Investment Pitches

Pitch Summary:
APA (APA) is an independent E&P operating in the Midland and Delaware basins of the Permian and onshore Egypt, with exploration potential in Suriname, that trades at a discount despite lucrative natural gas financial contracts. We own APA for exposure to an energy market generating significant free cash flow in a perennially undersupplied environment. APA outperformed in the first quarter as oil prices surged following the Strait of Hormuz closure and the US-Israel conflict with Iran, with Brent crude peaking near $127. The company's natural gas financial contracts—which capture differentials between Waha, the Houston Ship Channel, Henry Hub, and global LNG—became significantly more valuable as supply disruptions drove wider basis differentials.

BSD Analysis:
Hotchkis & Wiley views APA Corporation as an undervalued energy play with attractive exposure to both oil and natural gas markets through strategic financial contracts. The investment thesis emphasizes APA's positioning in the high-quality Permian Basin acreage and its sophisticated natural gas hedging strategy that captures basis differentials across multiple pricing points. The fund believes the energy sector remains structurally undersupplied, supporting sustained free cash flow generation. APA's natural gas financial contracts proved particularly valuable during the recent geopolitical crisis, as supply disruptions widened basis differentials between regional pricing hubs and global LNG markets. The company's diversified geographic footprint, including operations in Egypt and exploration potential in Suriname, provides additional upside optionality. At 4.3% of net assets, APA represents the fund's second-largest holding, demonstrating strong conviction in the energy thesis.

Pitch Summary:
Kosmos Energy (KOS) is an independent E&P focused on offshore operations in the U.S. Gulf of Mexico, Ghana, and Equatorial Guinea, with development potential in the Mauritania/Senegal LNG project. We own Kosmos for its competitive advantage in offshore expertise, with the stock trading at a discount to the value of existing production. Kosmos outperformed in the first quarter as spot Brent crude oil neared $127 following the Strait of Hormuz closure. The company's offshore producing assets in the Gulf of Mexico, Ghana, and Equatorial Guinea benefited from the geopolitical risk premium on oil prices, while higher global LNG prices increased revenue from the recently-commissioned Greater Tortue Ahmeyim project.

BSD Analysis:
Hotchkis & Wiley maintains a bullish stance on Kosmos Energy, viewing it as an undervalued offshore E&P specialist trading below the value of its existing production assets. The fund's investment thesis centers on the company's competitive advantages in offshore drilling expertise and its diversified geographic footprint across high-quality basins. The recent geopolitical turmoil and Strait of Hormuz closure provided a significant catalyst, driving oil prices to $127/bbl and benefiting KOS's producing assets. The Greater Tortue Ahmeyim LNG project adds another revenue stream that benefits from elevated global LNG prices. The manager appears confident in the structural undersupply dynamics in global crude markets and believes geopolitical disruption risks remain underappreciated by the market. KOS represents the fund's largest holding at 4.6% of net assets, reflecting high conviction in the offshore energy thesis.

Pitch Summary:
Unity Software runs two tightly linked businesses: Create Solutions, its real-time 3D engine used to build games and interactive experiences where it has a leading share in mobile game creation; and Grow Solutions, its advertising and monetization network that helps game developers acquire users and optimize revenue. This gives Unity a dual revenue model where it earns subscriptions and usage fees from creators and then derives performance based advertising revenue from live games. Unity sold off aggressively when Google unveiled Project Genie, an AI-powered tool for generating virtual worlds. We see this as a net positive for Unity. AI accelerates game creation which increases the volume of content that ultimately needs Unity's engine. The core functions of a real-time engine - physics, interaction, performance, and playability - that actually make a game playable remain irreplaceable and form the core of Unity's moat. Importantly, once the game is developed, it also has to be marketed in order to generate revenue. Here, Unity's Grow division is incorporating AI through a product called Vector, which is improving targeting, bidding, and monetization for developers. Unity's largest competitor in this business, AppLovin, has successfully incorporated AI into their business and is growing at a rapid pace while making supernormal margins (>80% EBITDA margins). While Unity is behind, we believe the current management team is taking the right steps to position the company as a credible competitor to AppLovin. Recent results have been encouraging. Unity has been a turnaround play with multiple management changes, write-offs, delayed product launches, and high stock based compensation (SBC) expenses. We think each of these metrics is improving for the better and the business, with very high incremental margins as Vector scales, has the potential to do close to $1 billion in adj. EBITDA in two years. At our cost base this translates to a valuation of less than 4x EV/Revenue and 9x EV/adj. EBITDA.

BSD Analysis:
White Falcon views Unity as an attractive turnaround opportunity in the gaming and real-time 3D development space. The manager sees Unity's dual business model as a competitive advantage, combining Create Solutions (3D engine with leading mobile game creation share) and Grow Solutions (advertising and monetization network). Contrary to market fears about Google's Project Genie, the fund believes AI will actually benefit Unity by accelerating game creation and increasing demand for Unity's irreplaceable engine capabilities. The investment thesis hinges on Unity's Vector product improving advertising targeting and monetization to compete with AppLovin's AI-driven success. Despite acknowledging Unity's troubled past with management changes and execution issues, the manager believes current leadership is making progress. The valuation appears compelling at less than 4x EV/Revenue and 9x EV/EBITDA based on projected $1 billion adjusted EBITDA potential within two years.

Pitch Summary:
Oracle is reinventing itself from a traditional software company into a vertically integrated enterprise cloud provider, controlling the entire stack from infrastructure to database to enterprise applications. At its core, with its database and applications, Oracle is the 'system of record' which executives rely on as the 'single source of truth' within an enterprise. Much of the world's government, financial, healthcare, and retail data runs on Oracle databases, making the platform deeply mission critical and exceptionally sticky. Even in a world where agents autonomously execute business processes, enterprises will always need a 'single source of truth' to reconcile transactions, diagnose failures, and audit agent driven decisions. Today, Oracle is leveraging this foundation to transform into a specialized cloud and AI business. Their strategy is to use their 'data moat' to pull AI workloads onto their infrastructure business (OCI). Because so much of the world's mission critical information already lives in Oracle databases, the company is using that position to attract AI training and inference workloads onto OCI. It is now the fourth largest hyperscaler but rather than compete head on with AWS, Azure, or Google, Oracle is partnering with them and giving enterprises multicloud flexibility. Interestingly, Oracle's late arrival to the cloud has actually worked in its favor as it could incorporate the industry's best architectural practices for its specific workloads. Even though this strategic pivot is logical, the market remains skeptical because cloud and AI infrastructure require enormous amounts of upfront capital. Early results are encouraging. Oracle is already generating solid cloud margins at its current scale, growing OCI consumption, and accelerating both its database and enterprise application businesses. Oracle is also being creative and securing billions in upfront payments from customers who essentially pay for their own hardware in exchange for guaranteed access to 'compute'. We believe that the debt/EBITDA ratios for Oracle will be manageable as they build out this infrastructure and consolidated ROIC's will be more than sufficient. With OCI, the database, and its applications portfolio, Oracle now participates in three of the five layers of the AI stack. We established our position recently at 20x 2026E EPS, which we view as attractive given the company's quality and the potential upside. This is especially true when considering that its Remaining Performance Obligations (RPO) - contracted but not yet delivered revenue - point to accelerating growth in both revenue and earnings going forward.

BSD Analysis:
White Falcon presents a compelling bull case for Oracle's transformation from legacy software to integrated cloud and AI infrastructure provider. The manager emphasizes Oracle's unique positioning as the 'system of record' for mission-critical enterprise data across government, financial, healthcare, and retail sectors, creating exceptional customer stickiness. The investment thesis centers on Oracle's ability to leverage its database dominance to attract AI workloads to its Oracle Cloud Infrastructure (OCI), positioning it as the fourth-largest hyperscaler. The fund appreciates Oracle's strategic partnerships with AWS, Azure, and Google rather than direct competition, and notes the company's late cloud entry actually benefited from incorporating best practices. At 20x 2026E EPS, the valuation appears reasonable given Oracle's participation across three of five AI stack layers and strong Remaining Performance Obligations indicating accelerating growth. The manager believes debt levels will remain manageable despite heavy infrastructure investment requirements.

Pitch Summary:
Monolithic Power Systems Inc. provides semiconductor-based power electronics solutions to direct current as well as convert and control voltages for electronic systems. The company is benefiting from the broader enthusiasm for AI picks and shovels as investors position themselves for continued growth in data center spending. They reported a modest fourth-quarter beat and gave solid first-quarter guidance. The major surprise from the earnings call was that management raised its full-year enterprise data segment growth outlook, which boosted the stock by 21%.

BSD Analysis:
TimesSquare positions Monolithic Power Systems as a key beneficiary of the AI infrastructure buildout, specifically highlighting the company's role as an "AI picks and shovels" play in the data center ecosystem. The company's semiconductor-based power electronics solutions are critical components for managing power conversion and control in data centers, positioning it well for continued growth in data center spending. The modest fourth-quarter beat and solid first-quarter guidance demonstrate consistent execution, while the major surprise of raised full-year enterprise data segment growth outlook drove the 21% stock gain. This upward revision suggests management sees accelerating demand from hyperscale data center customers. Monolithic Power's specialized power management semiconductors benefit from the increasing power requirements and efficiency demands of AI workloads. The company's technical expertise and customer relationships in the data center market provide competitive advantages. The secular trend toward AI adoption and data center expansion creates a multi-year growth runway for power management solutions.

Pitch Summary:
Verisk Analytics Inc. provides data, analytics, and technology solutions to the insurance industry. While there were some concerns heading into fourth-quarter earnings, the company delivered solid results, a large share buyback, in-line forward guidance, and the rollout of AI-enabled solutions for clients. Its stock price dropped by -21% in the quarter due to AI disruption fears. The most important moat against AI disruption narrative is VRSK's proprietary data, and management has highlighted that 90% of its revenues are underpinned by unique data sources. What makes VRSK data unique is the ISO database to which P&Cs contribute and from which they underwrite risk. Verisk's competitive advantage isn't workflow automation. It's a multi-decade data aggregation network with regulatory embedding that creates compounding returns. Contributory data and statistical submissions scale Verisk's databases to tens of billions of records, improving model accuracy and actuarial outputs as more carriers contribute. This creates a data flywheel.

BSD Analysis:
TimesSquare presents a compelling defense of Verisk Analytics against AI disruption concerns, emphasizing the company's unique data moats and network effects. Despite the 21% decline driven by AI fears, the manager highlights Verisk's solid fourth-quarter results, large share buyback, and AI-enabled solution rollout. The key investment thesis centers on Verisk's proprietary ISO database, where property and casualty insurers contribute data and access risk underwriting information, creating a regulatory-embedded network with high switching costs. The manager emphasizes that 90% of revenues are underpinned by unique data sources, differentiating Verisk from pure workflow automation companies more vulnerable to AI disruption. The data flywheel effect, where more carrier contributions improve model accuracy and actuarial outputs, creates compounding competitive advantages. This multi-decade data aggregation network with tens of billions of records represents a significant barrier to entry. TimesSquare views the current weakness as a misunderstanding of Verisk's true competitive positioning and data advantages.

Pitch Summary:
Rising 24% was Curtis Wright Corp., a provider of engineered products, solutions, and services to aerospace, defense, commercial nuclear power, and industrial markets. Fourth quarter revenues beat sell-side expectations and that led to higher earnings. Their aerospace and defense business was a highlight, led by ground defense and naval defense.

BSD Analysis:
TimesSquare highlights Curtiss-Wright's strong execution with fourth-quarter revenues beating expectations and driving higher earnings, resulting in a 24% quarterly gain. The company's aerospace and defense segment performed particularly well, with strength in ground defense and naval defense applications. This performance reflects the broader defense spending increases and geopolitical tensions driving demand for military equipment and systems. Curtiss-Wright's engineered products and solutions serve critical applications across multiple end markets, providing diversification and stability. The company's technical expertise and long-standing customer relationships in defense and aerospace create competitive moats and recurring revenue streams. The nuclear power exposure provides additional diversification and potential upside from the renewed interest in nuclear energy. The strong quarterly performance demonstrates the company's ability to execute on its strategy and capitalize on favorable market conditions across its key verticals.

Pitch Summary:
Carpenter Technology Corp. manufactures, fabricates, and distributes specialty metals. Its share price jumped 25% after management confirmed a rebound in aerospace demand.

BSD Analysis:
TimesSquare views Carpenter Technology as well-positioned to benefit from the recovery in aerospace demand, as evidenced by the 25% quarterly gain following management's confirmation of improving market conditions. The company's specialty metals and alloys are critical components in aerospace applications, providing exposure to the cyclical recovery in commercial aviation. Carpenter's technical expertise in manufacturing high-performance materials creates barriers to entry and pricing power in specialized applications. The aerospace industry's recovery from pandemic lows represents a significant tailwind for specialty metals suppliers. The company's diversified end markets beyond aerospace provide some stability while the core aerospace exposure drives growth. Management's confidence in confirming the demand rebound suggests visibility into order patterns and customer commitments. The specialty metals market benefits from limited competition and high switching costs, supporting sustainable margins as volumes recover.

Pitch Summary:
EMCOR Group Inc. provides electrical, mechanical, construction, industrial, and facilities services. The stock price gained 21% on the heels of a strong fourth quarter. 2026 guidance surpassed Street estimates. The company continues to benefit from the booming demand for data center infrastructure. It is an essential "pick-and-shovel" play for the construction of massive data centers required by AI hyper-scalers. We trimmed the position on strength.

BSD Analysis:
TimesSquare recognizes EMCOR as a key beneficiary of the AI infrastructure buildout, positioning the company as an essential "pick-and-shovel" play in the data center construction boom. The strong fourth-quarter performance and 2026 guidance exceeding Street estimates demonstrate the company's ability to capitalize on this secular growth trend. The 21% quarterly gain reflects market recognition of EMCOR's strategic positioning in the AI infrastructure value chain. The company's diversified service offerings in electrical, mechanical, and construction services provide comprehensive solutions for complex data center projects. EMCOR's established relationships with hyperscale cloud providers and technical expertise create competitive advantages in this high-growth market. The manager's decision to trim the position on strength suggests disciplined portfolio management while maintaining exposure to this compelling theme. The data center infrastructure demand driven by AI adoption represents a multi-year growth opportunity for specialized contractors like EMCOR.

Pitch Summary:
Cencora Inc. sources and distributes pharmaceutical products. Reported mixed fiscal first quarter results as revenues for the US Healthcare business came in slightly below sell-side projections, and the International was in-line. Its stock price pulled back -7% and we added to the position on weakness.

BSD Analysis:
TimesSquare demonstrates conviction in Cencora by adding to the position following the 7% decline, suggesting they view the weakness as a buying opportunity. The mixed quarterly results with US Healthcare revenues slightly below expectations and International segment in-line indicate operational challenges but not fundamental deterioration. The manager's decision to increase the position on weakness reflects confidence in the company's long-term prospects and competitive positioning in pharmaceutical distribution. Cencora operates in an essential healthcare infrastructure role with significant barriers to entry and stable cash flows. The pharmaceutical distribution industry benefits from aging demographics and continued drug innovation driving volume growth. The company's scale and relationships with both healthcare providers and pharmaceutical manufacturers provide competitive advantages. TimesSquare's contrarian approach of adding on weakness suggests they believe the market has overreacted to near-term headwinds.

Pitch Summary:
Veeva Systems Inc. provides cloud-based software for the life sciences industry. Despite reporting strong fiscal fourth quarter results and offering guidance that surpassed Street expectations, its shares traded down by -21%. This stems from investor concerns regarding their Vault customer relationship management system. Vault CRM was launched in 2024 as they moved away from Salesforce.com and Veeva's management team has been conservative in customer migration estimates.

BSD Analysis:
TimesSquare appears to view the recent weakness in Veeva Systems as a temporary disconnect between fundamentals and market sentiment. The company delivered strong fourth-quarter results and provided guidance above Street expectations, indicating solid underlying business performance. The 21% decline appears driven by investor concerns about the Vault CRM transition rather than fundamental deterioration. Veeva's strategic move away from Salesforce.com to their proprietary Vault CRM platform represents a significant opportunity to capture more value from their customer relationships. Management's conservative approach to migration estimates suggests prudent planning and realistic expectations. The life sciences software market remains attractive with secular growth drivers from pharmaceutical innovation and regulatory requirements. Veeva's dominant position in this specialized vertical provides pricing power and customer stickiness. The current weakness may present an attractive entry point for a high-quality software company with strong competitive moats.

Pitch Summary:
Electronic broker Interactive Brokers Group Inc. edged forward by 7% over the quarter. Account growth and trading volume were contributing factors in their latest results.

BSD Analysis:
TimesSquare maintains a positive stance on Interactive Brokers based on the company's solid operational metrics and market position. The 7% quarterly gain reflects the company's ability to grow both account numbers and trading volumes, which are key drivers of revenue for electronic brokerage platforms. Interactive Brokers benefits from the secular trend toward self-directed investing and the growing adoption of electronic trading platforms. The company's technology-driven model provides operational leverage as increased trading activity flows through to higher margins. Account growth demonstrates the platform's competitive appeal and market share gains in the retail and institutional segments. Rising trading volumes suggest healthy client engagement and market participation. The combination of user growth and increased activity per user creates a favorable revenue trajectory for the electronic brokerage model.

Pitch Summary:
Cheniere Energy Inc. operates liquefied natural gas terminals in New Orleans and Corpus Christi. Heightened geopolitical tensions with Iran and structural damage to Qatari LNG facilities have sidelined 20% of global capacity, significantly tightening the supply-demand balance. This along with solid fourth-quarter earnings and increased forward guidance drove a 47% surge in the stock price. The company maintained elevated share buybacks and increased its authorization for the 2026–2030 period.

BSD Analysis:
TimesSquare presents a compelling bull case for Cheniere Energy driven by favorable supply-demand dynamics in the global LNG market. The manager identifies a significant supply shock with 20% of global LNG capacity offline due to geopolitical tensions and infrastructure damage, creating a tight market that benefits Cheniere's export terminals. The company's strong operational performance is evidenced by solid fourth-quarter earnings and management's confidence reflected in increased forward guidance. Cheniere's substantial 47% quarterly gain demonstrates the market's recognition of these favorable fundamentals. The company's capital allocation strategy appears shareholder-friendly, with elevated share buybacks and expanded authorization through 2030. Cheniere's strategic positioning as a key US LNG exporter provides exposure to global energy security themes and structural demand growth. The combination of supply constraints and strong execution positions the company well for continued outperformance.

Pitch Summary:
O'Reilly Automotive Inc., a specialty retailer of aftermarket automotive parts and accessories, edged forward 1%. The company reported a solid quarter, outpacing consensus estimates. Their do-it-for-me, professional-mechanic-focused business continues to perform well, posting double-digit sales growth while its do-it-yourself segment exhibited signs of stabilization.

BSD Analysis:
TimesSquare maintains a positive view on O'Reilly Automotive based on the company's solid quarterly performance that exceeded consensus estimates. The manager highlights the strength in O'Reilly's professional-mechanic-focused business segment, which delivered double-digit sales growth, demonstrating the company's ability to capture market share in the higher-margin professional channel. The stabilization of the do-it-yourself segment suggests the company is successfully navigating challenging consumer spending conditions. O'Reilly's dual-channel approach provides diversification and resilience across different customer segments. The company's consistent execution and market-leading position in automotive aftermarket parts positions it well for continued growth. The modest 1% quarterly gain reflects steady performance in a volatile market environment. TimesSquare's continued holding suggests confidence in the company's long-term competitive positioning and operational excellence.

Pitch Summary:
In the case of Visa (V) and Mastercard (MA), I am going to take an alternative approach since they are well known, and it is easy to see how they are great businesses. Instead, I am aiming to share the current points of contention and how an investor might become more comfortable with the uncertainty involved. Initially, our investment was made after the Credit Card Competition Act (CCCA) was reintroduced in January of this year. Effectively, Senators Durbin and Marshall are seeking to introduce manufactured competition to the payment rails ecosystem to limit the fees charged by Visa and Mastercard. Among the proposals, the bill mandates that large, card-issuing banks offer other unaffiliated networks for credit card transaction routing. This dual-network routing protocol would in theory allow merchants to choose to route transactions over whichever network had the lower interchange fee, which would result in fee compression (assuming no other frictions). The current model makes it such that transactions are routed solely via the branded network that the card issuer chooses, which is nearly always Visa or Mastercard. The card networks were not given their competitive positions from artificially imposed advantages. Visa and Mastercard control such a large market share (around 90% globally, ex-China) because they offer a structurally cost-effective alternative to cash payments, while further conferring their cost advantages to the ecosystem of merchants, acquirers, issuers, and customers through low fees. Jamie Dimon stated in his 2024 letter to JP Morgan shareholders that, 'the cost of processing cash, even for the largest retailers, is probably more than 4% of the payment.' Visa and Mastercard are clearly much more efficient for the ecosystem than cash and are able to increasingly reduce frictions as they scale. At the end of the day, we are left with two separate questions with regard to the CCCA. First, will it even be enacted? This is the third time in three years that the bill has been proposed, and in both prior instances it did not make the floor for a vote after heavy opposition from the banking industry. I think it is unlikely that the act will ultimately benefit consumers (although that is not necessarily disqualifying in Washington). Fifteen years later, the original Durbin Amendment is largely considered to have failed in lowering costs for consumers. Most of the reduced interchange fees benefited large retailers, who did not pass these savings on to the consumers in the form of lower prices. Free checking accounts, once funded with debit interchange fees, are also much less prevalent today than they once were. Banking is highly competitive, and fees exist to cover the cost of service. Whether it is debit or credit, the idea that a commoditized industry with ample capital would be able to collect significant economic rents over the long run is misguided. In my opinion, the CCCA would be poor policy that accomplishes little, and I would imagine that the failure to be passed so far illustrates a similar belief among lawmakers. Second, what is the likely impact to the card networks in the event that the bill is actually enacted? Luckily, the Durbin Amendment illustrates some historical precedent as well. While debit cards have had multiple routing networks for fifteen years, Visa and Mastercard have maintained their strong grip on the market. Although the interoperability requirements initially resulted in the two seeing some temporary share losses, they actually resumed taking share in the period following. Even with their routing exclusivity being breached by forcing network interoperability, Visa and Mastercard still offer the best proposition to the ecosystem by sharing the advantages of their scale with merchants and issuers. Having the largest network allows them to have the lowest costs, provide the most comprehensive transaction security, and continue to innovate with new payment methods. As a centralized authority, they also act as a collective bargaining intermediary between the thousands of banks and merchants. The fact that they have such a commanding market share is a structural feature of scaled intangible markets. In summary, I think the likelihood of the CCCA passing is low, and the likelihood of any long-term headwinds to the card networks is similarly low. If it is any consolation, both networks have diversified beyond the domestic market – less than a fifth of Visa's credit transaction volumes come from the United States, and less than a sixth of Mastercard's credit transaction volumes. Many international markets already have fee caps in place and are generally growing much more quickly. When it rains, it pours. A few weeks after the renewed interest in the CCCA, an article was published that hypothesized a fictional future where several business models would be obsolete within the next few years following the rise of agentic AI. For reasons that perhaps say more about the current market mood than the article's merit, this piece was shared enough that it was even being discussed on financial news networks, like Bloomberg and CNBC, and the companies mentioned were selling off on the threat of fictitious obsolescence. Of course, Mastercard and Visa were both mentioned under the reasoning that AI agents would route transactions to cheaper networks using cryptocurrencies and stablecoins. Setting that specific argument aside for now, both card networks have had to contend with emergent technologies over the past several years. First, it was the threat of the alternative card networks discussed above, next the threat of real time Account-to-Account (A2A) payments, then decentralized blockchain networks, and now agentic commerce. They have innovated to deal with the current threats each time successfully, and I think the tailwinds are still on their side. So, why is the agentic commerce threat not very potent? For one, it inaccurately ascribes costs and benefits. Interchange fees are borne by the merchant, and AI agents would be acting on behalf of consumers. Blockchain is immutable, meaning that transactions would not be easily reversed. This is a cost to the consumer by way of more costly fraud, and the benefits of cheaper interchange would not accrue to the customer (the Durbin Amendment's consequences say as much). It makes little sense to think that customer agents would choose the network that benefits the merchant and adds costs for the customer. This is not to say that agentic commerce is not on the horizon. It seems reasonable to me that agentic solutions could exist to automate certain transactions in cases of managing orders between multiple vendors, transactions that are recurring in nature, or transactions that are small enough to prioritize convenience over cost. However, why should we believe that Mastercard and Visa would not also capture this volume? Both already have agentic protocols in place and ready to be utilized. MasterCard's Agent Pay suite has tools that allows AI agents to make purchases on behalf of consumers in a secure, transparent, and rules-based protocol using the security and fraud protection of the underlying MasterCard network. Visa has created their own Trusted Agent Protocol (TAP) which authorizes agents in a similar way, meaning that both networks own the standards of agentic commerce. If you believe that agentic commerce will reduce transaction friction, as I think is likely, then it seems reasonable to think that Visa and Mastercard are actually the beneficiaries of the technological change. More broadly speaking, the market sometimes seems to only account for what is known today: the business as it exists currently, and the ever-present uncertainty of the future. Great businesses are not built on the specific products or services they provide, but the advantages that working with them provides. Visa and Mastercard own card networks, yet the organizations themselves are not limited to only being card networks. They are scaled, centralized authorities in the most fragmented financial network in the world. That will always have its value.

BSD Analysis:
The manager presents a strong bull thesis for Mastercard alongside Visa, emphasizing the company's resilient competitive position despite regulatory and technological headwinds. The investment case rests on Mastercard's dominant market share (~90% globally ex-China) derived from genuine operational efficiencies rather than regulatory protection, with processing costs significantly below cash handling expenses of ~4%. The manager dismisses regulatory risks from the Credit Card Competition Act, citing its repeated failure to advance and the poor outcomes of similar legislation like the Durbin Amendment, which failed to benefit consumers while Mastercard maintained market leadership. On AI disruption, the manager argues Mastercard is positioned as a beneficiary through its Agent Pay suite, which enables secure AI-driven transactions while maintaining network advantages. The thesis is bolstered by international diversification, with less than one-sixth of credit volumes from the US, providing exposure to faster-growing international markets. The manager views current uncertainties as creating an attractive entry point into a structurally advantaged business with durable competitive moats.

Pitch Summary:
In the case of Visa (V) and Mastercard (MA), I am going to take an alternative approach since they are well known, and it is easy to see how they are great businesses. Instead, I am aiming to share the current points of contention and how an investor might become more comfortable with the uncertainty involved. Initially, our investment was made after the Credit Card Competition Act (CCCA) was reintroduced in January of this year. Effectively, Senators Durbin and Marshall are seeking to introduce manufactured competition to the payment rails ecosystem to limit the fees charged by Visa and Mastercard. Among the proposals, the bill mandates that large, card-issuing banks offer other unaffiliated networks for credit card transaction routing. This dual-network routing protocol would in theory allow merchants to choose to route transactions over whichever network had the lower interchange fee, which would result in fee compression (assuming no other frictions). The current model makes it such that transactions are routed solely via the branded network that the card issuer chooses, which is nearly always Visa or Mastercard. The card networks were not given their competitive positions from artificially imposed advantages. Visa and Mastercard control such a large market share (around 90% globally, ex-China) because they offer a structurally cost-effective alternative to cash payments, while further conferring their cost advantages to the ecosystem of merchants, acquirers, issuers, and customers through low fees. Jamie Dimon stated in his 2024 letter to JP Morgan shareholders that, 'the cost of processing cash, even for the largest retailers, is probably more than 4% of the payment.' Visa and Mastercard are clearly much more efficient for the ecosystem than cash and are able to increasingly reduce frictions as they scale. At the end of the day, we are left with two separate questions with regard to the CCCA. First, will it even be enacted? This is the third time in three years that the bill has been proposed, and in both prior instances it did not make the floor for a vote after heavy opposition from the banking industry. I think it is unlikely that the act will ultimately benefit consumers (although that is not necessarily disqualifying in Washington). Fifteen years later, the original Durbin Amendment is largely considered to have failed in lowering costs for consumers. Most of the reduced interchange fees benefited large retailers, who did not pass these savings on to the consumers in the form of lower prices. Free checking accounts, once funded with debit interchange fees, are also much less prevalent today than they once were. Banking is highly competitive, and fees exist to cover the cost of service. Whether it is debit or credit, the idea that a commoditized industry with ample capital would be able to collect significant economic rents over the long run is misguided. In my opinion, the CCCA would be poor policy that accomplishes little, and I would imagine that the failure to be passed so far illustrates a similar belief among lawmakers. Second, what is the likely impact to the card networks in the event that the bill is actually enacted? Luckily, the Durbin Amendment illustrates some historical precedent as well. While debit cards have had multiple routing networks for fifteen years, Visa and Mastercard have maintained their strong grip on the market. Although the interoperability requirements initially resulted in the two seeing some temporary share losses, they actually resumed taking share in the period following. Even with their routing exclusivity being breached by forcing network interoperability, Visa and Mastercard still offer the best proposition to the ecosystem by sharing the advantages of their scale with merchants and issuers. Having the largest network allows them to have the lowest costs, provide the most comprehensive transaction security, and continue to innovate with new payment methods. As a centralized authority, they also act as a collective bargaining intermediary between the thousands of banks and merchants. The fact that they have such a commanding market share is a structural feature of scaled intangible markets. In summary, I think the likelihood of the CCCA passing is low, and the likelihood of any long-term headwinds to the card networks is similarly low. If it is any consolation, both networks have diversified beyond the domestic market – less than a fifth of Visa's credit transaction volumes come from the United States, and less than a sixth of Mastercard's credit transaction volumes. Many international markets already have fee caps in place and are generally growing much more quickly. When it rains, it pours. A few weeks after the renewed interest in the CCCA, an article was published that hypothesized a fictional future where several business models would be obsolete within the next few years following the rise of agentic AI. For reasons that perhaps say more about the current market mood than the article's merit, this piece was shared enough that it was even being discussed on financial news networks, like Bloomberg and CNBC, and the companies mentioned were selling off on the threat of fictitious obsolescence. Of course, Mastercard and Visa were both mentioned under the reasoning that AI agents would route transactions to cheaper networks using cryptocurrencies and stablecoins. Setting that specific argument aside for now, both card networks have had to contend with emergent technologies over the past several years. First, it was the threat of the alternative card networks discussed above, next the threat of real time Account-to-Account (A2A) payments, then decentralized blockchain networks, and now agentic commerce. They have innovated to deal with the current threats each time successfully, and I think the tailwinds are still on their side. So, why is the agentic commerce threat not very potent? For one, it inaccurately ascribes costs and benefits. Interchange fees are borne by the merchant, and AI agents would be acting on behalf of consumers. Blockchain is immutable, meaning that transactions would not be easily reversed. This is a cost to the consumer by way of more costly fraud, and the benefits of cheaper interchange would not accrue to the customer (the Durbin Amendment's consequences say as much). It makes little sense to think that customer agents would choose the network that benefits the merchant and adds costs for the customer. This is not to say that agentic commerce is not on the horizon. It seems reasonable to me that agentic solutions could exist to automate certain transactions in cases of managing orders between multiple vendors, transactions that are recurring in nature, or transactions that are small enough to prioritize convenience over cost. However, why should we believe that Mastercard and Visa would not also capture this volume? Both already have agentic protocols in place and ready to be utilized. MasterCard's Agent Pay suite has tools that allows AI agents to make purchases on behalf of consumers in a secure, transparent, and rules-based protocol using the security and fraud protection of the underlying MasterCard network. Visa has created their own Trusted Agent Protocol (TAP) which authorizes agents in a similar way, meaning that both networks own the standards of agentic commerce. If you believe that agentic commerce will reduce transaction friction, as I think is likely, then it seems reasonable to think that Visa and Mastercard are actually the beneficiaries of the technological change. More broadly speaking, the market sometimes seems to only account for what is known today: the business as it exists currently, and the ever-present uncertainty of the future. Great businesses are not built on the specific products or services they provide, but the advantages that working with them provides. Visa and Mastercard own card networks, yet the organizations themselves are not limited to only being card networks. They are scaled, centralized authorities in the most fragmented financial network in the world. That will always have its value.

BSD Analysis:
The manager presents a compelling bull case for Visa amid regulatory and technological uncertainties that have created an attractive entry point. The thesis centers on Visa's structural competitive advantages as a scaled payment network with ~90% global market share (ex-China), which stems from genuine cost efficiencies rather than artificial barriers. The manager argues that the Credit Card Competition Act is unlikely to pass given its poor track record and limited consumer benefits, while historical precedent from the Durbin Amendment shows Visa maintained market dominance even under dual-routing requirements. On the AI threat, the manager contends that Visa is actually positioned to benefit from agentic commerce through its existing Trusted Agent Protocol, making it a beneficiary rather than victim of technological change. The investment case is strengthened by Visa's international diversification, with less than 20% of credit volumes from the US, providing exposure to faster-growing markets. The manager views current uncertainties as temporary headwinds that have created an opportunity to invest in a high-quality business at attractive prices.

Pitch Summary:
Autodesk is the kind of business that gets less credit than it deserves because it is not flashy. It makes software for architects, engineers, and construction professionals. It has been in the business for over forty years. It is not, on the surface, a headline-grabbing story. But underneath the surface, Autodesk is one of the most durable software franchises in existence, and its transition over the past several years from a perpetual-license model to a subscription-based cloud platform has dramatically improved the predictability and quality of its earnings. We initiated our Autodesk position in late February when the stock was trading at a meaningful discount to our estimate of intrinsic value, driven by broader software sector weakness. The subscription transition is essentially complete. Free cash flow is growing. The company is beginning to layer AI capabilities — particularly in generating design and automated compliance checking — that should drive further expansion in average revenue per user. This is a classic Nightview holding: durable competitive moat, recurring revenue, and a long compounding runway.

BSD Analysis:
Nightview Capital views Autodesk as an underappreciated software franchise with exceptional durability despite its unglamorous positioning. The fund emphasizes Autodesk's 40-year track record serving architects, engineers, and construction professionals with mission-critical design software. The manager highlights the successful transition from perpetual licenses to subscription-based cloud services, which has dramatically improved earnings predictability and quality. The investment thesis centers on Autodesk's durable competitive moat in professional design software with high switching costs. The fund initiated the position in February 2026 during broader software sector weakness, acquiring shares at a significant discount to intrinsic value. Nightview sees compelling AI integration opportunities in automated design generation and compliance checking that should drive average revenue per user expansion. The manager positions Autodesk as a classic long-term holding with recurring revenue, competitive moats, and a long compounding runway. The investment reflects the fund's preference for durable, mission-critical software platforms trading at attractive valuations.

Pitch Summary:
Shopify is a business that the market has consistently struggled to value, and for understandable reasons: it does not fit neatly into a single category. It is part payments company, part software platform, part logistics network, and part financial services provider. The revenue mix has evolved steadily. Margins compress and expand as the company invests in new capabilities. For investors who want a clean, simple model, Shopify is frustrating. For investors who can look past the quarterly noise and see what the business is actually building, it remains exciting. The core thesis is simple: Shopify is becoming a commerce infrastructure layer for the modern internet. When a merchant starts a Shopify store, they are plugging into a system that handles payments, inventory management, fulfillment logistics, customer data, marketing automation, and increasingly, cross-border commerce. The platform is deeply sticky. The AI story at Shopify is also compelling. The company has been building AI-powered tools for merchants — product descriptions, ad copy, customer service automation, pricing optimization — that are genuinely useful, no just marketing. As AI capabilities become part of the core platform, Shopify becomes more valuable to more merchants, which expands the addressable market and deepens the moat. We added Shopify to the portfolio in mid-March and see it as a long-term compounder.

BSD Analysis:
Nightview Capital views Shopify as a misunderstood commerce infrastructure play that defies simple categorization. The fund acknowledges the market's valuation struggles with Shopify's hybrid model spanning payments, software, logistics, and financial services, but sees this complexity as a competitive advantage. The manager emphasizes Shopify's evolution into a comprehensive commerce infrastructure layer that creates deep merchant stickiness through integrated payments, inventory management, fulfillment, and marketing automation. The investment thesis centers on Shopify's expanding ecosystem that becomes more valuable as merchants plug into additional services. The fund highlights compelling AI integration with genuinely useful tools for product descriptions, customer service, and pricing optimization that expand the addressable market. Nightview added the position in March 2026, viewing Shopify as a long-term compounder despite quarterly volatility. The manager believes the platform's stickiness and expanding AI capabilities will drive sustained growth as e-commerce infrastructure becomes increasingly critical.

Pitch Summary:
If you want to understand why we are bullish on enterprise software despite the AI-disruption narrative, ServiceNow is the clearest expression of our thesis. The platform is, in the most literal sense, the workflow engine of large enterprises. It manages IT service requests, HR processes, legal requests, facilities management, and, increasingly, the cross-departmental orchestration that large organizations require to function. Roughly 85% of the Fortune 500 uses ServiceNow in some capacity. The average customer has expanded their usage year over year, a pattern that has persisted for years running. Our view is that AI does not threaten this business so much as it accelerates it. ServiceNow has been embedding AI capabilities — including agentic automation that can resolve IT tickets without human intervention — directly into its platform. Each AI feature gives customers more reason to deepen their reliance on the platform. The result is a flywheel: more AI features drive more workflow automation, which drives more data into ServiceNow's systems, which makes the AI smarter, which drives more expansion. We added ServiceNow to the portfolio in mid-March after the stock had sold off more than 20% from its highs of fears that AI would enable customers to build their own workflow tools. We find this thesis unpersuasive. The switching costs are enormous, the ecosystem deep, and the platform increasingly central to how enterprises operate. The selloff was, in our view, a gift.

BSD Analysis:
Nightview Capital positions ServiceNow as the definitive counter-argument to AI disruption fears in enterprise software. The fund emphasizes ServiceNow's role as the literal workflow engine for large enterprises, managing critical processes across IT, HR, legal, and facilities with 85% Fortune 500 penetration. The manager highlights consistent customer expansion patterns and views AI as an accelerant rather than a threat to the business model. ServiceNow's integration of agentic automation and AI-powered ticket resolution creates a powerful flywheel effect that deepens customer dependency. The fund added the position during a 20% selloff in March 2026, viewing market fears about AI enabling customer defection as fundamentally misguided. The investment thesis centers on enormous switching costs, deep ecosystem integration, and ServiceNow's increasingly central role in enterprise operations. The manager believes the market's indiscriminate selling of software stocks created an exceptional entry point for a mission-critical platform with expanding AI capabilities.

Pitch Summary:
Axon is not a software company in the way most people use that term, which is precisely why we think it is one of the most underappreciated businesses in our portfolio. It is the operating system of public safety in America and, increasingly, around the world. The company sells Tasers, body cameras, in-car cameras, and — this is the key — a cloud-based evidence management platform called Axon Evidence, which has become the de facto system of record for law enforcement agencies across the country. The software business alone is impressive: high recurring revenue, long contract durations, minimal churn, and a customer base — police departments and government agencies — that, once converted, essentially never leave. The hardware serves as a distribution mechanism for the software. As Axon expands into records management, computer-aided dispatch, and AI-powered video analysis, the addressable market expands dramatically. We initiated our position in Axon in late February as the stock corrected sharply in the broader software selloff. As the prices we paid, we were acquiring a business with roughly 30% annual revenue growth, expanding margins, and a near-monopoly position in its core market — for a valuation that reflected significant investor skepticism.

BSD Analysis:
Nightview Capital views Axon as a misunderstood technology platform disguised as a hardware company. The fund emphasizes Axon's transformation into the 'operating system of public safety' through its cloud-based evidence management platform, which creates powerful switching costs with government customers. The manager highlights the recurring revenue model with minimal churn from police departments and government agencies that rarely switch providers once implemented. Axon's expansion into records management, dispatch systems, and AI-powered video analysis significantly expands the addressable market beyond traditional hardware sales. The fund initiated the position during the Q1 2026 software selloff, acquiring shares at what they considered exceptional valuations despite 30% revenue growth and expanding margins. The investment thesis centers on Axon's near-monopoly position in law enforcement technology and the stickiness of government contracts. The manager believes the market's focus on short-term software sector fears created an opportunity to acquire a high-quality, mission-critical platform at a discount.