Investment Pitches

Pitch Summary:
Another example is Phinia Inc. (PHIN), an auto parts company spun off from Borg Warner in 2023 that makes fuel systems for vehicle manufacturers and the after-market. In our opinion, the market has been overly pessimistic on PHIN's outlook in the aftermath of President Trump's 'Liberation Day' announcements on tariffs, and large insider purchases by the company's CEO and two directors helped confirm our view. We believe PHIN has a variety of ways to win, especially relative to other companies in the auto parts category. In its legacy auto OEM business, PHIN is the third player in a three-company oligopoly that collectively controls roughly 80%-90% market share. The second-biggest player in this group has deemphasized this category since COVID-19, resulting in 4%-5% market share gains for PHIN. We believe this trend is likely to continue, and PHIN could control around 20% of the market by 2030, up from the mid-teens today. The company also has considerable exposure to the relatively stable after-market auto parts end-market, which accounts for approximately 40% of the company's revenues and close to half of its operating profits. We believe Phinia's after-market business could grow at a mid-single digit percentage CAGR with less cyclicality, as it is based on replacement of critical engine components. Additionally, PHIN has multiple revenue growth opportunities in under-penetrated end-markets such as aerospace, off-highway vehicles and hybrid vehicles that were overlooked as part of the much larger Borg Warner entity. Following PHIN's spin-off, management has executed on cost savings initiatives to improve margins and used free cash flow to consistently buyback stock and de-lever the balance sheet. PHIN is hitting on all three of the main capital allocation criteria we look for, which gives us even more confidence. Yet the stock is trading at a modest 6x EV/EBITDA. We believe PHIN is being valued by the market as an OEM auto parts manufacturer even though that exposure is less than 30% of revenue. As PHIN's after-market and industrial end-market exposures continue to grow, we think PHIN should receive a multiple closer to after-market auto parts and industrial companies that trade in the 8-12x EV/EBITDA range.

BSD Analysis:
Heartland identifies Phinia as a misunderstood spin-off trading at a significant discount to fair value. The fund emphasizes the market's overly pessimistic view following tariff concerns, while insider buying from the CEO and directors validates their contrarian stance. PHIN operates in a three-player oligopoly controlling 80-90% market share, with the company gaining 4-5% share as a competitor de-emphasized the business post-COVID. The aftermarket business provides stability with 40% of revenues and nearly half of operating profits, offering mid-single digit growth with lower cyclicality. Management has executed well on cost savings, share buybacks, and deleveraging since the spin-off. At 6x EV/EBITDA, PHIN trades like a pure OEM supplier despite less than 30% OEM exposure. The fund expects multiple expansion toward 8-12x as the market recognizes the higher-quality aftermarket and industrial mix, creating substantial upside potential.

Pitch Summary:
These are companies like Brady Corp. (BRC), a leading manufacturer of ID solutions and workplace safety products. In our view, the company is allocating capital wisely: They are actively buying back stock, consistently increasing dividends, and pursuing tuck-in acquisitions that complement their core business — all while maintaining low leverage. The company's core business is identification solutions for commercial products, allowing clients to trace and track parts. Brady's niche is printers and related consumables such as labels for rugged industrial markets. This has been a year of restructuring and cost cutting for Brady, which is part of the company's self-help story. Recently, management has called out strong growth in Aerospace and Data Center end markets, with the Data Center strength focused on BRC's wire marking business. We believe the company will begin to reap the benefits of these efforts starting next year, and in its most recent quarterly earnings announcement, Brady reported 2026 guidance that was above expectations. Still, the stock trades at a reasonable valuation. Our current price target for BRC would represent 18x our 2026 EPS estimate.

BSD Analysis:
Heartland presents a compelling bull case for Brady Corp based on strong capital allocation and operational improvements. The fund highlights Brady's disciplined approach to capital deployment through active share buybacks, consistent dividend increases, and strategic tuck-in acquisitions while maintaining low leverage. The company's restructuring and cost-cutting initiatives position it well for margin expansion as demand recovers. Management's guidance for 2026 exceeded expectations, indicating confidence in the turnaround strategy. The aerospace and data center end markets are showing strong growth momentum, particularly in wire marking solutions. At 18x 2026 EPS estimates, the valuation appears reasonable for a company executing self-help strategies in growing industrial niches. The combination of operational leverage from cost cuts and exposure to secular growth markets like data centers creates an attractive risk-reward profile.

Pitch Summary:
Lastly, we bought Hormel (HRL), a grocery mainstay with protein-heavy offerings, that is well-positioned for favorable consumer trends.

BSD Analysis:
Miller/Howard initiated a position in Hormel Foods, viewing the company as strategically positioned to benefit from evolving consumer dietary preferences toward protein-rich foods. As a well-established grocery staple with strong brand recognition, Hormel offers defensive characteristics typical of consumer staples companies. The company's protein-heavy product portfolio aligns with growing consumer awareness of protein's importance in nutrition and wellness trends. Hormel's diversified protein offerings, including processed meats, turkey products, and other protein-based foods, provide multiple avenues for growth as consumers increasingly prioritize protein content in their diets. The company's established distribution network and brand equity in the grocery channel provide competitive advantages and pricing power. As a dividend-paying consumer staples company, Hormel fits Miller/Howard's income-focused strategy while offering exposure to favorable long-term demographic and dietary trends. The defensive nature of food products provides portfolio stability during economic uncertainty.

Pitch Summary:
We initiated Equity Lifestyle Properties (ELS), a REIT with a nationwide portfolio of manufactured housing and RV properties, where it collects rent on the plots of land.

BSD Analysis:
Miller/Howard added Equity Lifestyle Properties to their portfolio, targeting a specialized REIT focused on manufactured housing and recreational vehicle properties. The company's business model centers on owning and leasing land plots rather than the structures themselves, which provides a unique value proposition in the real estate sector. This land-lease model typically generates stable, recurring rental income with lower maintenance capital requirements compared to traditional real estate ownership. The nationwide portfolio diversification reduces geographic concentration risk while capturing demographic trends toward affordable housing alternatives and recreational vehicle usage. ELS benefits from the structural housing affordability crisis, as manufactured housing provides a lower-cost homeownership alternative. The RV segment captures growing recreational travel trends and the rise of remote work enabling location flexibility. This REIT structure should provide consistent dividend income aligned with Miller/Howard's income-focused investment strategy.

Pitch Summary:
In energy, we bought ConocoPhillips (COP), a pure-play oil and gas producer nearing the end of a major investment cycle. Three large projects coming online are expected to generate $3 billion in annual cash flow, while reduced capital spending adds another $3 billion. Conoco also holds, in our view, the deepest remaining high-quality drilling inventory in the Permian Basin.

BSD Analysis:
Miller/Howard initiated a position in ConocoPhillips as the company approaches the completion of a significant capital investment cycle. The fund highlights three major projects coming online that are projected to generate $3 billion in annual cash flow, while simultaneously reducing capital expenditures will contribute an additional $3 billion to free cash flow generation. This dual benefit of increased production and lower capex creates a compelling cash flow inflection point. The managers view ConocoPhillips as holding the highest quality remaining drilling inventory in the prolific Permian Basin, providing long-term production visibility. The timing appears strategic, as the company transitions from a capital-intensive growth phase to a cash-generative phase. This positioning aligns with Miller/Howard's income-focused strategy, as the enhanced cash flows should support dividend growth and returns to shareholders. The pure-play exposure to oil and gas production offers direct commodity exposure without the complexity of integrated operations.

Pitch Summary:
Q2 provides secure, cloud-based digital banking software to regional and community financial institutions, offering retail and commercial digital banking, lending, and related solutions delivered as subscriptions. During the quarter, the company reported solid second-quarter results and raised its full-year outlook. However, shares detracted from performance as investors focused on several mixed signals: management noted higher-than-typical churn, a slight sequential dip in gross margin related to cloud-migration costs, and muted growth in discretionary services, all of which tempered enthusiasm around the otherwise strong subscription momentum and guidance raise. Further, we believe the stock experienced a valuation reset amid mixed sell-side signals and elevated headline valuation metrics, which added pressure late in the quarter. In our view, Q2's long-term fundamentals remain intact, as the company is well positioned to benefit from the continued digitization of banking and expanding relationships with larger institutions.

BSD Analysis:
The manager maintains a constructive long-term view on Q2 Holdings despite near-term stock underperformance and mixed quarterly signals. The investment thesis is anchored on Q2's strong positioning in the digital banking transformation trend, serving regional and community financial institutions with cloud-based software solutions. While the company delivered solid second-quarter results and raised full-year guidance, several concerning trends emerged including higher customer churn, margin pressure from cloud migration costs, and slower growth in discretionary services. The stock's underperformance appears driven by valuation concerns and mixed sell-side sentiment rather than fundamental deterioration. The manager emphasizes that Q2's long-term fundamentals remain strong, supported by the ongoing digitization of banking and expanding relationships with larger financial institutions. The subscription-based business model provides recurring revenue visibility and positions Q2 to benefit from continued digital transformation in the banking sector.

Pitch Summary:
Portillo's is a fast-casual restaurant chain best known for Chicago-style hot dogs and Italian beef sandwiches, operating company-owned locations across the United States. During the quarter, shares detracted from performance after the company reported weaker-than-expected fiscal second-quarter results. Management also reduced full-year guidance for same-restaurant sales, citing softer traffic and underperformance at some newer restaurants. In our view, concerns about slower same-store momentum, moderated development pace, and industry pricing/promotional pressure overshadowed the brand's longer-term expansion narrative.

BSD Analysis:
The manager expresses concerns about Portillo's near-term execution challenges despite the brand's long-term potential. The investment case has been undermined by weaker-than-expected second-quarter results and reduced full-year same-restaurant sales guidance. Key issues include softer traffic trends and underperformance at newer restaurant locations, suggesting potential challenges with site selection or market penetration strategies. The slower same-store sales momentum indicates pressure on the core business, while the moderated development pace suggests management is taking a more cautious approach to expansion. Industry-wide pricing and promotional pressures are creating additional headwinds for the restaurant sector. While the manager acknowledges Portillo's longer-term expansion narrative and brand strength, the near-term operational challenges and guidance reduction have overshadowed the growth story. The company's focus on Chicago-style cuisine provides differentiation but may limit broader market appeal.

Pitch Summary:
Wingstop is a global restaurant brand best known for its cooked-to-order, hand-sauced chicken wings. The company operates just over 2,000 locations worldwide, with most in the United States. Wingstop delivered strong fiscal second-quarter results, exceeding expectations despite facing tough comparisons from prior years. Sales momentum was supported by several factors, including new menu offerings, increased marketing, and continued growth in digital ordering, all of which have boosted brand awareness and profitability. However, shares declined later in the quarter following reports of softer sales trends, as the restaurant industry has experienced a growth slowdown due to broad based consumer price aversion and a rotation towards food-at-home. Despite the near-term industry slowdown, we continue to view Wingstop favorably for its long-term growth potential and near-term catalysts, including the rollout of Smart Kitchen initiatives and an enhanced loyalty program.

BSD Analysis:
The manager maintains a constructive view on Wingstop despite near-term industry headwinds affecting restaurant stocks. The investment thesis is supported by strong second-quarter results that exceeded expectations, demonstrating the company's operational resilience. Key growth drivers include new menu offerings, increased marketing effectiveness, and continued digital ordering penetration, which have enhanced brand awareness and profitability. While acknowledging the broader restaurant industry slowdown due to consumer price sensitivity and food-at-home trends, the manager focuses on Wingstop's differentiated positioning and upcoming catalysts. The Smart Kitchen initiatives and enhanced loyalty program represent near-term drivers that could accelerate growth and improve operational efficiency. The manager's long-term bullish stance reflects confidence in Wingstop's brand strength and ability to navigate current industry challenges. The company's global footprint of over 2,000 locations provides a solid foundation for continued expansion.

Pitch Summary:
Tutor Perini Corporation is a leading construction company providing a broad range of general contracting, construction management, and design-build services to private and public-sector clients globally. Tutor Perini's offerings include comprehensive project management—from pre-construction planning to detailed scheduling of labor, equipment, materials, and subcontractors—as well as self-performed construction services such as site preparation, concrete forming and placement, steel erection, electrical work, mechanical systems, plumbing, HVAC (heating, ventilation, and air conditioning), and fire protection. Shares of Tutor Perini contributed positively during the quarter after the company reported strong second-quarter results and increased its full-year 2025 earnings guidance. Management also reiterated expectations for a meaningful step-up in earnings in 2026, reflecting a supportive infrastructure spending backdrop and continued improvement in project execution, which together bolstered investor confidence.

BSD Analysis:
The manager presents a positive outlook for Tutor Perini based on strong operational execution and favorable industry dynamics. The investment thesis centers on the company's comprehensive construction capabilities spanning general contracting, construction management, and design-build services across both private and public sectors. Tutor Perini's extensive self-performed construction services provide operational control and margin opportunities across the construction value chain. The strong second-quarter results and raised full-year 2025 guidance demonstrate improving project execution and financial performance. Management's expectation for meaningful earnings growth in 2026 is supported by a favorable infrastructure spending environment and continued operational improvements. The combination of enhanced project execution capabilities and supportive industry tailwinds positions Tutor Perini for sustained earnings growth. The positive stock performance during the quarter reflects growing investor confidence in the company's turnaround story.

Pitch Summary:
Talen Energy is an independent power producer operating in the PJM market across the Mid-Atlantic and Midwest, where constrained supply and rising demand from data centers running AI workloads—particularly in northern Virginia—are supporting higher power prices and capacity. Talen also leverages its Cumulus digital infrastructure platform, which includes a hyperscale data center campus adjacent to its Susquehanna nuclear facility, providing carbon-free, low-cost energy directly from the plant and creating incremental revenue opportunities. While fiscal second-quarter operating results were modestly below estimates due to extended outages at Susquehanna, management reaffirmed full-year guidance, reinforcing visibility around future demand and grid revenues. The company also hosted an investor day in September, where management introduced its 2027 and 2028 outlook, which served as a positive catalyst for the stock.

BSD Analysis:
The manager's bull thesis for Talen Energy is built on favorable supply-demand dynamics in the PJM electricity market, particularly driven by AI data center demand in northern Virginia. The investment case is strengthened by Talen's unique positioning with its Cumulus digital infrastructure platform and adjacent hyperscale data center campus at the Susquehanna nuclear facility. This setup provides carbon-free, low-cost energy directly from the nuclear plant, creating differentiated revenue opportunities in the growing data center market. Despite modest second-quarter underperformance due to nuclear outages, management's reaffirmation of full-year guidance demonstrates confidence in the business outlook. The September investor day and introduction of 2027-2028 outlook provided positive catalysts and enhanced visibility into future earnings potential. The combination of constrained power supply, rising AI-driven demand, and Talen's strategic nuclear-powered data center assets positions the company well for sustained growth.

Pitch Summary:
Nebius is a leading provider of AI infrastructure and cloud-based solutions, delivering specialized GPU computing capabilities designed to support large-scale AI workloads for enterprise and research clients globally. We find Nebius compelling due to its impressive growth trajectory and expanding deployment of advanced Nvidia GPU technology within data centers across Europe and North America, positioning it as a key beneficiary of accelerating AI adoption. During the period, shares contributed positively, aided by continued demand for AI compute and a landmark multi-year agreement with Microsoft. Under this deal, Nebius will supply dedicated GPU infrastructure to power Microsoft's AI services, marking Nebius's first long-term contract with a major cloud service provider. We believe this partnership not only validates Nebius's technology and execution capabilities but also provides a significant revenue anchor, reinforcing its role as a critical player in the global AI infrastructure ecosystem.

BSD Analysis:
The manager presents a compelling bull case for Nebius based on its strategic positioning in the rapidly growing AI infrastructure market. The investment thesis centers on Nebius's specialized GPU computing capabilities and expanding deployment of advanced Nvidia technology across European and North American data centers. The landmark multi-year agreement with Microsoft represents a significant validation of the company's technology and provides crucial revenue visibility. This partnership marks Nebius's first long-term contract with a major cloud service provider, establishing it as a credible player in the global AI infrastructure ecosystem. The manager views Nebius as well-positioned to benefit from accelerating AI adoption trends. The positive stock performance during the quarter reinforces the investment thesis. The focus on specialized AI workloads for enterprise and research clients suggests a differentiated market position in the competitive cloud infrastructure space.

Pitch Summary:
German bottling company Krones weighed on performance after management struck a cautious tone with its 2026 outlook, citing macro pressures from tariffs and geopolitics. However, the company's operations and balance sheet remain strong, and the company continues to return capital to shareholders.

BSD Analysis:
Despite management's cautious 2026 outlook, the manager maintains confidence in Krones based on strong operational fundamentals and financial position. The cautious tone reflects external macro pressures from tariffs and geopolitical uncertainty rather than company-specific operational issues. Strong operations suggest Krones maintains market leadership in bottling and packaging equipment with resilient demand from beverage and food industries. The robust balance sheet provides financial flexibility to navigate challenging macro conditions while continuing strategic investments. Ongoing capital returns to shareholders demonstrate management's commitment to shareholder value creation and confidence in cash flow generation. The manager appears to view current weakness as a temporary disconnect between strong fundamentals and market sentiment. Krones' specialized industrial equipment business likely benefits from recurring revenue streams and high switching costs that provide defensive characteristics. The manager's maintained position suggests confidence in the company's ability to weather macro headwinds and resume growth as conditions normalize.

Pitch Summary:
Mexican consumer company Walmart de México (Walmex) also detracted after margins came in below expectations due to investments in technology, e-commerce and new stores, alongside higher labor costs. We believe Walmex's competitive position continues to improve, supported by a strong balance sheet and an increase in share buybacks.

BSD Analysis:
The manager views current margin pressure as temporary, driven by strategic investments that should strengthen Walmex's long-term competitive position. Investments in technology and e-commerce demonstrate management's commitment to digital transformation and omnichannel retail capabilities in Mexico's evolving consumer landscape. New store expansion indicates confidence in market growth opportunities and the company's ability to gain market share. Higher labor costs reflect broader inflationary pressures but also suggest Walmex is investing in employee retention and service quality. The strong balance sheet provides financial flexibility to continue strategic investments while maintaining shareholder returns through share buybacks. The manager's emphasis on improving competitive position suggests Walmex is successfully differentiating itself in Mexico's retail market. The combination of digital capabilities, physical expansion, and capital allocation discipline positions Walmex to capitalize on Mexico's growing consumer market despite near-term margin headwinds.

Pitch Summary:
Conversely, Indian bank HDFC Bank was the top detractor in Q3. Despite solid fundamentals, shares declined as the Indian market saw general weakness due to tariffs, policy concerns and weak consumption trends. Our thesis remains grounded in HDFC's underwriting discipline and banking technology leadership in one of the world's fastest-growing economies.

BSD Analysis:
Despite near-term headwinds, the manager maintains conviction in HDFC Bank based on superior operational fundamentals and structural growth opportunities. The emphasis on underwriting discipline suggests HDFC maintains conservative credit standards that should protect against loan losses during economic uncertainty. Banking technology leadership provides competitive advantages in customer acquisition, operational efficiency, and digital transformation in India's rapidly evolving financial services landscape. The manager views current weakness as temporary, driven by macro factors rather than company-specific issues. India's position as one of the world's fastest-growing economies provides a compelling long-term backdrop for banking sector expansion. HDFC's market leadership and operational excellence position it to capture disproportionate share of India's financial services growth. The manager's maintained conviction despite recent underperformance demonstrates confidence in the bank's ability to navigate short-term challenges while capitalizing on structural growth trends.

Pitch Summary:
Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading semiconductor foundry, rounded out the top contributors. The stock rose on strong demand for advanced manufacturing tied to AI and high-performance computing. We continue to view TSMC as a foundational enabler of modern computing with durable competitive advantages.

BSD Analysis:
The manager positions TSMC as an essential infrastructure play in the artificial intelligence and high-performance computing revolution. Strong demand for advanced manufacturing capabilities demonstrates TSMC's critical role in enabling next-generation technology applications. The characterization as a "foundational enabler of modern computing" suggests the manager views TSMC as having quasi-monopolistic positioning in cutting-edge semiconductor production. Durable competitive advantages likely stem from TSMC's technological leadership, manufacturing scale, and customer relationships with leading chip designers. The focus on AI-driven demand indicates the manager expects sustained growth as artificial intelligence applications proliferate across industries. TSMC's advanced node capabilities create significant barriers to entry and pricing power in the most profitable segments of semiconductor manufacturing. The manager's continued bullish stance reflects confidence in TSMC's ability to maintain technological leadership and capture disproportionate value from the AI semiconductor boom.

Pitch Summary:
Alibaba, China's largest e-commerce and tech giant, also contributed. Shares rose on strong revenue and profit growth, continued investment in AI and cloud, solid e-commerce execution and a substantial share repurchase program. The company is increasingly viewed as a leader in China's AI landscape, and the stock appreciated with improving sentiment.

BSD Analysis:
The manager views Alibaba as a key beneficiary of China's technology leadership, particularly in artificial intelligence and cloud computing. Strong fundamental performance across revenue and profit growth demonstrates the company's operational excellence despite challenging macro conditions. The manager emphasizes Alibaba's substantial share repurchase program as evidence of management's confidence in the business and commitment to shareholder returns. The positioning as a leader in China's AI landscape suggests significant competitive advantages and growth potential in emerging technologies. Solid e-commerce execution indicates the core business remains resilient while the company successfully diversifies into higher-growth segments. The improving sentiment around Chinese technology stocks provides a favorable backdrop for continued outperformance. The manager's bullish stance reflects confidence in Alibaba's ability to monetize its AI investments and maintain market leadership across multiple business lines.

Pitch Summary:
Dutch-headquartered biotechnology company uniQure was the top contributor in the quarter. Shares rallied after the company announced positive results from its Phase I/II study of high-dose AMT-130 for Huntington's disease, as results exceeded expectations and spurred optimism that the future value of potential royalty streams far outstripped prior expectations.

BSD Analysis:
The manager highlights uniQure as a top quarterly contributor following strong clinical trial results for AMT-130 in Huntington's disease treatment. The Phase I/II study results exceeded expectations, creating significant optimism around the company's pipeline value. The manager emphasizes that the positive data has fundamentally shifted expectations for future royalty streams, suggesting the market had previously undervalued the commercial potential of this gene therapy candidate. This represents a classic biotech value inflection point where clinical success validates the investment thesis. The focus on royalty stream potential indicates the manager views uniQure's business model as capital-efficient with strong cash flow generation prospects. The Dutch biotech's rally demonstrates how clinical milestones can rapidly unlock value in the gene therapy space. The manager's positioning suggests confidence in uniQure's ability to advance AMT-130 toward commercialization and capture meaningful market share in Huntington's disease treatment.

Pitch Summary:
Terex: This global manufacturer of industrial equipment specializes in aerial work platforms, waste and recycling solutions, materials processing machinery and equipment for the electric utility industry. The company has faced headwinds, including weak demand in its core segments, rising tariffs and interest expenses, and a soft European market. The company's Environmental Solutions segment has helped offset these headwinds, and we believe it will be a source of growth long term.

BSD Analysis:
The managers are taking a contrarian position in Terex during a challenging operating environment. The company is experiencing multiple headwinds including weak end-market demand, tariff pressures, higher interest costs, and European market softness. Despite these near-term challenges, the fund sees value in Terex's diversified industrial equipment portfolio. The managers are particularly optimistic about the Environmental Solutions segment, which appears to be a bright spot providing both current stability and future growth potential. This segment likely benefits from increasing focus on waste management and recycling infrastructure. The investment thesis appears to be based on the belief that current headwinds are cyclical and that Terex's diversified platform will benefit from eventual market recovery and secular growth in environmental solutions.

Pitch Summary:
Saia: This North American transportation company specializes in less-than-truckload (LTL) shipping, which is used for shipments that are too large for parcel delivery but too small for a full truckload. The trucking industry has been in a multi-year cyclical downturn. At the same time, the company has been expanding rapidly, which has led to higher costs and weaker profit margins. We believe these are short-term issues, and expansion should provide long-term potential.

BSD Analysis:
The fund managers view Saia as an attractive cyclical opportunity in the LTL transportation sector. They acknowledge the company is currently facing headwinds from both industry-wide cyclical pressures and company-specific expansion costs that are weighing on margins. However, they believe these challenges are temporary in nature. The managers see the current rapid expansion as an investment in future growth capacity that should drive long-term value creation once the cycle turns and operational efficiency improves. This represents a classic value play on a quality operator during a cyclical trough. The timing of the investment suggests confidence that the trucking cycle is approaching a bottom and that Saia's network expansion will position it well for the eventual recovery.

Pitch Summary:
MSCI Inc. is a financial technology company that serves asset owners, asset managers, and other financial intermediaries. It is probably best known for its flagship indexes, such as the MSCI ACWI and MSCI EAFE, but it also calculates many thousands of other custom indexes daily. Additionally, it offers clients a broad suite of risk management tools and data products. We believe that MSCI is a unique, high-quality business, anchored by its indexes, which are the standard for measuring the performance of global and international equity markets. MSCI is also in the early innings of creating standards around risk and return measurement for investors allocating to private assets. Importantly, organic growth at MSCI requires minimal capital investments, so margins are high and free cash flow is robust. Its management team is also excellent. CEO Henry Fernandez and President Baer Pettit have both been with MSCI for decades and built it from a small subsidiary within Morgan Stanley into the global franchise it is today. The company's compensation structure encourages both business growth and shareholder return, and management owns a meaningful stake in the company. Overall, we believe that MSCI has a long runway for growth as it's well-positioned to capitalize on secular industry trends, launch products that reach new customer groups, and broadly benefit from the growth of global capital markets.

BSD Analysis:
Madison initiated a position in MSCI, viewing it as a unique, high-quality financial technology franchise with dominant market positioning in global equity index standards. The manager emphasizes MSCI's asset-light business model that generates high margins and robust free cash flow with minimal capital requirements for organic growth. The company's flagship indexes like MSCI ACWI and MSCI EAFE serve as global benchmarks, creating a durable competitive moat. Management quality is highlighted as a key strength, with CEO Henry Fernandez and President Baer Pettit having decades of tenure and having transformed MSCI from a Morgan Stanley subsidiary into a global leader. The fund sees significant growth opportunities in private asset measurement standards, where MSCI is establishing early leadership. Madison believes MSCI is well-positioned to benefit from secular trends in global capital markets expansion and the growing need for sophisticated risk management tools. The combination of market-leading products, excellent management, and multiple growth vectors makes this an attractive long-term holding for the concentrated portfolio.