Investment Pitches

Pitch Summary:
Business Description: Global pharmaceutical company with a leading position in diabetes/obesity and a rich pipeline of follow-on medicines addressing several therapeutic categories. Thesis: Lilly is a leader in diabetes and obesity markets which represent large global patient populations and today remain largely underserved. Excellent management team with a long-term focus on deploying capital towards R&D/serial innovation in therapeutic categories with large unmet needs. Q2 Results: Revenue +38% and EPS +61%. Raised FY 2025 revenue and EPS guidance. What Happened: Stock declined on results from P3 ATTAIN-1 trial – orforglipron (Lilly's oral GLP-1 molecule) delivered 12.4% weight loss at the highest dose – expectations were 13-15% weight loss. Edgewood's View: The market was too narrowly focused on one metric from one trial, demographics impacted results and the totality of data from 5 clinical trials would support approval. After a ~15% price decline, Lilly traded at ~20x 2026 EPS for a company that we believe can compound EPS >20% over the next 5 years. Resulting Action: After research meeting with senior management at LLY HQ, Edgewood added 100bps to our position in August.

BSD Analysis:
Edgewood maintains a bullish stance on Eli Lilly, viewing the company as a dominant player in the massive diabetes and obesity markets that remain significantly underserved globally. The fund's thesis centers on Lilly's leadership position in GLP-1 therapies and its robust pipeline addressing multiple therapeutic areas with substantial unmet medical needs. Despite the stock's decline following disappointing weight loss results from the ATTAIN-1 trial for orforglipron (12.4% vs. expected 13-15%), Edgewood believes the market overreacted to a single data point. The manager emphasizes that the totality of data across five clinical trials should still support regulatory approval. At approximately 20x 2026 EPS following the selloff, Edgewood sees compelling value for a company they expect to compound earnings at over 20% annually for the next five years. The fund's conviction was reinforced through direct engagement with senior management, leading them to increase their position by 100 basis points.

Pitch Summary:
Today, Adidas is the world's #2 player in athletic footwear and apparel, behind category leader Nike. Despite multiple new entrants across different sporting verticals and niches, these brands continue to dominate sportswear on the global stage and generate annual revenues 5x and 3x larger than the third-largest brand, Puma. While strong economic moats can be difficult to find in competitive consumer categories such as apparel and footwear, we continue to believe the brand equity, marketing reach, R&D capabilities and global distribution networks of the world's two leading sportswear brands provide meaningful and durable advantages. Importantly, Adidas consistently reinvests to defend these competitive advantages, including an annual marketing budget of around €3 billion – or roughly 12% of net sales. These funds support high-profile partnerships with athletes like Lionel Messi and Patrick Mahomes, sporting teams like Real Madrid and Manchester United, and sporting leagues and events like UEFA Champions League and the Paris Olympics, reinforcing brand visibility and consumer loyalty. While Nike's dominance is strongest in North America and basketball, Adidas holds sway in the world's most popular sport, football, where its unrivalled presence at global events like the upcoming FIFA World Cup acts as a showcase for the brand. Adidas also benefits from an enviable vault of iconic product silhouettes that are now cross-generational staples blending sports and fashion. The brand's most recent global success story, the Adidas Originals Samba sneaker, has roots tracing back to the 1950s and was officially launched in its current form in 1972. Execution is critical in the sportswear industry, where consumer tastes shift quickly. Over decades, Adidas has demonstrated resilience and adaptability through challenging periods. In the last five years alone, the company has navigated a global pandemic, geopolitical backlash in China, an exit from Russia and the winding down of its Yeezy collaboration. These external shocks compressed profitability and ultimately resulted in a CEO change. Under new leadership, the business has regained strong momentum across key markets. From an investment perspective, periods of disruption like this, in categories where structural growth tailwinds and economic moat drivers remain intact, can present attractive investment opportunities. Earlier this year, consumer health and tariff fears drove material underperformance of the apparel and sportswear sector, creating an attractive entry point for Adidas in the Magellan Global Opportunities strategy. While remaining conscious of broader industry risks – including consumer health, fashion cycles, geopolitics, social supply chain and environmental challenges – we believe Adidas represents a compelling long-term opportunity: a brand with deep heritage, durable competitive advantages, and the ability to continue turning global sports tailwinds into sustainable growth.

BSD Analysis:
Magellan presents a compelling bull case for Adidas, positioning it as an attractive contrarian opportunity following sector-wide underperformance. The manager emphasizes Adidas's durable competitive moats, including its #2 global position in athletic footwear/apparel, dominant football market presence, and €3 billion annual marketing investment supporting high-profile partnerships. The thesis centers on the company's resilience through recent disruptions including pandemic impacts, China geopolitical issues, Russia exit, and Yeezy collaboration termination, with new leadership driving momentum recovery. Magellan views the recent sector weakness from consumer health and tariff concerns as creating an attractive entry point for a brand with deep heritage and cross-generational appeal. The investment case relies on Adidas's ability to leverage structural growth tailwinds in athleisure and global sports participation. Key risks acknowledged include fashion cycle volatility, geopolitical exposure, and broader consumer discretionary headwinds, though the manager believes the brand's competitive advantages and execution capabilities position it well for long-term growth.

Pitch Summary:
Founded in 1949 in Herzogenaurach, Germany, Adidas was the vision of Adolf "Adi" Dassler, who split from his brother Rudolf (the founder of Puma) to create what would become one of the world's most enduring sports brands. Registered under the now-iconic three stripes trademark, Adidas quickly rose to prominence when West German footballers wore its innovative boots to victory in the 1954 FIFA World Cup, a defining moment that cemented its reputation for high-performance sportswear on the global stage. In the decades since, Adidas has expanded far beyond football boots, entering running, basketball and training categories. Along the way, it has pioneered innovations such as screw-in studs and various cushioning and ultra-lightweight footwear and clothing materials. The brand's visibility at the Olympic Games, World Cups and global running events has deepened its association with sporting excellence. In more recent decades, the blending of sports and lifestyle has broadened the company's addressable market as athletic apparel and footwear have become everyday wear. Adidas was pivotal to the history of "athleisure" wear, introducing the tracksuit to non-athletes all the way back in the 1970s. Today, Adidas is the world's #2 player in athletic footwear and apparel, behind category leader Nike. Despite multiple new entrants across different sporting verticals and niches, these brands continue to dominate sportswear on the global stage and generate annual revenues 5x and 3x larger than the third-largest brand, Puma. While strong economic moats can be difficult to find in competitive consumer categories such as apparel and footwear, we continue to believe the brand equity, marketing reach, R&D capabilities and global distribution networks of the world's two leading sportswear brands provide meaningful and durable advantages. Importantly, Adidas consistently reinvests to defend these competitive advantages, including an annual marketing budget of around €3 billion – or roughly 12% of net sales. These funds support high-profile partnerships with athletes like Lionel Messi and Patrick Mahomes, sporting teams like Real Madrid and Manchester United, and sporting leagues and events like UEFA Champions League and the Paris Olympics, reinforcing brand visibility and consumer loyalty. While Nike's dominance is strongest in North America and basketball, Adidas holds sway in the world's most popular sport, football, where its unrivalled presence at global events like the upcoming FIFA World Cup acts as a showcase for the brand. Adidas also benefits from an enviable vault of iconic product silhouettes that are now cross-generational staples blending sports and fashion. The brand's most recent global success story, the Adidas Originals Samba sneaker, has roots tracing back to the 1950s and was officially launched in its current form in 1972. Execution is critical in the sportswear industry, where consumer tastes shift quickly. Over decades, Adidas has demonstrated resilience and adaptability through challenging periods. In the last five years alone, the company has navigated a global pandemic, geopolitical backlash in China, an exit from Russia and the winding down of its Yeezy collaboration. These external shocks compressed profitability and ultimately resulted in a CEO change. Under new leadership, the business has regained strong momentum across key markets. From an investment perspective, periods of disruption like this, in categories where structural growth tailwinds and economic moat drivers remain intact, can present attractive investment opportunities. Earlier this year, consumer health and tariff fears drove material underperformance of the apparel and sportswear sector, creating an attractive entry point for Adidas in the Magellan Global Opportunities strategy. While remaining conscious of broader industry risks – including consumer health, fashion cycles, geopolitics, social supply chain and environmental challenges – we believe Adidas represents a compelling long-term opportunity: a brand with deep heritage, durable competitive advantages, and the ability to continue turning global sports tailwinds into sustainable growth.

BSD Analysis:
Magellan presents a compelling bull case for Adidas, emphasizing the company's position as the world's second-largest sportswear brand with durable competitive advantages. The manager highlights Adidas's dominant position in football globally, contrasting with Nike's strength in basketball and North America, providing geographic and sport-specific diversification. The investment thesis centers on the company's substantial economic moats including brand equity, global distribution networks, R&D capabilities, and a €3 billion annual marketing budget representing 12% of sales. Magellan views recent disruptions including the pandemic, China backlash, Russia exit, and Yeezy collaboration termination as temporary headwinds that created an attractive entry point. The manager emphasizes Adidas's resilience through these challenges and strong momentum under new leadership. The pitch highlights the structural growth tailwinds in athleisure and the brand's iconic product portfolio, including cross-generational staples like the Samba sneaker. Magellan sees this as a long-term opportunity to capitalize on global sports trends while acknowledging industry risks including consumer health concerns and fashion cycles.

Pitch Summary:
Elutia Inc. (ELUT) was a detractor from performance during the quarter. Elutia is a medical device company that produces a biologic envelope to hold cardiac devices (CIED) in place beneath the skin. These devices are typically implanted near the shoulder and have issues with migration (moving beneath the skin). Elutia developed a biologic form of these devices versus plastic versions that are produced by Medtronic. We thought they would sell the whole company to Boston Scientific as they compete directly with Medtronic. Unfortunately, management sold the product to Boston Scientific for only $88 million, far less than what we and they would have expected they would get for it. Management has made the decision to use the money to develop unapproved products to the detriment of shareholders. We had expected a purchase price of over $200 million. While it was a small position across portfolios, it is disappointing, nonetheless. We sold the remaining holdings of ELUT on this news.

BSD Analysis:
The manager expresses significant disappointment with Elutia's management decisions, leading to a complete exit from the position. The investment thesis was based on the company's biologic envelope technology for cardiac devices, which offered advantages over Medtronic's plastic versions. The manager expected a full company acquisition by Boston Scientific given the competitive dynamics. However, management's decision to sell only the product for $88 million versus the expected $200+ million represents a substantial value destruction. The manager criticizes management's capital allocation, specifically the decision to pursue unapproved products rather than maximizing shareholder value. The complete sale of holdings indicates lost confidence in management's ability to create value. This represents a classic case of management execution risk undermining an otherwise sound investment thesis. The position size was kept small, demonstrating appropriate risk management.

Pitch Summary:
Zeta Global Holdings Corp. (ZETA) is a marketing technology software company which benefits from multiple market tailwinds in the advertising industry. Zeta's software platform combined with artificial intelligence helps companies' market more efficiently by targeting ads based on specific demographics. The Zeta marketing platform helps customers deliver advertisements through all channels such as email, social media, web, chat, connected TV and video. Zeta is unique in that their platform doesn't use cookies. This reduces risk from a regulatory and customer standpoint as they are not impacted by these issues. Consequently, they can take market share from competitors like Adobe, Salesforce, and Oracle, who have all made legacy acquisitions to enter the space at valuations of 8-20x EV/Revenues. ZETA trades for 3x EV/Revenues. Oracle announced they would be exiting the advertising business on their Q4 2024 earnings call, creating an incremental revenue opportunity for Zeta. Despite the broader softness in software spending, Zeta remains unaffected, citing a healthy demand environment. The company was founded by former Apple CEO, John Scully, and the management team has a strong track record of performance (the company has beaten their revenue guidance for 16 consecutive quarters since their IPO in 2021). Zeta's stock has been volatile throughout the past few months as investors digested a short report in November. As noted above Zeta trades at a significant discount to peers in the software industry at only 3x EV/Revenues vs. 5-7x for the group, despite stronger growth and operating margins.

BSD Analysis:
The manager presents a compelling value opportunity in Zeta Global, emphasizing the company's competitive advantages in marketing technology. The investment thesis centers on Zeta's cookie-free platform providing regulatory and competitive advantages over legacy players like Adobe, Salesforce, and Oracle. The valuation discount is striking at 3x EV/Revenue versus peers at 5-7x and competitors at 8-20x, despite superior growth and margins. Management's exceptional track record of beating guidance for 16 consecutive quarters since IPO demonstrates execution capability. Oracle's exit from advertising creates a direct market share opportunity for Zeta. The company's resilience during broader software spending weakness indicates strong competitive positioning. The founding by former Apple CEO John Scully adds credibility to the leadership team. Recent volatility from a short report may have created an attractive entry point given the fundamental strength.

Pitch Summary:
Xeris Pharmaceuticals Inc. (XERS) is a specialty pharmaceutical company with unique products serving large unmet medical needs. Their main product includes Recorlev which is a medication prescribed for the treatment of Cushing's Syndrome (CS). CS is a serious medical condition where out of control cortisol levels wreak havoc on the body, leading to fatigue, weight gain, and hypertension. XERS recently hosted an Investor Day presentation where they announced a 2030 model of $750 million in revenue from the current portfolio, particularly Recorlev. For reference, the total company is expected to generate $285 million in 2025. The gross margins for Recorlev are around 80% and profitability is expected to ramp significantly in the coming years as the company leverages the investments they've already made. Xeris expanded their salesforce by an additional 40 reps in November of 2024. Those reps are now contributing to the 54% quarterly revenue growth XERS achieved in the 2nd quarter. This is an acceleration from Q1 where they grew 44% year over year. While the stock has almost doubled since June when we bought it, we continue to hold it in investor portfolios due to the large opportunity ahead.

BSD Analysis:
The manager presents a strong growth story for Xeris Pharmaceuticals, anchored by their lead product Recorlev for Cushing's Syndrome treatment. The investment thesis is built on exceptional revenue growth acceleration from 44% to 54% year-over-year, driven by salesforce expansion and market penetration. Management's 2030 revenue target of $750 million represents significant upside from the expected 2025 revenue of $285 million. The high-margin profile with 80% gross margins on Recorlev provides substantial operating leverage as the company scales. The manager's decision to hold despite the stock doubling since June demonstrates conviction in the long-term opportunity. The rare disease focus in Cushing's Syndrome addresses a large unmet medical need with limited competition. The salesforce expansion of 40 additional reps is already showing measurable impact on growth metrics.

Pitch Summary:
MDxHealth (MDXH) is a prostate cancer diagnostics screening company we initially purchased at around $2 per share a year ago. Prostate is the second most diagnosed cancer type overall and the most common in men. Their portfolio includes Select mdx, Confirm mdx, Genomic Prostate Score (GPS), and the hereditary prostate cancer test. The company has a network of over 7 thousand physicians and has completed over 250 thousand tests in total. With their series of non-invasive tests, they offer physicians and patients additional guidance when making treatment decisions. MDXH has grown revenue each of the last 12 quarters at over 20% and we believe they can accelerate that rate as they recently acquired an additional prostate test. Despite the positive momentum the stock only trades at 2x EV/Revenues vs. peers at 5-9x for similar growth and margin profiles.

BSD Analysis:
The manager presents a compelling value proposition for MDxHealth, highlighting the company's position in the large prostate cancer diagnostics market. The investment thesis centers on consistent revenue growth exceeding 20% for 12 consecutive quarters, driven by a comprehensive portfolio of non-invasive diagnostic tests. The manager emphasizes the significant valuation discount, with MDXH trading at 2x EV/Revenue versus peers at 5-9x despite comparable growth and margins. The recent acquisition of an additional prostate test provides a potential catalyst for accelerating growth. The established physician network of over 7,000 doctors and 250,000 completed tests demonstrates market penetration and scalability. The manager's entry point around $2 per share suggests meaningful appreciation potential given the fundamental improvements and valuation gap.

Pitch Summary:
Founded in 1949 in Herzogenaurach, Germany, Adidas was the vision of Adolf "Adi" Dassler, who split from his brother Rudolf (the founder of Puma) to create what would become one of the world's most enduring sports brands. Registered under the now-iconic three stripes trademark, Adidas quickly rose to prominence when West German footballers wore its innovative boots to victory in the 1954 FIFA World Cup, a defining moment that cemented its reputation for high-performance sportswear on the global stage. In the decades since, Adidas has expanded far beyond football boots, entering running, basketball and training categories. Along the way, it has pioneered innovations such as screw-in studs and various cushioning and ultra-lightweight footwear and clothing materials. The brand's visibility at the Olympic Games, World Cups and global running events has deepened its association with sporting excellence. In more recent decades, the blending of sports and lifestyle has broadened the company's addressable market as athletic apparel and footwear have become everyday wear. Adidas was pivotal to the history of "athleisure" wear, introducing the tracksuit to non-athletes all the way back in the 1970s. Today, Adidas is the world's #2 player in athletic footwear and apparel, behind category leader Nike. Despite multiple new entrants across different sporting verticals and niches, these brands continue to dominate sportswear on the global stage and generate annual revenues 5x and 3x larger than the third-largest brand, Puma. While strong economic moats can be difficult to find in competitive consumer categories such as apparel and footwear, we continue to believe the brand equity, marketing reach, R&D capabilities and global distribution networks of the world's two leading sportswear brands provide meaningful and durable advantages. Importantly, Adidas consistently reinvests to defend these competitive advantages, including an annual marketing budget of around €3 billion – or roughly 12% of net sales. These funds support high-profile partnerships with athletes like Lionel Messi and Patrick Mahomes, sporting teams like Real Madrid and Manchester United, and sporting leagues and events like UEFA Champions League and the Paris Olympics, reinforcing brand visibility and consumer loyalty. While Nike's dominance is strongest in North America and basketball, Adidas holds sway in the world's most popular sport, football, where its unrivalled presence at global events like the upcoming FIFA World Cup acts as a showcase for the brand. Adidas also benefits from an enviable vault of iconic product silhouettes that are now cross-generational staples blending sports and fashion. The brand's most recent global success story, the Adidas Originals Samba sneaker, has roots tracing back to the 1950s and was officially launched in its current form in 1972. Execution is critical in the sportswear industry, where consumer tastes shift quickly. Over decades, Adidas has demonstrated resilience and adaptability through challenging periods. In the last five years alone, the company has navigated a global pandemic, geopolitical backlash in China, an exit from Russia and the winding down of its Yeezy collaboration. These external shocks compressed profitability and ultimately resulted in a CEO change. Under new leadership, the business has regained strong momentum across key markets. From an investment perspective, periods of disruption like this, in categories where structural growth tailwinds and economic moat drivers remain intact, can present attractive investment opportunities. Earlier this year, consumer health and tariff fears drove material underperformance of the apparel and sportswear sector, creating an attractive entry point for Adidas in the Magellan Global Opportunities strategy. While remaining conscious of broader industry risks – including consumer health, fashion cycles, geopolitics, social supply chain and environmental challenges – we believe Adidas represents a compelling long-term opportunity: a brand with deep heritage, durable competitive advantages, and the ability to continue turning global sports tailwinds into sustainable growth.

BSD Analysis:
Magellan presents a compelling bull case for Adidas as a turnaround opportunity in the global sportswear market. The manager emphasizes Adidas's position as the world's second-largest athletic brand with durable competitive advantages including brand equity, global distribution networks, and substantial marketing investments of €3 billion annually. The investment thesis centers on the company's recovery under new leadership after navigating significant external challenges including the pandemic, geopolitical tensions in China, Russia exit, and Yeezy partnership termination. Magellan views the recent sector underperformance driven by consumer health and tariff concerns as creating an attractive entry point for a quality brand with deep heritage. The manager highlights Adidas's dominance in football globally, contrasting with Nike's strength in North American basketball, and notes the brand's successful cross-generational appeal through iconic products like the Samba sneaker. The pitch emphasizes structural growth tailwinds in athleisure and the company's proven ability to adapt through challenging periods while maintaining its competitive moat.

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.