Investment Pitches

Pitch Summary:
Business Description: Leading provider of semiconductor design automation software and IP, enabling chip design, verification, and secure software development across AI, automotive, and hyperscaler markets. Thesis: Mission-critical supplier to the semiconductor and AI ecosystem, with durable double-digit revenue growth driven by rising chip complexity and AI workloads. FYQ3 Results: Revenue +14% ($1.6B) and EPS of $3.39 missed management's guidance. Backlog increased to $8.1B. Management guided F4Q25 EPS below expectations. What Happened: Stock fell 36% after reporting earnings due to weakness in the Design IP segment, BIS export restrictions disrupting China design activity, and challenges at a foundry customer. Edgewood's View: We believe the selloff was overdone and IP issue is narrower than investors fear. Management has taken steps to address, and we believe the IP segment can return to mid-teens growth in FY27, following a transition year in FY26. Resulting Action: Met with management immediately following earnings disappointment. Clarified ambiguous guidance and added 170bps to our position.

BSD Analysis:
Edgewood maintains conviction in Synopsys despite the significant 36% stock decline following disappointing earnings results. The fund views Synopsys as a mission-critical supplier to the semiconductor and AI ecosystem, providing essential design automation software and intellectual property that enables chip design and verification across high-growth markets including AI, automotive, and hyperscale computing. While Q3 results showed revenue growth of 14% and an increased backlog of $8.1 billion, earnings per share missed guidance due to weakness in the Design IP segment, export restrictions affecting China operations, and challenges at a foundry customer. Edgewood believes the market overreacted to what they view as temporary and addressable issues, arguing that the IP segment problems are narrower than feared and that management has implemented corrective measures. The managers expect the IP segment to return to mid-teens growth by fiscal 2027 following a transition year in 2026. Rising chip complexity and AI workloads should continue driving durable double-digit revenue growth over the long term. Following immediate post-earnings engagement with management to clarify guidance ambiguities, Edgewood significantly increased their position by 170 basis points, demonstrating strong conviction in the company's fundamental value proposition.

Pitch Summary:
Business Description: Leading producer (~90% market share) of photolithography machines used in semiconductor manufacturing. ASML's machines enable chips to become smaller and more power efficient every year. Thesis: Secular tailwinds (AI, robotics, cloud, electrification) will continue to drive demand for chips. ASML's EUV & High NA EUV machines continue to be essential equipment and will drive double digit revenue & earnings growth. Q2 Results: Revenue +41% (€7.7B), and EPS +47%. Reiterated FY2025 revenue & EPS guidance. What happened: Stock declined on 2026 revenue growth uncertainty. Edgewood's View: The negative stock reaction had nothing to do with ASML's competitive moat or the size of the market opportunity, rather it was a timing issue related to tariff uncertainty. Over a multi-year period we feel that ASML will compound revenue & earnings at a high teens rate. Resulting Action: Spoke with management. Did additional due diligence on ASML's technology moat. We added 50bps in late July.

BSD Analysis:
Edgewood maintains a bullish outlook on ASML, recognizing the company's near-monopolistic position with approximately 90% market share in photolithography equipment essential for semiconductor manufacturing. The fund's investment thesis is built on powerful secular tailwinds including artificial intelligence, robotics, cloud computing, and electrification trends that continue driving insatiable demand for more advanced semiconductors. ASML's extreme ultraviolet (EUV) and High Numerical Aperture EUV machines represent mission-critical technology that enables the industry's ongoing miniaturization and performance improvements. Despite recent stock weakness due to concerns about 2026 revenue growth timing, Edgewood views this as a temporary issue related to tariff uncertainty rather than any fundamental deterioration in ASML's competitive advantages or market opportunity. Strong Q2 results showing 41% revenue growth and 47% EPS growth demonstrate the underlying business momentum. The managers believe ASML can compound revenue and earnings at high-teens rates over multiple years, supported by their dominant technology moat. Following direct management engagement and additional due diligence on the company's technological advantages, Edgewood added 50 basis points to their position.

Pitch Summary:
Business Description: Leading provider of consumer credit analytics and scoring algorithms that is best known for the "FICO Score"—a three-digit metric used in a variety of consumer credit decisions. Thesis: FICO is the industry standard, used in 90%+ of consumer credit decisions across the US. There is an opportunity to proliferate scores beyond originations and close the Scores' price to value gap, specifically in mortgage and auto. FYQ3 Results: Revenue +20% and EPS +47%. Raised full year EPS. What Happened: Stock declined after FHFA Director Bill Pulte posted on X that government-sponsored enterprises (GSEs) could use an alternate score, creating headline risk around FICO's mortgage score moat and 2026 pricing. Edgewood's View: The market overestimated share-loss and pricing risk; we viewed management as having flexibility in how they wanted to approach Scores monetization and felt confident in the 20%+ multi-year EPS growth algorithm. Resulting Action: Added to the position throughout the quarter (250bps in total), with additions in the post Q3 earnings sell-off after numerous meetings with senior FICO management.

BSD Analysis:
Edgewood maintains strong conviction in Fair Isaac Corporation, viewing the company as the entrenched industry standard in consumer credit scoring with its FICO Score used in over 90% of US credit decisions. The fund's investment thesis focuses on FICO's dominant market position and the significant opportunity to expand score usage beyond loan originations into areas like mortgage and auto lending, which could help close the pricing gap relative to the value provided. Despite recent volatility triggered by regulatory headlines suggesting government-sponsored enterprises might consider alternative scoring models, Edgewood believes the market dramatically overestimated both market share loss and pricing risks. The managers view FICO's management team as having considerable flexibility in their monetization approach and remain confident in the company's ability to deliver over 20% annual EPS growth over multiple years. Strong quarterly results showing 20% revenue growth and 47% EPS growth, along with raised full-year guidance, reinforce their bullish outlook. Edgewood significantly increased their position by 250 basis points throughout the quarter, including purchases during post-earnings weakness, following extensive due diligence meetings with senior FICO management.

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

BSD Analysis:
Edgewood maintains a bullish stance on Eli Lilly, viewing the company as a dominant player in the massive diabetes and obesity markets that remain significantly underserved globally. The fund's thesis centers on Lilly's leadership position in GLP-1 therapies and their robust pipeline addressing multiple therapeutic categories with substantial unmet medical needs. Despite the stock's decline following disappointing Phase 3 ATTAIN-1 trial results for orforglipron, where weight loss came in at 12.4% versus expectations of 13-15%, Edgewood believes the market overreacted to a single data point. The managers argue that demographic factors influenced the results and that the totality of data from five clinical trials should still support regulatory approval. At approximately 20x 2026 estimated earnings following the selloff, Edgewood sees compelling value for a company they believe can compound earnings at over 20% annually for the next five years. The fund's conviction was reinforced through direct engagement with senior management at Lilly's headquarters, leading them to increase their position by 100 basis points.

Pitch Summary:
The company posted total revenue comfortably ahead of expectations as results show strength across the board. AI and cloud are leading the charge, driven by an acceleration of growth to 39% for Azure and the remaining performance obligation (RPO) rose 35%, both in constant currency terms. Those strong growth trends indicate that artificial intelligence is driving a new wave of demand and that momentum is building on the commercial side as businesses rush to digitalize and adopt AI-powered services. Microsoft is the key port of call for many. But not only that. Also, the 365 consumer and personal computing side (including Windows and Xbox) enjoyed accelerating growth showing Microsoft's appeal across its sprawling business. Consumer Products and consumer cloud services grew 21%, driven by 9% more subscribers. Even the legacy-division More Personal Computing grew revenues by 9% and operating income by 33% (in CC), driven by advertising (up 20%) and gaming. While investors have been concerned about Microsoft's ploughing billions into data centers and AI infrastructure, those results show that those investments are paying off, and that Microsoft is firing on all cylinders. While we have trimmed our positions mildly, we maintain our overweight and it remains our largest position.

BSD Analysis:
The manager maintains a strong bullish position on Microsoft based on broad-based strength across all business segments and successful AI infrastructure investments. The investment thesis emphasizes Microsoft's leadership in the AI-driven digital transformation, with Azure growth accelerating to 39% and RPO increasing 35% in constant currency. This demonstrates strong commercial momentum as businesses adopt AI-powered services, positioning Microsoft as the primary beneficiary of enterprise digitalization. Beyond cloud and AI, the company shows remarkable diversification with 365 consumer services growing 21% and even legacy Personal Computing segments delivering 9% revenue growth and 33% operating income growth. The strength in advertising (up 20%) and gaming further validates Microsoft's ecosystem approach. Despite investor concerns about massive data center and AI infrastructure investments, the results demonstrate these expenditures are generating strong returns. The manager views Microsoft as firing on all cylinders and maintains it as the portfolio's largest position despite mild trimming for risk management.

Pitch Summary:
The visit to BYD, the global leader in full-electric and hybrid vehicles, in China confirmed our investment case in full. The foundation of BYD's success lies in its deeply vertically integrated supply chain. BYD designs and manufactures key components in-house, enabling speed, control, and significant cost efficiencies. This combined with BYD's expertise in electronics and batteries (its origin as the world's largest mobile battery maker), gives it a unique edge in both performance and cost structure. With an estimated 15–25% cost advantage over legacy OEMs, BYD offers high-quality, competitively priced vehicles while sustaining gross margins comparable to best-in-class manufacturers like Toyota. In a segment where scale, integration, and battery tech determine winners, BYD stands out as the most complete and defensible EV platform globally. The stock price of the company undervalues the growth potential of the franchise.

BSD Analysis:
The manager presents a compelling bull case for BYD following a company visit to China that validated the original investment thesis. The core argument centers on BYD's deeply vertically integrated supply chain providing significant competitive advantages in the electric vehicle market. BYD's heritage as the world's largest mobile battery manufacturer gives it unique expertise in electronics and battery technology, translating to superior performance and cost structure. The company maintains an estimated 15-25% cost advantage over legacy automotive OEMs while achieving gross margins comparable to best-in-class manufacturers like Toyota. BYD's combination of scale, integration, and battery technology positions it as the most complete and defensible EV platform globally. The manager views the current stock price as undervaluing the franchise's substantial growth potential. This vertically integrated approach appears particularly advantageous in an industry where battery technology and manufacturing scale are key competitive differentiators.

Pitch Summary:
The latest quarterly results demonstrated again the lead of the company in the Ad-business and the success of it's business strategy. The Ad business continued to impress with revenues up 21% Y/Y. Going forward, Meta continues to see their ability to grow their revenue through a combination of driving up engagement and enhancing monetization driven thanks to improvements to their content recommendation systems that resulted in a 5% increase in time spent on Facebook, and 6% on Instagram. In particular, video time spent remains strong, with Instagram video time up 20% Y/Y globally. Clearly, Meta is leading the pack in advertising thanks to it's investments in AI and the improvements in ad-creation and management as well as growing user engagement. Given the latest results, we lifted our five-year revenue growth expectations from 10-12% to above 15% driven by faster user growth, increased time spent on the platforms and an improvement in ad performance/pricing. While next year PE rose from 21x to 28x since our entry into Meta, the growth outlook has improved significantly over that period, which leaves Meta with solid upside despite the outperformance since, according to our model.

BSD Analysis:
The manager maintains a bullish stance on Meta based on the company's dominant position in digital advertising and successful AI-driven engagement improvements. The investment thesis highlights Meta's 21% year-over-year advertising revenue growth and significant user engagement gains, with Facebook time spent up 5% and Instagram up 6%. Video consumption remains particularly strong with Instagram video time increasing 20% globally. Meta's AI investments are driving superior ad creation, management capabilities, and content recommendation systems that enhance monetization. The combination of faster user growth, increased platform engagement, and improved ad performance has prompted the manager to raise five-year revenue growth expectations from 10-12% to above 15%. Despite the stock's PE expansion from 21x to 28x, the significantly improved growth outlook supports continued upside potential. Meta's leadership position in AI-powered advertising appears sustainable and well-positioned for continued market share gains.

Pitch Summary:
We visited ASML and some of it's key business partners in the Netherlands in September. We meet with Investor Relations and Peter Vanoppen who heads development of High NA EUV, the next generation technology for producing the most advanced chips. High NA EUV is key for ASML's future growth, and the level and speed of adoption was a major concern for analysts and a major headwind for the stock in recent quarters. We came away from the discussion with Mr. Vanoppen with the view that is very well on track regarding reliability and demand, and as importantly, it is further ahead than EUV was at the same stage of the development resp. market introduction. High NA EUV will be adopted because of it's cost advantage, lower production risks and higher flexibility. If players stay for too long with EUV they lose the flexibility (productivity) from High NA EUV and might miss the ability to compete for the next generation of high-end chips. For the upcoming 2NM-chips there will already be some limitations from using EUV. This means at some point customers will hit a brick wall and then will need to move to High NA EUV. While there is hardly any doubt about the direction of travel, timing is more open and depends on many factors. Regarding competitive market position we came away from the visit strongly convinced that the competitive position of ASML is almost unassailable, at least for the next 10-15 years. While ASML thinks that Chinese competitors will eventually develop Lithography technology like EUV, that alone won't make them competitive in the high end because they would have to develop the entire eco-system of suppliers, which is almost impossible in the quality needed. Finally, the strive for shrink will continue and ASML has a clear roadmap of how to support that until at least 2040. More importantly, as far as we can see, ASML's High NA EUV (and potentially Hyper NA EUV) will be the key technologies to achieve that. Hence, we see sustained double digit growth for ASML for a long time.

BSD Analysis:
The manager presents a highly confident bull case for ASML following an extensive company visit and management meetings in the Netherlands. The investment thesis centers on ASML's next-generation High NA EUV lithography technology, which addresses previous investor concerns about adoption timing and competitive positioning. Management discussions with development head Peter Vanoppen revealed High NA EUV is ahead of schedule compared to previous EUV development timelines, offering superior cost advantages, lower production risks, and enhanced flexibility. The technology becomes essential for 2nm chip production, creating an inevitable migration path as customers face EUV limitations. ASML's competitive moat appears virtually unassailable for 10-15 years, as potential Chinese competitors would need to replicate an entire supplier ecosystem. The company maintains a clear technology roadmap through 2040, with High NA EUV and potential Hyper NA EUV positioning ASML for sustained double-digit growth in the semiconductor equipment market.

Pitch Summary:
Oracle reported exceptional Q1 FY26 results that included an unprecedented upgrade to cloud infrastructure growth guidance. Oracle's stock surged ~40% the next day —rare for a company of this scale—driven by transformational cloud business projections. The upgraded trajectory could make Oracle Cloud (OCI) equal or larger than Google Cloud Platform by FY29-30, representing a dramatic shift from Oracle's traditional database business to major cloud and AI infrastructure provider. The explosive growth is underpinned by massive contract wins, particularly in AI training and inferencing. Oracle signed four multi-billion-dollar contracts with three clients in Q1, including what analysts believe is a $30B annual contract with OpenAI. Remaining Performance Obligations (RPO) surged 359% to $455B, providing unprecedented visibility for future revenue streams of OCI. Given the massive upgrade of guidance and the unprecedented visibility that the large increase in RPO provides, we are substantially lifting our already optimistic EPS estimates for 2030. More importantly, Oracle has rapidly evolved from a traditional software company to a major cloud hyperscaler and AI infrastructure provider, with three original committed contracts supporting a growth trajectory that few companies of Oracle's size have achieved. As a result, investors increasingly place Oracle in the same category as the so-called "Magnificent 7", rightly so, we think. Therefore, we maintain a large overweight position in Oracle.

BSD Analysis:
The manager presents an exceptionally bullish case for Oracle based on its dramatic transformation into a major cloud and AI infrastructure provider. The investment thesis centers on Oracle's unprecedented Q1 FY26 results featuring massive contract wins, including a reported $30B annual OpenAI contract, and explosive RPO growth of 359% to $455B. This provides extraordinary revenue visibility and positions Oracle Cloud Infrastructure to potentially rival Google Cloud Platform by FY29-30. The manager emphasizes Oracle's evolution from traditional database software to hyperscale cloud provider, with growth trajectories typically seen only in much smaller companies. The 40% single-day stock surge reflects market recognition of this transformation. Strong contract momentum in AI training and inferencing validates Oracle's positioning in the AI infrastructure arms race. The fund maintains a large overweight position, viewing Oracle as deserving inclusion among the "Magnificent 7" technology leaders.

Pitch Summary:
Their recent upgrade of their long-term outlook provides growing evidence that Broadcom is progressively gaining share with their three XPU customers as they increase adoption with each new generation of those chips. As importantly, the strong commitment of the 4th big customer validates our initial investment case of Broadcom being THE prime beneficiary of the ramping up of AI-infrastructure due to the progress made in AI-Chips (XPUs), in networking and the strong position in corporate network software and infrastructure that are crucial to accommodate AI in corporate networks and companies in a broader context. Thanks to the breath of it's offering and the already deep integration in it's customers' IT stack, Broadcom is, in our view, better positioned than Nvidia to benefit from the next wave of AI rollouts. Given the strength in last few quarterly reports and the shift in the long-term growth drivers, we substantially increased our long-term estimates for Owner's Earnings. Our still somewhat conservative estimates leave more room for future upgrades.

BSD Analysis:
The manager presents a compelling bull case for Broadcom centered on its positioning as the primary beneficiary of AI infrastructure buildout. The thesis emphasizes Broadcom's competitive advantages through its diversified AI-related portfolio spanning XPU chips, networking solutions, and corporate software infrastructure. The fund manager highlights validation from a fourth major customer commitment and progressive market share gains with existing XPU customers across chip generations. Broadcom's deep integration within customer IT stacks and breadth of offerings are positioned as key differentiators versus Nvidia for the next wave of AI deployments. Recent quarterly strength and upgraded long-term outlook have prompted substantial increases to Owner's Earnings estimates. The manager maintains conservative projections, suggesting potential for further upward revisions. This comprehensive AI infrastructure play appears well-positioned to capitalize on the ongoing technology transformation.

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

BSD Analysis:
The manager expresses clear disappointment with Elutia's management decisions and strategic execution. The company developed a competitive biologic alternative to Medtronic's plastic cardiac device envelopes, addressing device migration issues. However, management significantly undermonetized the asset by selling to Boston Scientific for only $88 million versus the manager's $200+ million expectation. The decision to redirect proceeds toward unapproved product development rather than maximizing shareholder value demonstrates poor capital allocation. The manager's complete exit reflects lost confidence in management's ability to create shareholder value. This represents a classic case where good technology and market opportunity were undermined by suboptimal strategic decisions.

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

BSD Analysis:
The manager presents a compelling value opportunity in Zeta Global based on significant valuation discount and competitive advantages. The company trades at 3x EV/Revenue versus peers at 5-7x and competitors at 8-20x, despite superior growth and margins. Zeta's cookie-free platform provides regulatory and competitive advantages, positioning them to gain market share as competitors face privacy challenges. Oracle's exit from advertising creates additional growth opportunities. Management's exceptional track record of beating guidance for 16 consecutive quarters demonstrates strong execution capability. The recent volatility from a short report appears to have created an attractive entry point. The multi-channel advertising platform with AI capabilities addresses growing market demand despite broader software spending weakness.

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

BSD Analysis:
The manager maintains a strong bull thesis on Xeris despite the stock doubling since their June purchase. The investment centers on Recorlev, a treatment for Cushing's Syndrome with exceptional 80% gross margins addressing a significant unmet medical need. Management's 2030 revenue target of $750 million represents substantial growth from the expected $285 million in 2025, indicating a multi-year growth runway. Recent sales force expansion is already showing results with accelerating quarterly growth from 44% to 54% year-over-year. The company appears positioned to leverage existing investments for expanding profitability. The manager's continued conviction despite significant gains suggests confidence in the long-term opportunity and execution capability.

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

BSD Analysis:
The manager presents a compelling bull case for MDxHealth based on strong fundamentals and attractive valuation. The company operates in the large prostate cancer diagnostics market with a comprehensive test portfolio and established physician network of 7,000+ doctors. Revenue growth has been consistently strong at 20%+ for 12 consecutive quarters, with potential for acceleration following a recent acquisition. The valuation appears significantly undervalued at 2x EV/Revenue compared to peers trading at 5-9x despite similar growth profiles. The non-invasive nature of their tests addresses a clear medical need in treatment decision-making. The manager's entry point around $2 per share suggests meaningful upside potential given the growth trajectory and valuation discount.

Pitch Summary:
Washington H. Soul Pattinson (SOL) is a diversified investment house that we at Airlie see as Australia's own mini-Berkshire Hathaway (the famous investment company led by Warren Buffett). SOL invests its permanent capital for the long term across listed large caps and emerging companies, as well as unlisted property, private equity and private credit. Today it oversees a diversified portfolio (NAV of A$13.2 billion). SOL has a long history, founded in 1903 and originally being a sole operator of pharmacy stores. In the 1960s and 1970s, SOL began to diversify by expanding into the building material and resources sectors through positions in Brickworks and other ASX-listed companies. A key step change to the SOL occurred in 2021 through the acquisition of Milton Corporation, which increased the scale of SOL by c. A$3.7 billion in assets held primarily in domestic equities. Today SOL holds A$13.2 billion in net assets. The SOL investment philosophy focuses on identifying long-term superior risk-adjusted returns, with diversification across industry and asset class to allow the portfolio to weather market cycles and generate sustainable returns. As with Berkshire, the beauty of the model is the permanent capital that SOL controls. The company is not like other fund managers with the risk of capital withdrawal ever present, allowing for true long-term investment decisions. The attractiveness of the SOL investment has only increased by the recent merger with Brickworks. Brickworks and SOL have historically held a long-term cross-shareholding partnership, which saw Brickworks own 26% of SOL and SOL own 43% of Brickworks. The merger not only cleans up the structure of SOL, but following the capital raise to undertake the merger, it leaves SOL with a net cash balance sheet. Since 1 January 2000, SOL has delivered a compound total return of 13.4% p.a., compared with 8.6% p.a. for the S&P/ASX 200 over the same period. While we often compare SOL to Berkshire Hathaway, SOL's returns over this time frame are also ahead of Berkshire's (11.2% p.a. vs. 8.3% p.a. for the S&P 500). Crucially, this outperformance hasn't relied on "high beta" exposures that typically do extremely well in bull markets. SOL's portfolio leans to defensive, cash-generative businesses, which has historically helped it outperform in down markets – a feature we value given today's relatively high market valuations. We maintain a high level of confidence in SOL to continue to undertake high shareholder return investments given the stability and long tenure of key investment personnel. With net cash post-merger, SOL has a green light to pursue accretive investments across its opportunity set. In our view, the combination of permanent capital, a proven team, defensive tilt and a simplified structure positions SOL to continue delivering attractive long-term returns for shareholders.

BSD Analysis:
Airlie presents Washington H. Soul Pattinson as Australia's equivalent to Berkshire Hathaway, emphasizing its diversified investment approach and permanent capital structure. The manager highlights SOL's impressive long-term track record, delivering 13.4% annual returns since 2000 versus 8.6% for the ASX 200, even outperforming Berkshire Hathaway itself. The recent Brickworks merger is viewed as a significant catalyst, cleaning up the cross-shareholding structure while leaving SOL with a net cash position to pursue new investments. The fund values SOL's defensive portfolio tilt toward cash-generative businesses, which has historically provided downside protection during market corrections. Management stability is emphasized as a key strength, with senior investment personnel averaging over 15 years of tenure. The permanent capital model eliminates redemption risk, enabling truly long-term investment decisions. Airlie sees the combination of proven management, simplified structure, and available capital as positioning SOL for continued outperformance in an expensive market environment.

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

BSD Analysis:
The manager maintains a strong bull thesis on Xeris despite significant gains since their June purchase. The company's Recorlev drug addresses Cushing's Syndrome, a serious rare disease with limited treatment options. Management's 2030 revenue target of $750 million represents substantial growth from the expected $285 million in 2025, indicating confidence in the product's market penetration. The 80% gross margins on Recorlev demonstrate pricing power in the rare disease space. Accelerating quarterly growth from 44% to 54% following salesforce expansion validates the commercial strategy. The manager's decision to hold despite the stock doubling suggests conviction in the long-term opportunity. This appears to be a classic specialty pharma play with a differentiated product in an underserved market.

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

BSD Analysis:
The manager presents a compelling bull case for MDxHealth based on strong fundamentals and attractive valuation. The company operates in the large prostate cancer diagnostics market with a comprehensive test portfolio and established physician network of over 7,000 doctors. Revenue growth has been consistent at 20%+ for 12 consecutive quarters, with potential acceleration from recent acquisitions. The valuation appears deeply discounted at 2x EV/Revenue versus peers trading at 5-9x despite comparable growth and margins. The non-invasive nature of their tests addresses a clear medical need in treatment decision-making. The manager's entry point around $2 per share suggests significant appreciation potential. This appears to be a quality growth story trading at value multiples in a defensive healthcare sector.

Pitch Summary:
On the 18th of September, Rieter announced details of the capital increase approved by the Board to acquire Barmag, Oerlikon's artificial textile fibre machinery division. The Board approved a capital reduction with a reduction in the nominal value of the 4.7 million existing shares, which went from a nominal value of CHF 5.0 per share to CHF 0.01. Subsequently, a capital increase in two tranches was approved with the issue of 116.8 million new shares at a price of CHF 3.43 in tranche A and the issue of 14.6 million shares at a price of CHF 5.31 in tranche B. The main shareholders, Peter Spuhler and Martin Häfner, owners of 33% and 10% respectively, subscribed their share in the two tranches of the increase. The increase enabled Rieter to raise CHF 477 million, which will be used to pay for the acquisition of Barmag. As can be deduced from the structure of the transaction, this capital increase was extremely dilutive for shareholders who did not participate in the increase and very attractive for those who did. Equam exercised its pre-emptive subscription rights in tranche A of the increase and purchased shares at CHF 3.43. At the same time, it sold the shares it held in its portfolio, which were trading at CHF 6.52, making a small arbitrage on the price. Rieter currently has a market capitalisation of 464 million, representing an EBITDA multiple of 3.9x normalised EBITDA for Rieter + Barmag. The company's leverage, considering the debt of both companies and the UBS loan for the acquisition of Barmag, is 3x current EBITDA and 2.1x normalised EBITDA.

BSD Analysis:
EQUAM participated in Rieter's highly dilutive capital raise to fund the acquisition of Barmag, Oerlikon's artificial textile fiber machinery division. The fund executed an arbitrage strategy by exercising pre-emptive rights at CHF 3.43 while simultaneously selling existing shares at CHF 6.52. This transaction demonstrates sophisticated capital allocation as the fund maintained exposure while capturing immediate value. The combined entity trades at an attractive 3.9x normalized EBITDA multiple with leverage of 3x current EBITDA, declining to 2.1x on normalized earnings. The Barmag acquisition significantly expands Rieter's capabilities in artificial fiber machinery, creating a more diversified industrial platform. Major shareholders Peter Spuhler and Martin Häfner's participation signals confidence in the strategic rationale. The valuation appears compelling for a specialized industrial machinery company with enhanced scale and market position post-acquisition.

Pitch Summary:
During the quarter, we began investing in Domino's Pizza, the British company that operates the brand in the United Kingdom and Ireland. Domino's does not manage restaurants directly, as it acts as a master franchisee. Its revenue comes from the sale of raw materials to franchisees and the collection of royalties for the use of the brand, so its asset structure is very light and its operating risk relatively low. Domino's has the largest number of franchised pizzerias in the United Kingdom, a total of 1,378, which, compared to the 381 of its nearest competitors, shows its high market share. It plans to open around 600 new franchises in towns with fewer than 10,000 citizens, where its franchisees achieve higher average sales than restaurants in large cities. It is also considering launching a new brand, drawing on its powerful network of franchisees. We have begun investing in Domino's, taking advantage of the weakness of its share price, which has fallen 43% so far this year. Although employment remains stable and retail sales are steady, consumer confidence in the United Kingdom is very low. The possible tax increase in the Labour government's next budget, which comes on top of previous increases, has led many consumers to reduce their spending. In this context, sales volume has fallen slightly, but Domino's has continued to increase its market share in the pizza delivery segment (+5.6 pp to 53.7% share). First-half results reflected weak consumption, with like-for-like sales falling 0.1% and EBITDA falling 7.4%, much less than the decline in the share price. The company has ex-IFRS16 debt of 2.3x and offers an equity free cash flow yield of 9%.

BSD Analysis:
EQUAM initiated a position in Domino's Pizza Group during Q3, capitalizing on a 43% share price decline driven by weak UK consumer sentiment and potential tax increases. The manager views this as an attractive entry point for a dominant market leader with 1,378 franchised locations versus 381 for its nearest competitor, representing a commanding 53.7% market share in pizza delivery. The business model is asset-light, generating revenue through raw material sales to franchisees and brand royalties, which reduces operational risk. Despite challenging conditions, Domino's has gained 5.6 percentage points of market share, demonstrating competitive strength. The company plans to expand with 600 new franchises in smaller towns where unit economics are superior. With 2.3x debt-to-EBITDA and a 9% free cash flow yield, the valuation appears compelling given the temporary nature of consumer weakness and the company's market-leading position.

Pitch Summary:
U-Haul also detracted from performance for the quarter and for the year. The company continues to invest its cashflow to build out its self-storage business. Self-storage real estate investment trust (REIT) analysts are accustomed to evaluating the economics of this part of the business with initial capital investment followed by low occupancy until a location matures and produces strong recurring revenue at higher occupancy. Because U-Haul also has a truck rental business, the company does not cleanly fit into a sector category, and it is not widely followed by analysts. We appreciate the disciplined capital allocation that U-Haul's leaders continue to demonstrate.

BSD Analysis:
Yacktman maintains a bullish stance on U-Haul despite recent underperformance, viewing the company's self-storage expansion as a compelling long-term value creation strategy. The fund appreciates management's disciplined approach to capital allocation, reinvesting cash flows into high-return self-storage real estate that follows a predictable maturation curve from low initial occupancy to strong recurring revenue streams. Yacktman recognizes that U-Haul's hybrid business model creates analytical complexity that results in limited Wall Street coverage, potentially creating an informational advantage for patient investors who understand both the truck rental and self-storage economics. The manager draws parallels to REIT valuation methodologies, suggesting the market may not fully appreciate the embedded real estate value being created through the storage expansion. This investment reflects Yacktman's preference for companies with strong management teams executing clear capital allocation strategies, even when short-term performance disappoints. The fund views the current weakness as temporary noise obscuring the underlying value creation from disciplined real estate investment in a fragmented, recession-resistant industry.