Investment Pitches

Pitch Summary:
Ducommun is a critical Tier 1 and Tier 2 supplier of advanced material aerostructures and electrical components to the defense and commercial markets. Boeing is consistently producing its 737 Max airplane at a rate of 38 per month, which could increase to 42 per month by the end of 2025—and Ducommun expects it will be able to supply Boeing at a rate roughly equal to its production rate by the middle of 2026. Ducommun is also benefiting from strong demand in its missile programs amid heightened geopolitical tensions globally.

BSD Analysis:
The manager highlights Ducommun as a critical aerospace and defense supplier positioned to benefit from Boeing's 737 Max production ramp and increased defense spending. The investment thesis is built on the company's strategic position as a Tier 1 and Tier 2 supplier providing advanced aerostructures and electrical components. Boeing's consistent 737 Max production at 38 aircraft per month, potentially increasing to 42 by year-end 2025, provides visible revenue growth as Ducommun scales to match production rates by mid-2026. The defense side benefits from heightened geopolitical tensions driving missile program demand. This dual exposure to commercial aerospace recovery and defense spending creates multiple growth drivers. The company's critical supplier status suggests strong customer relationships and barriers to entry. The timing appears favorable with Boeing's production recovery and elevated global defense spending.

Pitch Summary:
US Lime and Mineral, which manufactures and supplies lime and limestone products, benefited from growing demand from construction, environmental and steel customers, which in turn drove sales growth. The company's key markets in Louisiana and Texas are experiencing more stabilization work than other regions, with strong bidding activity indicating robust underlying demand. US Lime and Mineral is also benefiting from infrastructure projects in the region which should contribute to above-average construction activity.

BSD Analysis:
The manager presents US Lime & Minerals as benefiting from strong regional demand dynamics in its core Louisiana and Texas markets. The investment thesis centers on the company's exposure to multiple end markets including construction, environmental applications, and steel production, providing diversified demand drivers. The regional focus appears advantageous as Louisiana and Texas are experiencing more stabilization work and infrastructure investment compared to other regions. Strong bidding activity indicates healthy underlying demand fundamentals. The infrastructure projects mentioned suggest a multi-year tailwind for construction activity in the company's geographic footprint. This represents a classic materials play leveraged to regional economic strength and infrastructure spending. The diversified customer base across construction, environmental, and steel markets provides some demand stability.

Pitch Summary:
Other top contributors in Q3 included Red Rock Resorts, US Lime & Minerals and Ducommun. Red Rock Resorts, a casino operator controlling over half the Las Vegas locals market, continues to benefit from broad fundamental strength, which is underpinning steady and stable growth.

BSD Analysis:
The manager identifies Red Rock Resorts as a top contributor, highlighting the company's dominant position controlling over half the Las Vegas locals casino market. This represents a compelling regional gaming monopoly with significant barriers to entry in the Las Vegas locals market. The company benefits from broad fundamental strength in its core market, which underpins steady and stable growth according to the manager. Red Rock's focus on the locals market provides more predictable cash flows compared to tourist-dependent Strip properties, as local customers tend to be more consistent and less economically sensitive. The company's market-leading position in this segment creates pricing power and operational leverage. The fundamental strength mentioned suggests the Las Vegas locals market remains healthy despite broader economic uncertainties.

Pitch Summary:
Nuclear fuel and services provider Centrus Energy is benefiting from renewed interest in nuclear power in the US to support growing power demand tied to the AI boom. Centrus is a nuclear fuel broker with burgeoning enrichment capabilities, positioning it well as the US seeks to maintain domestic energy independence.

BSD Analysis:
The manager presents Centrus Energy as benefiting from a powerful secular trend - the intersection of AI-driven power demand growth and nuclear energy renaissance. The investment thesis is built on the company's dual role as both a nuclear fuel broker and emerging enrichment capability provider. This positioning is particularly strategic as the US prioritizes domestic energy independence and nuclear power experiences renewed interest. The AI boom is creating unprecedented electricity demand, making nuclear power increasingly attractive as a reliable, carbon-free baseload energy source. Centrus appears well-positioned to capitalize on this trend through its fuel supply chain expertise and developing enrichment capabilities. The domestic energy independence angle adds a geopolitical tailwind to the fundamental growth story.

Pitch Summary:
Our top individual contributors in Q3 were Mr. Cooper Group and Centrus Energy. Shares of mortgage servicing company Mr. Cooper Group rose as its acquisition by Rocket Companies closed as the quarter concluded. Investor sentiment has also been buoyed by the Fed's recent rate cut, which should give a boost to housing and refinancing demand in the period ahead.

BSD Analysis:
The manager highlights Mr. Cooper Group as a top contributor during Q3, benefiting from its acquisition by Rocket Companies which closed during the quarter. The investment thesis centers on the company's position as a mortgage servicing provider that stands to benefit from Federal Reserve rate cuts. Lower interest rates are expected to stimulate housing market activity and increase refinancing demand, which directly benefits mortgage servicers like Mr. Cooper through higher transaction volumes. The acquisition by Rocket Companies provides additional strategic value and validation of the business model. The timing appears favorable given the Fed's accommodative monetary policy stance. This represents a classic interest rate-sensitive financial services play positioned for a lower rate environment.

Pitch Summary:
Equitable is transitioning from a life insurance company to a more diversified financial company, which should result in a better earnings, profitability and cash-generation profile — which we don't believe is reflected in the current valuation.

BSD Analysis:
The manager initiated a position in Equitable Holdings, viewing the company as undervalued during its strategic transformation. The investment thesis centers on Equitable's transition from a traditional life insurance company to a more diversified financial services firm. This business model evolution is expected to improve the company's earnings quality, profitability metrics, and cash generation capabilities. The manager believes the market has not yet recognized the value creation potential from this strategic shift, creating an attractive entry point. The position represents a transformation play on a financial services company repositioning for improved returns and growth. The timing appears opportunistic given the valuation disconnect between current share price and the improved business profile expected from diversification. This reflects confidence in management's execution of the strategic transition and the resulting financial benefits.

BSD Analysis:
The manager initiated a position in Zoetis, the leading animal health company, during a period of share price weakness. The investment thesis highlights Zoetis' market leadership position in both companion animal (pets) and livestock segments with a diversified product portfolio. The company's multiple growth drivers and strong pipeline for addressing undertreated pet conditions provide long-term expansion opportunities. Recent concerns about one of the company's arthritis drugs for dogs created a buying opportunity below the manager's intrinsic value estimate. This represents a quality growth play on the expanding pet care market and agricultural productivity trends. The manager appears confident in Zoetis' competitive positioning and innovation capabilities despite near-term product concerns. The timing reflects opportunistic value creation during temporary market pessimism about a specific product issue.

Pitch Summary:
Thermo Fisher Scientific is a leader in the medical tools and diagnostics space. We believe it is a well-run business that is structurally advantaged to take market share given the scale and breadth of its product portfolio. Against the backdrop of a slowdown in its end markets, we capitalized on a depressed share price to add the position to the portfolio.

BSD Analysis:
The manager initiated a position in Thermo Fisher Scientific, viewing the company as a market leader in medical tools and diagnostics with structural competitive advantages. The investment thesis emphasizes the company's scale and broad product portfolio as key differentiators that enable market share gains over time. The manager sees Thermo Fisher as a well-managed business with strong fundamentals despite facing temporary headwinds from end market weakness. The timing appears opportunistic, with the team capitalizing on depressed valuations caused by cyclical softness rather than fundamental deterioration. This represents a quality growth play on a dominant player in the life sciences tools sector. The manager appears confident in the company's ability to outperform through cycles given its competitive moat and operational excellence. The position reflects a contrarian approach to buying quality during temporary weakness.

Pitch Summary:
Transportation, e-commerce and business services company FedEx has materially cut its structural costs and has plans for further cuts — which we think could result in a more efficient and profitable parcel business as volumes recover in the period ahead. The company's LTL (less-than-truckload) business is the industry's largest by revenue and has the second-highest margins — and FedEx plans to spin it off in June 2026, which will subsequently give us exposure to a high-quality business positioned for growth as industrial production improves. FedEx shares have been pressured recently amid an extended freight recession — we capitalized on the opportunity to initiate a position in a high-quality business with an attractive long-term growth outlook at a compelling discount to its intrinsic value.

BSD Analysis:
The manager initiated a position in FedEx during Q3, viewing the company as undervalued amid a freight recession. The investment thesis centers on FedEx's significant structural cost reductions and operational efficiency improvements that should drive profitability as volumes recover. The upcoming spin-off of the LTL business in June 2026 is seen as a value catalyst, as it will separate the industry's largest LTL operation by revenue with second-highest margins. The manager believes the market is overlooking FedEx's long-term growth potential and competitive positioning in transportation and logistics. The timing appears opportunistic, with shares trading at a discount to intrinsic value due to cyclical headwinds. The thesis relies on industrial production recovery driving volume growth and the realization of cost-cutting benefits. This represents a classic value play on a quality franchise during a temporary downturn.

Pitch Summary:
Greggs is a vertically integrated food-on-the-go operator with over 2,650 shops across the UK. Greggs sells products which are low ticket, consumed immediately, and often repurchased during the day. The company's strong brand and differentiated business model have created loyal customers and long-term market share gains. Elevated cost inflation and growth investments have coincided with a demand slowdown, weighing on the near-term outlook and pressuring the stock. While sales growth and margins are likely to take a step back in the interim, given investments being made across the business (supply chain, innovation, employees, channels/partnership), we think the company has a long runway for new store openings. The company is cresting the peak of their supply chain investment cycle this year, management remains disciplined, and they are in an excellent financial position with cash flow set to inflect thereafter. We view the valuation as too low relative to their long-term prospects.

BSD Analysis:
FMI presents a contrarian view on Greggs, seeing temporary headwinds as creating an attractive entry point for a dominant UK food-on-the-go retailer. The manager emphasizes the company's unique vertically integrated model and strong brand loyalty, which have driven consistent market share gains over time. The investment thesis acknowledges near-term pressure from cost inflation and demand slowdown but positions these as cyclical challenges rather than structural issues. FMI highlights the company's strategic investments in supply chain, innovation, and employee development as positioning Greggs for accelerated growth once the current investment cycle peaks. The manager sees significant runway for new store expansion, supported by the company's proven ability to generate attractive returns on invested capital. With management maintaining disciplined capital allocation and the company's strong financial position, FMI expects cash flow inflection as supply chain investments moderate. The valuation appears compelling relative to the company's long-term growth prospects and dominant market position in the UK food-on-the-go segment.

Pitch Summary:
Becton Dickinson is a medical supply and device company, selling low-cost medical essentials. Products include vascular access devices, pre-fillable syringes, and catheters, to name a few. Becton is the leader in most of its product lines and often competes in oligopoly market structures. Their management team has been executing on a strategy to grow and simplify the business. This has been successful but is obscured by noise in the financials caused by the pandemic, portfolio actions, and other temporary factors, providing us with an opportunity to buy a quality business at an attractive price. We believe execution on the company's growth strategy and pending business separation will unlock value, with management targeting over 5% annual organic revenue growth and continued margin expansion in the coming years. Manufacturing scale is a key competitive advantage, with the company manufacturing billions of devices annually. Driven by healthcare utilization, the business is durable. Post their separation of biosciences and diagnostics solutions business in 2026, ~90% of revenue is recurring in nature (consumables). The valuation is attractive given the company's defensive attributes and growth potential.

BSD Analysis:
FMI identifies Becton Dickinson as a high-quality medical device leader trading at a discount due to temporary financial noise obscuring underlying business strength. The manager emphasizes BD's dominant market positions across multiple product categories, often operating in oligopolistic structures that provide pricing power and competitive moats. The investment thesis centers on management's successful execution of a growth and simplification strategy, with the upcoming 2026 business separation serving as a key catalyst for value realization. FMI highlights the company's massive manufacturing scale as a sustainable competitive advantage, producing billions of devices annually with significant barriers to entry. The manager projects attractive organic growth of over 5% annually combined with margin expansion, supported by durable healthcare utilization trends. Post-separation, the business model becomes increasingly attractive with 90% recurring revenue from consumables, providing predictable cash flows and defensive characteristics. FMI views current valuation as compelling given the combination of defensive attributes, growth potential, and upcoming corporate actions that should unlock shareholder value.

Pitch Summary:
OneMain is a scale leader in nonprime personal lending. Although they have a messy corporate history, our research suggests that in most key areas they are superior to their peers. We believe with a few years of clean results and an improved macro environment, this company could be reframed as a differentiated, high-quality financial. Given organic growth opportunities in personal lending, and newer areas such as credit card and direct auto, we believe they can grow organically in the mid-single digits with operating leverage, while at the same time returning significant capital through a large dividend and episodic buybacks. Although the current macro environment has stressed their core consumer and pressured net charge offs, we believe the income statement alone provides sufficient protection from an adverse outcome in nearly all reasonable scenarios, with further protection on the balance sheet in a tail risk scenario. The macro backdrop has given us the opportunity to own this industry leading business at an attractive valuation.

BSD Analysis:
FMI presents a compelling turnaround thesis for OneMain Holdings, positioning it as a misunderstood leader in nonprime personal lending. The manager emphasizes OneMain's superior competitive positioning despite its troubled corporate history, suggesting the market has not recognized the company's operational improvements. The investment case centers on multiple growth vectors including traditional personal lending, credit cards, and direct auto financing, with management targeting mid-single digit organic growth complemented by operating leverage. FMI highlights the company's robust capital return policy through dividends and share buybacks as an additional value driver. While acknowledging current macro headwinds that have pressured charge-offs, the manager expresses confidence in the company's financial resilience across various stress scenarios. The thesis reflects a classic value opportunity where temporary macro pressures have created an attractive entry point for a market-leading franchise. FMI's emphasis on the company's defensive characteristics and multiple layers of downside protection suggests a risk-adjusted approach to this cyclical financial services play.

Pitch Summary:
Greggs is a vertically integrated food-on-the-go operator with over 2,650 shops across the UK. Greggs sells products which are low ticket, consumed immediately, and often repurchased during the day. The company's strong brand and differentiated business model have created loyal customers and long-term market share gains. Elevated cost inflation and growth investments have coincided with a demand slowdown, weighing on the near-term outlook and pressuring the stock. While sales growth and margins are likely to take a step back in the interim, given investments being made across the business (supply chain, innovation, employees, channels/partnership), we think the company has a long runway for new store openings. The company is cresting the peak of their supply chain investment cycle this year, management remains disciplined, and they are in an excellent financial position with cash flow set to inflect thereafter. We view the valuation as too low relative to their long-term prospects.

BSD Analysis:
FMI presents Greggs as a compelling UK food retail story trading at a temporary discount due to near-term margin pressure and demand softness. The investment thesis highlights Greggs' differentiated vertically integrated model, strong brand loyalty, and defensive characteristics of low-ticket, frequently purchased items. The manager views current headwinds from cost inflation and growth investments as temporary, creating an attractive entry point for a business with significant expansion runway. FMI emphasizes the company's disciplined management and strong financial position, with supply chain investments peaking in 2025 and cash flow expected to inflect positively thereafter. The pitch reflects confidence in Greggs' long-term market share gains and store expansion potential across the UK. This represents a classic contrarian value play on a quality retailer experiencing cyclical pressures, with FMI betting on operational leverage as investments mature and demand normalizes.

Pitch Summary:
Becton Dickinson is a medical supply and device company, selling low-cost medical essentials. Products include vascular access devices, pre-fillable syringes, and catheters, to name a few. Becton is the leader in most of its product lines and often competes in oligopoly market structures. Their management team has been executing on a strategy to grow and simplify the business. This has been successful but is obscured by noise in the financials caused by the pandemic, portfolio actions, and other temporary factors, providing us with an opportunity to buy a quality business at an attractive price. We believe execution on the company's growth strategy and pending business separation will unlock value, with management targeting over 5% annual organic revenue growth and continued margin expansion in the coming years. Manufacturing scale is a key competitive advantage, with the company manufacturing billions of devices annually. Driven by healthcare utilization, the business is durable. Post their separation of biosciences and diagnostics solutions business in 2026, ~90% of revenue is recurring in nature (consumables). The valuation is attractive given the company's defensive attributes and growth potential.

BSD Analysis:
FMI identifies Becton Dickinson as a high-quality medical device leader trading at a discount due to temporary financial noise from pandemic effects and portfolio restructuring. The investment thesis centers on BD's dominant market positions in essential medical consumables, supported by oligopolistic competitive dynamics and massive manufacturing scale. Management's strategic focus on growth and simplification should drive 5%+ organic revenue growth and margin expansion, while the pending 2026 business separation will create a more focused, recurring revenue model. FMI emphasizes the defensive nature of healthcare utilization and BD's mission-critical products, providing earnings stability and predictable cash flows. The manager views current valuation as attractive relative to the company's competitive moats and long-term growth prospects. This represents a classic FMI investment in a quality compounder temporarily obscured by one-time factors, offering both defensive characteristics and meaningful upside potential as the business simplifies and execution improves.

Pitch Summary:
OneMain is a scale leader in nonprime personal lending. Although they have a messy corporate history, our research suggests that in most key areas they are superior to their peers. We believe with a few years of clean results and an improved macro environment, this company could be reframed as a differentiated, high-quality financial. Given organic growth opportunities in personal lending, and newer areas such as credit card and direct auto, we believe they can grow organically in the mid-single digits with operating leverage, while at the same time returning significant capital through a large dividend and episodic buybacks. Although the current macro environment has stressed their core consumer and pressured net charge offs, we believe the income statement alone provides sufficient protection from an adverse outcome in nearly all reasonable scenarios, with further protection on the balance sheet in a tail risk scenario. The macro backdrop has given us the opportunity to own this industry leading business at an attractive valuation.

BSD Analysis:
FMI presents a compelling turnaround thesis for OneMain Holdings, positioning it as a misunderstood leader in nonprime personal lending. The manager acknowledges the company's troubled past but emphasizes superior operational metrics versus peers and sees potential for multiple expansion as execution improves. The investment case centers on organic growth diversification into credit cards and auto lending, combined with disciplined capital allocation through dividends and buybacks. FMI views current macro headwinds as temporary, creating an attractive entry point for a business with defensive characteristics. The thesis relies on OneMain's scale advantages and the manager's confidence in downside protection through both income statement resilience and balance sheet strength. This contrarian bet reflects FMI's value-oriented approach during a period of consumer stress. The pitch demonstrates patience for a multi-year rerating story in a challenged but defensible niche.

Pitch Summary:
We initiated a position in Oracle, a leader in cloud infrastructure and enterprise software. Strong growth in the cloud and applications is supported by demand, AI innovation, and partnerships such as its OpenAI agreement. With a large installed base and expanding cloud adoption, Oracle is well positioned to capture rising software and infrastructure demand.

BSD Analysis:
The fund initiated a new position in Oracle based on its leadership position in cloud infrastructure and enterprise software. The investment thesis centers on Oracle's strong growth in cloud and applications, driven by robust demand, AI innovation, and strategic partnerships including the high-profile OpenAI agreement. The manager highlights Oracle's large installed base as a competitive advantage, providing a foundation for cloud migration and expansion opportunities. The fund views Oracle as well-positioned to benefit from the broader trend of expanding cloud adoption across enterprises. The emphasis on AI innovation suggests Oracle is successfully integrating artificial intelligence capabilities into its software and infrastructure offerings. The OpenAI partnership specifically positions Oracle to capitalize on the growing demand for AI infrastructure and services. The manager believes Oracle can capture rising software and infrastructure demand, indicating confidence in the company's ability to grow both existing and new customer relationships in an expanding market.

Pitch Summary:
We initiated a position in Toast, a leader in cloud-based restaurant technology serving a large, under-penetrated market. Toast provides an integrated platform for point-of-sale, payments, operations, and guest engagement, helping restaurants improve efficiency, streamline workflows, and enhance the customer experience. Expansion into enterprise and international markets, along with a strong recurring revenue model, position Toast for profitable growth potential.

BSD Analysis:
The fund initiated a new position in Toast based on its leadership position in cloud-based restaurant technology within a large, under-penetrated market opportunity. The investment thesis focuses on Toast's comprehensive integrated platform that addresses multiple restaurant operational needs including point-of-sale, payments, operations, and guest engagement. The manager emphasizes Toast's value proposition of helping restaurants improve efficiency, streamline workflows, and enhance customer experience, which should drive customer retention and expansion. The fund highlights Toast's expansion into enterprise and international markets as key growth drivers that can significantly expand the addressable market beyond its core small-to-medium restaurant base. The strong recurring revenue model provides predictable cash flows and high customer lifetime value. The manager views Toast as well-positioned for profitable growth, suggesting the company has reached sufficient scale to generate meaningful margins while continuing to invest in growth initiatives.

Pitch Summary:
We initiated a position in Advanced Micro Devices, a leading provider of high-performance computing and AI solutions. The company's sharpened product roadmap and momentum with major cloud providers highlight its growth prospects. Continued innovation in data center and AI accelerators, broad adoption across premium markets, and disciplined execution position Advanced Micro Devices as a compelling long-term investment in rapidly expanding technology markets.

BSD Analysis:
The fund initiated a new position in AMD based on its leadership position in high-performance computing and AI solutions. The investment thesis centers on AMD's refined product roadmap and growing traction with major cloud service providers, indicating strong demand visibility. The manager highlights AMD's continued innovation in data center and AI accelerators as key growth drivers, positioning the company to capitalize on the expanding AI infrastructure buildout. The emphasis on broad adoption across premium markets suggests AMD is successfully competing for high-value customers and applications. The fund views AMD's disciplined execution as a competitive advantage in capturing opportunities within rapidly expanding technology markets. This represents a strategic bet on AMD's ability to gain market share in the lucrative data center and AI chip segments. The timing of the investment appears aligned with the broader AI infrastructure investment cycle that has been driving semiconductor demand.

Pitch Summary:
Exit position: We exited Comcast (CMCSA) with the expectation that broadband growth will face continued challenges from fiber and fixed wireless trends.

BSD Analysis:
Miller/Howard exited their Comcast position due to structural headwinds facing the traditional cable broadband business model. The manager expects continued pressure on broadband subscriber growth as fiber-optic networks and fixed wireless alternatives gain market share. Fiber providers offer superior speeds and reliability, while wireless carriers are aggressively expanding 5G-based home internet services that compete directly with cable broadband. These competitive dynamics threaten Comcast's core revenue stream and pricing power in its most profitable segment. The exit reflects concerns about the company's ability to maintain broadband market share and pricing in an increasingly competitive landscape. Fixed wireless adoption has accelerated as carriers improve network coverage and speeds, providing consumers with viable alternatives to traditional cable. The manager likely views these trends as secular rather than cyclical, justifying a complete exit rather than a reduced position.

Pitch Summary:
New position: We initiated a position in Crown Castle (CCI) and expect the company's operating leverage to amplify US data demand tailwinds. Recent portfolio restructuring provides the company with relative advantages over cell tower peers.

BSD Analysis:
Miller/Howard initiated a new position in Crown Castle, viewing the company as well-positioned to benefit from increasing US data demand driven by AI and digital infrastructure growth. The manager believes CCI's recent portfolio restructuring has created competitive advantages relative to other cell tower operators. The thesis centers on operating leverage, where incremental revenue from new tenant additions should flow through at high margins given the fixed-cost nature of tower infrastructure. The timing appears strategic as the infrastructure space has underperformed broader markets, potentially creating an attractive entry point. Crown Castle's extensive tower portfolio and fiber network should benefit from the exponential growth in computational power and energy requirements for AI training. The manager expects data center expansion and 5G deployment to drive sustained demand for CCI's infrastructure assets. This position aligns with the portfolio's broader theme of benefiting from AI-driven infrastructure investment trends.