Investment Pitches

Pitch Summary:
Shares of Elevance Health, the health insurer and healthcare-services provider formerly known as Anthem, traded lower on concerns about reductions in Medicaid coverage and increased utilization of services. The company reported a decline in earnings for its most recent quarter and reduced its forward guidance. We believe that margins will eventually stabilize as higher premiums cycle through its customer base. We continue to view Elevance as a well-managed company positioned to benefit from long-term secular demand for its managed care services in the US.

BSD Analysis:
The manager maintains a bullish long-term view on Elevance Health despite near-term margin pressures and guidance reductions. Current headwinds from Medicaid coverage reductions and higher utilization represent cyclical challenges rather than structural threats to the business model. The manager expects margin recovery as premium increases cycle through the customer base, reflecting the typical lag between cost inflation and pricing adjustments in managed care. Elevance's position as a well-managed industry leader provides operational advantages and scale benefits that should support margin recovery over time. The secular growth in demand for managed care services in the US provides a favorable long-term backdrop, driven by aging demographics and healthcare cost management needs. The manager's confidence in management quality suggests the company will navigate current challenges effectively while positioning for future growth. Despite near-term volatility, the fundamental value proposition of managed care remains intact, with Elevance well-positioned to capture this opportunity. The manager appears to view current weakness as a temporary setback in a structurally attractive business.

Pitch Summary:
Japan's Shimano, which manufacturers bicycle parts, fishing components and rowing equipment, lowered its forward guidance during the quarter because of weakness in overseas markets and ongoing inventory adjustments. Our investment thesis remains intact, as we are confident that Shimano can work through accumulated inventories after the strong but unsustainable demand for its products during the Covid-19 era. In addition to high-quality products and dominant global market share, the company has a strong history of returning capital to investors.

BSD Analysis:
Despite near-term headwinds, the manager maintains conviction in Shimano based on the company's fundamental competitive strengths and cyclical recovery potential. The current weakness stems from inventory adjustments following unsustainable COVID-era demand, representing a temporary rather than structural challenge. Shimano's dominant global market share in bicycle components provides pricing power and defensive moats that should support recovery as inventory levels normalize. The company's reputation for high-quality products creates customer loyalty and premium positioning that competitors struggle to replicate. Shimano's diversified product portfolio across cycling, fishing, and rowing equipment provides some stability during cycling market downturns. The manager emphasizes the company's consistent capital return policy, which demonstrates management's commitment to shareholder value creation. The combination of market leadership, product quality, and shareholder-friendly policies creates a compelling long-term investment case. The manager appears confident that current inventory issues are transitory and that Shimano will emerge stronger as demand patterns normalize.

Pitch Summary:
C.H. Robinson is the largest freight broker in North America, linking transportation providers to businesses across industries. The company has implemented automated AI processes to cut costs and expand margins. Improved pricing may be in prospect as stricter licensing requirements promulgated by the US Department of Transportation in September take hold and capacity tightens.

BSD Analysis:
The manager presents a bullish thesis on C.H. Robinson based on operational improvements and favorable industry dynamics. As North America's largest freight broker, the company benefits from scale advantages and network effects in connecting transportation providers with businesses. The implementation of automated AI processes represents a significant operational upgrade that should drive cost reduction and margin expansion over time. These technology investments position C.H. Robinson ahead of smaller competitors who may lack the resources for similar automation initiatives. The manager anticipates improved pricing power from new Department of Transportation licensing requirements that should tighten industry capacity and reduce competition. This regulatory change creates a favorable supply-demand dynamic that should benefit established players like C.H. Robinson. The combination of AI-driven efficiency gains and industry consolidation through regulatory barriers creates multiple drivers for margin improvement. The manager appears confident that C.H. Robinson's market leadership and technology investments will translate into sustained profitability growth.

Pitch Summary:
Shares of tech giant Alibaba were strong during the quarter. With large infrastructure/data centers and leading open-source models, the company's cloud business has accelerated to capitalize on the AI boom in China. Its partnership with Nvidia, announced in September, further underscores Alibaba's commitment to its AI and cloud operations. At the same time, the company's core e-commerce business continues to grow, with improved operating efficiencies that enable it to return cash to shareholders through dividends and stock repurchases.

BSD Analysis:
The manager presents a bullish case for Alibaba based on its dual growth engines in AI/cloud and core e-commerce. Alibaba's cloud business is well-positioned to benefit from China's AI boom, supported by substantial data center infrastructure and leading open-source AI models. The strategic partnership with Nvidia, announced in September, validates Alibaba's AI capabilities and provides access to cutting-edge GPU technology for cloud services. This partnership should accelerate Alibaba's cloud growth and competitive positioning in the Chinese AI market. Meanwhile, the core e-commerce business continues to demonstrate resilience with ongoing growth and improving operational efficiency. The combination of operational improvements and cash generation enables meaningful capital returns through dividends and share buybacks, providing direct value to shareholders. The manager appears confident that Alibaba can successfully execute on both its traditional e-commerce strengths and emerging AI/cloud opportunities. This dual-engine growth strategy positions Alibaba to capture value from China's digital transformation and AI adoption.

Pitch Summary:
Shares of Alphabet, the parent company of Google and YouTube, were strong during the quarter as the Department of Justice delivered favorable rulings on embedding Chrome as the default browser on phones and retaining the company's current corporate structure with no need to divest divisions. Beyond its core ad and search businesses, Alphabet provides a full stack solution within AI: spanning research, infrastructure/data centers and integrated end products. Valuation remains reasonable, in our view, and the company continues to share its ample store of cash with investors through dividends and buybacks.

BSD Analysis:
The manager maintains a bullish stance on Alphabet following favorable regulatory outcomes and the company's comprehensive AI positioning. The Department of Justice rulings allowing Chrome to remain the default browser and preserving Alphabet's corporate structure remove significant regulatory overhangs that had weighed on the stock. Beyond regulatory relief, the manager highlights Alphabet's full-stack AI capabilities spanning research, infrastructure, and end products, positioning the company to capture value across the entire AI ecosystem. The manager views current valuation as reasonable despite the stock's strong performance, suggesting further upside potential. Alphabet's substantial cash generation and shareholder-friendly capital allocation through dividends and buybacks provide additional support for the investment thesis. The combination of regulatory clarity, AI leadership, reasonable valuation, and strong cash returns creates a compelling multi-faceted bull case. The manager appears confident in Alphabet's ability to maintain its dominant market position while expanding into high-growth AI markets.

Pitch Summary:
Oracle is one of the world's largest independent enterprise software companies. The company reported a large increase in backlogs during the quarter, including a substantial, five-year cloud-computing contract with OpenAI. In addition to a significant near-term lift to Oracle's top line from this contract, we expect margins on these revenues to expand over time.

BSD Analysis:
The manager presents a bullish thesis on Oracle based on strong backlog growth and a significant multi-year cloud contract with OpenAI. The five-year OpenAI deal represents a substantial revenue opportunity that should provide both immediate top-line growth and expanding margins over time. Oracle's position as one of the largest independent enterprise software companies provides scale advantages in the competitive cloud infrastructure market. The partnership with OpenAI, a leading AI company, positions Oracle well to capitalize on the ongoing AI boom and enterprise demand for cloud computing services. The manager's confidence in margin expansion suggests Oracle's cloud business model is becoming more profitable as it scales. This strategic positioning in AI infrastructure appears to be driving both near-term contract wins and long-term competitive advantages. The substantial backlog increase indicates strong demand visibility and revenue predictability going forward.

Pitch Summary:
The Fund initiated a new position in WEC Energy earlier this year for two reasons: First, WEC operates in a stable service area with one of the most balanced regulatory environments for a utility. Second, their Wisconsin service territory is seeing considerable investment in AI-related data centers which should provide a tailwind to rate base growth as well as long-term earnings growth.

BSD Analysis:
The fund initiated a position in WEC Energy based on two compelling investment drivers that position the utility for sustained growth. The first factor is WEC's operational advantage through its stable Wisconsin service territory and favorable regulatory environment, providing predictable cash flows and reasonable rate recovery mechanisms. The second and more dynamic catalyst is the significant AI-related data center investments occurring within WEC's service territory, creating substantial incremental electricity demand. This data center buildout should drive meaningful rate base expansion as WEC invests in grid infrastructure to support these high-demand customers. The combination of regulatory stability and secular growth from data center demand creates an attractive risk-adjusted return profile. This positioning allows WEC to benefit from the AI infrastructure boom while maintaining the defensive characteristics typical of regulated utilities.

Pitch Summary:
The Fund initiated a new position in Amazon, which is well positioned to continue capturing market share in retail distribution while also growing its market-leading cloud business. The Fund took advantage of weakness in the stock during April to start the position as tariff news and a precipitous market decline provided an attractive valuation opportunity.

BSD Analysis:
The fund initiated a new position in Amazon, viewing the company as uniquely positioned to benefit from dual growth engines in both retail and cloud computing. The managers highlight Amazon's ability to continue gaining market share in retail distribution, leveraging its logistics network and customer relationships. Simultaneously, they recognize the strength of Amazon Web Services as the market-leading cloud platform, providing high-margin recurring revenue growth. The timing of the position initiation demonstrates opportunistic investing, as the fund capitalized on market weakness in April driven by tariff concerns and broader market volatility. This approach reflects disciplined value investing, waiting for attractive entry points in high-quality businesses. The dual-platform strategy positions Amazon to benefit from both e-commerce penetration and digital transformation trends across multiple industries.

Pitch Summary:
Fiserv (FI) also underperformed and is a large holding in the Fund. Lower guidance on the growth of its Clover cloud-based payment platform was to blame, but we remain convinced that Fiserv is well-positioned long-term. Fiserv revised guidance lower for its Clover product, a cloud-based payment platform, which is at the core of its growth in merchant acceptance. The company had performed well in recent years, and the Clover product had been a meaningful part of that growth. Although we remain confident in the company's future, the revision downward of expectations had an outsized impact on stock performance.

BSD Analysis:
The fund maintains conviction in Fiserv despite disappointing guidance revisions for the Clover platform, which represents a core growth driver in merchant acceptance services. The managers acknowledge that Clover has been instrumental in the company's recent strong performance, making the guidance reduction particularly impactful on investor sentiment and stock performance. However, they view this as a temporary setback rather than a fundamental deterioration of the investment thesis. The fund's continued confidence reflects their belief in Fiserv's competitive positioning in the payments processing industry and the long-term secular growth trends in digital payments. Their decision to maintain the position suggests they view current weakness as potentially creating future opportunity. The emphasis on long-term positioning indicates patience with near-term execution challenges while maintaining faith in the underlying business model.

Pitch Summary:
UnitedHealth Group (UNH) underperformed and is a large holding in the Fund. The stock was hampered by financial missteps, reduced earnings guidance, and an abrupt CEO departure. We have confidence going forward but have not meaningfully adjusted our position. UnitedHealth lagged during the period as the company experienced higher than expected medical loss ratios which led to a significant decline in earnings expectations. The company is likely to fix its pricing issues for new members, while it has some work ahead to improve its Medicare Advantage managed care business. In addition, the company experienced an abrupt management change when it announced that former CEO Stephen Hemsley would return to the role to "steady the ship." The company still has an enviable earnings profile and historically has demonstrated an ability to manage through temporary disturbances. We continue to hold our UnitedHealth position and will look to add when valuation opportunities present themselves.

BSD Analysis:
The fund maintains a bullish stance on UnitedHealth despite significant near-term headwinds including elevated medical loss ratios, reduced earnings guidance, and management turnover. The managers acknowledge the company's pricing challenges in new member acquisition and operational issues in Medicare Advantage but express confidence in management's ability to navigate these temporary setbacks. They highlight UnitedHealth's historically strong earnings profile and proven track record of managing through cyclical disruptions. The return of former CEO Stephen Hemsley is viewed as a stabilizing factor. The fund's decision to maintain their position while preparing to add on weakness demonstrates conviction in the long-term investment thesis. This contrarian approach reflects confidence in UnitedHealth's competitive moat and operational capabilities despite current execution challenges.

Pitch Summary:
Powell Industries designs, manufactures and packages equipment and systems for the distribution, control and management of electrical energy and process control systems. The stock performed well last quarter due to the increasingly robust outlook for the company's solutions within the utility end market. We believe the company is well-positioned to capitalize on the ongoing strength of electrical and grid-related capital investment, and as a smaller player in this growing area, it stands out by providing more customizable switchgear solutions than its larger competitors. Additionally, the company has alluded to the potential for increased direct exposure to data centers, which could provide an incremental lever to future growth.

BSD Analysis:
The manager presents a bullish case for Powell Industries based on strong utility market fundamentals and competitive positioning. The company benefits from robust electrical and grid-related capital investment trends, driven by infrastructure modernization and expansion needs. As a smaller player in the electrical equipment market, Powell differentiates itself through more customizable switchgear solutions compared to larger competitors, creating a competitive moat. The utility end market outlook continues to strengthen, providing sustained demand for the company's products and services. Management has indicated potential for increased exposure to data centers, which would provide an additional growth driver beyond traditional utility applications. The combination of strong core utility market trends, competitive differentiation, and potential data center exposure creates multiple avenues for growth. Powell's specialized focus and customization capabilities position it well to capture market share in this expanding sector.

Pitch Summary:
Rambus provides technology and chips to the computer memory industry. The company has some of the fastest technology solutions needed for the large-scale artificial intelligence (AI) data centers being built by the hyperscalers. We believe the company's evolution from a licensing and patent company into a full-fledged product company is progressing well, and we expect healthy growth as hyperscaler capital expenditures (capex) continue.

BSD Analysis:
The manager maintains a bullish thesis on Rambus centered on the company's strategic positioning in the AI infrastructure buildout. Rambus provides critical high-speed memory technology solutions essential for large-scale AI data centers, positioning it at the center of a major secular growth trend. The company's transformation from primarily a licensing and patent business to a full product company represents a significant strategic evolution that should drive more predictable revenue streams. The manager expects continued healthy growth driven by hyperscaler capital expenditure increases, which are fundamental to AI infrastructure expansion. This business model transformation, combined with exposure to the AI data center theme, creates multiple growth catalysts. The company's technology leadership in high-speed memory solutions provides competitive advantages in this rapidly expanding market segment.

Pitch Summary:
Zurn Elkay Water Solutions is a diversified provider of specification-driven water management solutions. The company has continued to outperform broader non-residential construction trends and has navigated the unfolding tariff situation impressively thus far. This performance was on display in the company's most recent earnings report, which exceeded investor expectations across the board, and the stock reacted accordingly. We see recent new product launches and favorable legislation trends positively affecting Zurn Elkay's core institutional end markets, providing a nice tailwind to future growth.

BSD Analysis:
The manager presents a bullish case for Zurn Elkay Water Solutions based on strong relative performance and favorable market positioning. The company has outperformed broader non-residential construction trends, demonstrating resilience and market share gains in a challenging environment. Management has effectively navigated tariff headwinds, showing operational flexibility and strategic planning capabilities. The latest earnings report exceeded expectations across all metrics, indicating strong fundamental execution and business momentum. New product launches position the company for future growth and market expansion. Favorable legislation trends are creating tailwinds for the institutional end markets that represent Zurn Elkay's core customer base. The combination of strong current performance, product innovation, and regulatory support creates multiple growth drivers for the investment thesis.

Pitch Summary:
Perimeter Solutions is a specialized chemical solutions provider to the fire safety and specialty products industries. Shares were propelled higher by an earnings report that highlighted impressive operating execution and notable contributions from recent accretive acquisitions. Perimeter also announced a new multi-year agreement with the largest customer of its fire-retardant business. We believe this showcases a business model that is less cyclical or variable than investors have previously expected. This has provided additional lift to the stock.

BSD Analysis:
The manager maintains a bullish stance on Perimeter Solutions based on strong operational performance and strategic positioning. The company demonstrated impressive operating execution in its latest earnings report, indicating effective management and business fundamentals. Recent accretive acquisitions are contributing meaningfully to results, showing successful capital allocation and integration capabilities. The new multi-year agreement with the largest customer in the fire-retardant business provides revenue visibility and demonstrates strong customer relationships. The manager believes the business model is more stable and less cyclical than previously perceived by the market. This stability, combined with growth from acquisitions and secured customer contracts, creates a compelling investment case. The stock's positive reaction reflects improved investor confidence in the company's execution and business model durability.

Pitch Summary:
Impinj provides radio frequency identification (RFID) chips for inventory and asset tracking. The company posted very strong revenue growth versus expectations for the quarter as the adoption of RFID broadened beyond the traditional use cases. Investors also have appreciated key margin and free cash flow improvement with licensing wins. We believe the long-term case for RFID remains strong, and we expect that Impinj should benefit from this theme.

BSD Analysis:
The manager presents a bullish thesis on Impinj based on strong fundamental execution and expanding market adoption. The company exceeded revenue expectations as RFID technology gains traction beyond traditional applications, indicating successful market penetration. Key operational improvements in margins and free cash flow generation demonstrate effective business execution and scalability. The licensing wins provide additional validation of the company's technology and create recurring revenue streams. The manager views RFID as a secular growth theme with long-term tailwinds. Impinj appears well-positioned to capitalize on the broadening adoption of RFID technology across various industries. The combination of strong quarterly results and structural market expansion supports the positive investment outlook.

Pitch Summary:
The portfolio's holding in semiconductor equipment manufacturer Lam Research contributed significantly to performance as the stock performed exceptionally well during the quarter and the fund maintained a significant relative overweight to the benchmark. Lam continues to be an AI beneficiary from a company perspective, as AI workloads require more advanced chips, which drives demand for Lam Research's deposition and etch solutions. The rebounding NAND flash market is also contributing to the growth of the company, as LAM's molybdenum and carbon gap fill solutions are continuing to gain traction. The company announced record-high profits and revenues on the company's most recent earnings call.

BSD Analysis:
The fund holds a significant overweight position in Lam Research, viewing it as a prime beneficiary of the AI infrastructure boom. The investment thesis is anchored on Lam's critical role in manufacturing advanced semiconductors required for AI workloads, specifically through their deposition and etch solutions. The company is experiencing a dual tailwind from both AI demand and the recovering NAND flash memory market, where Lam's molybdenum and carbon gap fill technologies are gaining market share. Recent financial results validate this thesis, with the company reporting record profits and revenues in their latest earnings call. The fund's significant relative overweight reflects high conviction in Lam's positioning within the semiconductor equipment value chain. As AI chip complexity increases, Lam's specialized manufacturing equipment becomes increasingly essential for foundries and memory manufacturers. The combination of secular AI growth and cyclical memory recovery creates a compelling multi-year growth trajectory for the company.

Pitch Summary:
The fund continued to hold an off-benchmark position in Bloom Energy. The company manufactures and markets solid-oxide fuel cells that produce electricity and can provide an alternative source of energy compared to traditional supply. Our thesis on Bloom has been that it has the necessary technology to provide a solution to the electricity shortage that overhangs new AI data center builds in the U.S. and around the world. Bloom's fuel cells plug into a natural gas line that can fit on a data center's campus without taking up much real estate, and the company has informed customers they can ramp up power delivery quicker than other energy providers. Bloom received a favorable tax credit from the Trump administration's "One Big Beautiful Bill" which included a provision that supports hydrogen fuel cell and clean hydrogen production. This credit has led Bloom to approach cost parity with many other energy providers, including wind turbines. Add in the company's ability to deliver a solution quicker, and the current environment appears set up well for Bloom. In July, the company also announced a partnership with Oracle to provide support for Oracle's OCI data-center business and said they could be operational within 90-days - further emphasizing our thesis on Bloom's opportunity due to traditional energy backlogs.

BSD Analysis:
The fund maintains a bullish stance on Bloom Energy, viewing it as a strategic solution to the electricity shortage constraining AI data center expansion globally. The investment thesis centers on Bloom's solid-oxide fuel cell technology providing faster deployment and space-efficient power generation compared to traditional energy infrastructure. Recent policy tailwinds include favorable tax credits from the Trump administration's legislation supporting hydrogen fuel cell production, bringing Bloom closer to cost parity with wind energy providers. The Oracle partnership announced in July demonstrates commercial validation, with Bloom promising 90-day operational timelines versus traditional energy providers facing significant backlogs. The fund sees Bloom as uniquely positioned to capitalize on the urgent power needs of hyperscale data center builds. This off-benchmark position reflects high conviction in Bloom's competitive advantages during the AI infrastructure buildout cycle. The combination of technological differentiation, policy support, and accelerating demand creates a compelling investment opportunity in the energy transition space.

Pitch Summary:
However, we did initiate one new position in Q3: Hurco Companies. Hurco Companies is a global industrial technology company specializing in computer numerical control (CNC) machine tools and interactive controls for the metal-cutting industry. The company serves job shops and manufacturers across the aerospace, defense, medical, energy and transportation sectors through three distinct brands: Hurco (premium brand), Milltronics (value brand) and Takumi (precision brand). Hurco's strategic positioning creates a compelling investment opportunity given it has over 50% revenue exposure to Europe, which positions the company well to benefit from European defense and industrial investment.

BSD Analysis:
The manager initiated a new position in Hurco Companies, viewing it as a compelling industrial technology investment with strategic European exposure. The company operates in the CNC machine tools market serving critical end markets including aerospace, defense, medical, energy, and transportation. The three-brand strategy (Hurco premium, Milltronics value, Takumi precision) provides market segmentation and pricing flexibility across different customer needs. The key investment thesis centers on over 50% European revenue exposure, positioning the company to benefit from increased European defense and industrial investment. This geographic positioning appears particularly attractive given elevated defense spending and industrial reshoring trends in Europe. The diversified end market exposure across aerospace, defense, medical, energy, and transportation provides multiple growth drivers and some cyclical protection.

Pitch Summary:
Mesa Laboratories provides life sciences tools and quality control products and services. The company navigated a challenging macroeconomic environment with modest growth—though profitability was pressured by currency impacts, tariffs and timing delays. These order timing issues also weighed on organic growth, as did China-related headwinds. However, positively, Mesa's largest segment, sterilization and disinfection control, delivered solid core growth, speaking to the resilience of the company's diversified portfolio.

BSD Analysis:
The manager presents a balanced view of Mesa Laboratories, acknowledging both challenges and strengths in the life sciences tools provider. The company faced multiple headwinds including currency impacts, tariffs, order timing delays, and China-related issues that pressured profitability and organic growth. However, the core sterilization and disinfection control segment demonstrated resilience with solid growth, highlighting the defensive nature of quality control products in healthcare. The diversified portfolio appears to provide some stability during challenging periods. While the near-term environment remains difficult with macroeconomic pressures and geopolitical tensions affecting China business, the essential nature of Mesa's products in life sciences quality control suggests underlying demand durability. The manager seems to view current challenges as temporary while maintaining confidence in the long-term business model.

Pitch Summary:
Bottom contributors in Q3 included FTAI Infrastructure and Mesa Laboratories. FTAI Infrastructure, which operates infrastructure assets for transportation, energy and industrial products customers, saw volumes at its Jefferson terminal increase slower than expected in the quarter and performed planned maintenance at its Long Ridge facility—factors which impacted revenues and weighed on the share price. However, during the quarter, FTAI Infrastructure also announced it will acquire The Wheeling Corporation, which owns the Wheeling & Lake Erie Railway Company, a Class II regional freight railroad serving customers in Ohio, Pennsylvania, West Virginia and Maryland. We believe this acquisition is strategically significant and could represent a pivotal moment in the company's evolution toward becoming primarily a freight rail business, while also working to monetize its other assets.

BSD Analysis:
Despite near-term operational headwinds, the manager maintains conviction in FTAI Infrastructure based on a strategic transformation thesis. The company experienced slower volume growth at its Jefferson terminal and planned maintenance at Long Ridge, creating temporary revenue pressure. However, the manager views the Wheeling Corporation acquisition as strategically transformative, representing a pivot toward becoming primarily a freight rail business. The Wheeling & Lake Erie Railway serves a strategic geographic footprint across Ohio, Pennsylvania, West Virginia, and Maryland. This acquisition appears to be part of a broader strategy to monetize existing assets while building a focused freight rail platform. The manager sees this as a pivotal moment in the company's evolution, suggesting confidence in management's capital allocation and strategic vision despite short-term operational challenges.