Investment Pitches

Pitch Summary:
Sphere Entertainment Co. (SPHR) also aided performance for the Fund after the company reported better-than-expected quarterly results driven by strong attendance and premium pricing at the Las Vegas Sphere venue. We believe Sphere’s unique, immersive entertainment experience provides a powerful competitive advantage that can support attractive returns on invested capital over time. In our view, management has significant opportunity to expand programming, optimize utilization, and leverage the platform for new revenue streams, including sponsorship and content partnerships. While the balance sheet and MSG Networks segment pose risks, we think these concerns are more than reflected in the current valuation. We continue to view SPHR as a differentiated consumer and media asset with meaningful upside potential as execution improves.

BSD Analysis:
Sphere Entertainment is the ultimate optionality play — a media-tech company built around the most advanced venue in the world. The Las Vegas Sphere is a sensory spectacle with economics that improve dramatically as residency and event pipelines fill. Content licensing, sponsorships, and IP monetization add layers beyond ticket sales. It’s high capex, high risk — but also high upside if Sphere becomes the global template for next-gen live entertainment.

Pitch Summary:
Last, oil services company, Core Laboratories, Inc. (CLB) declined in the quarter on mixed earnings results. Although increased demand for diagnostic services in U.S. onshore and offshore markets aided the Production Enhancement segment, this growth was neutralized by weaker-than-expected Reservoir Description performance due to seasonality, geopolitical tensions, tariff concerns and commodity price volatility. Importantly, management noted tariffs should not have a significant impact on the business given its service-related revenue.

BSD Analysis:
Core Labs’ high-science reservoir services make it the “brains” of the oilfield, not the muscle. As depletion rises globally, Core’s expertise in optimizing extraction becomes even more important. The asset-light model gives it margin resilience and strong cash conversion. This is one of the few OFS names that wins even without volume growth.

Pitch Summary:
Oil and natural gas explorer, APA Corporation (APA) also detracted from relative performance in the quarter amid poor investor sentiment across the energy sector due to concerns of slowing global growth. The company continues to execute on its cost reduction plan and announced the divestiture of its Permian Basic assets in New Mexico to paydown debt. Management remains laser-focused on increasing the operational efficiency of the Callon assets, free cash flow generation and returning capital to shareholders. We believe the company trades at a significant discount to its intrinsic value.

BSD Analysis:
APA is the E&P everyone loves to hate, but the business is lean, cash-rich, and leveraged to Suriname — one of the highest-potential offshore plays globally. The company’s capital discipline is real, debt has improved, and shareholder returns are robust. If the Suriname JV clears key development hurdles, APA rerates meaningfully. Even without it, its U.S. and international assets are generating healthy cash.

Pitch Summary:
In contrast, leading manufacturer of consumer food products, J.M. Smucker Co. (SJM) also declined during the period. Quarterly earnings benefitted from the company’s legacy businesses anchored by the Uncrustables brand and coffee portfolio, however continued challenges at Hostess weighed on results. Meanwhile, management delivered disappointing fiscal year 2026 guidance due to expected profit declines driven by inflation related to higher expected coffee costs, tariffs and continued weakness at Hostess. SJM remains focused on stabilizing revenue and management believes SKU and display rationalization alongside marketing investments will help. Longer-term, we continue to believe SJM’s portfolio of iconic and emerging foods brands, coupled with its broad-based innovation and productivity agenda, supports an attractive total shareholder return opportunity.

BSD Analysis:
J.M. Smucker is the quietly lethal CPG operator behind an absurdly strong portfolio: coffee, snacks, pet food, and now Hostess. Pricing power is intact, integration synergies are rolling in, and the company’s supply-chain execution is top-tier. Smucker consistently converts revenue into cash while keeping margins stable in volatile markets. This is a defensive compounder now with real growth optionality.

Pitch Summary:
Additionally, supplier of residential thermal, comfort and energy management solutions, Resideo Technologies, Inc. (REZI) advanced following solid quarterly earnings results highlighted by organic revenue growth and margin expansion. Synergies from the integration of Snap One are also ahead of expectations. Meanwhile, REZI expects to substantially mitigate any headwinds from tariffs by increasing prices, repositioning inventory and by running its factories at different utilization rates. We believe REZI’s earnings potential is underappreciated. The company is entering a new phase of sustainable growth driven by a secular preference for more connected smart home solutions and product innovation.

BSD Analysis:
Resideo is a turnaround industrial-tech name with real hidden value: Honeywell Home products + ADI distribution, both steady cash generators. After management missteps, cost discipline and portfolio cleanup are finally showing results. Smart home, security, HVAC, and connected devices give the company a durable footprint. Resideo remains cheap because of past failures — but margins and execution are noticeably improving.

Pitch Summary:
Producer and marketer of crop nutrients, the Mosaic Co. (MOS), also traded higher following the delivery of solid quarterly earnings results. The company expects phosphate markets to remain tight through 2025 supported by limited new supply, lower inventories and a reduction in imports driven by tariffs. MOS remains focused on cost discipline, improved free cash flow generation and maintaining an investment grade credit profile, while continuing to return significant capital to shareholders. Given management’s renewed discipline on capital allocation, we continue to believe the company is well positioned.

BSD Analysis:
Mosaic is the fertilizer heavyweight positioned to benefit from structurally tight global crop markets. Potash and phosphate prices have normalized, but supply constraints and geopolitical disruptions create long-term pricing support. Mosaic’s cost structure has improved, cash flow is solid, and the company is returning capital aggressively. This is a commodity cyclical with a surprisingly strong margin floor.

Pitch Summary:
Shares of global leader in enterprise software, Oracle Corporation (ORCL), accelerated following a significant top- and bottom-line beat and impressive full year 2026 outlook driven by accelerating demand for its cloud and AI capabilities. This supports our view that ORCL’s positioning as the leading provider of database software and cloud-based infrastructure is entrenched, making it a key beneficiary of global demand for generative AI development.

BSD Analysis:
Oracle has quietly become the hyperscalers’ compute mercenary — building AI clusters so powerful that competitors begrudgingly rent them. OCI’s performance-per-dollar advantage is undeniable, and enterprise workloads are finally migrating as AI reshapes IT budgets. Meanwhile, the legacy database empire prints cash. Oracle is no longer a laggard — it’s a stealth AI infrastructure winner hiding under an old-school brand.

Pitch Summary:
We also repurchased global investment bank, Goldman Sachs Group, Inc. (GS), as macro uncertainty, geopolitical tensions and shifts in global trade policy drove the name back down within our midcap portfolios’ capitalization range in the quarter. In our view, GS has one of the strongest investment banking franchises on Wall Street.

BSD Analysis:
Goldman is built for this moment — IPO pipelines reopening, M&A rebounding, markets hot, and wealth/asset management scaling. The failed consumer adventure is over, and now the core engine is firing on all cylinders. Trading revenue remains elite, alternative investments are expanding, and capital returns are accelerating. When financial conditions loosen, Goldman’s earnings rip higher than any other bank.

Pitch Summary:
We added Fiserv, Inc. (FI), leading global provider of payment processing and financial services technology solutions. The company possesses unmatched scale and cross-selling abilities across its businesses, including its core financial technology solutions, merchant acceptance and payment processing. Additionally, these innovative technologies are deeply entrenched in client operations, providing attractive and predictable recurring economics representative of a wide moat, high switching cost service business. A recent pullback in the stock provided an attractive entry point. Shares came under pressure due to investor concerns around Clover volumes decelerating in the quarter. However, the deceleration was due to one-time items and growth is expected to accelerate in the second half of this year. In our view, FI offers a rare opportunity to own a best-in-class financial technology business that should benefit from the secular demand for innovative financial technology.

BSD Analysis:
Fiserv is the payment rails operator hiding behind a boring ticker — merchant acquiring, core banking tech, ACH, card networks, all rolled into one margin-rich platform. Clover continues to scale beautifully, banking tech remains sticky, and synergy capture is driving operating leverage. Fiserv has become too essential to replace, too embedded to uproot. This is a cash-generating fintech infrastructure powerhouse — not a sleepy processor.

Pitch Summary:
Last, used and wholesale vehicle auction operator, CarMax, Inc. (KMX), trader lower in the quarter. Although the company’s earnings rose sharply year-over-year, management suspended the timeframes around its long-term strategic objectives due to macro uncertainty. At current levels, KMX’s valuation is particularly attractive. Management has a strong track record of navigating headwinds and their inventory management expertise, alongside KMX’s brand and scale are difficult to replicate. Looking out, we believe the company has a long runway for growth as its omni-channel presence and initiatives targeted at personalizing the consumer experience seamlessly combine its world-class in-store experience and online offerings.

BSD Analysis:
CarMax is the used-car market’s data-driven juggernaut — a national brand with pricing power, proprietary retail analytics, and a scaled finance arm. Inventory normalization and improving wholesale trends set up a far cleaner FY ahead. The omnichannel model keeps gaining traction, and CarMax’s ability to source and refurbish vehicles at scale gives it margins smaller dealers can’t match. When the used-car cycle turns, CarMax is the first winner.

Pitch Summary:
Alternatively, oil services company, Core Laboratories, Inc. (CLB) detracted from relative results during the quarter amid weak demand from certain international markets and delays in large scale projects. Increased demand for diagnostic services in U.S. onshore and offshore markets aided the Production Enhancement segment. However, this growth was neutralized by weaker-than-expected Reservoir Description performance due to seasonality, geopolitical tensions, tariff concerns and commodity price volatility. Importantly, management noted tariffs should not have a significant impact on the business given its service-related revenue. CLB’s product sales are also primarily manufactured and consumed domestically. Looking ahead, the company continues to project international growth from projects in the Middle East, Asia Pacific and West Africa and remains laser focused on generating positive free cash flow, reducing debt and improving its return on invested

BSD Analysis:
Core Labs is a reservoir-intelligence business wrapped inside an oilfield stock — meaning its earnings hold up better than roughneck service providers. As U.S. shale shifts toward disciplined, high-return drilling, Core wins more work analyzing reservoirs and optimizing completions. Lean operations, premium pricing, and stable international demand make it a quiet outperformer. When oil stabilizes above breakeven, Core compounds faster than peers.

Pitch Summary:
Also in the quarter, we bought shares of bar-code manufacturer, Zebra Technologies (ZBRA), which is held in other Ariel portfolios. ZBRA’s brand strength, distribution network and commitment to innovation enable it to take share, earn industry-leading profitability and penetrate new markets. A recent pullback in the stock price provided an attractive entry point. Shares have come under pressure due to investor concerns around supply chain disruptions and tariffs. At current the valuation, we think the market is underappreciating ZBRA’s alignment with the global effort to improve supply chain efficiency. At the same time, the company is leveraging the wide moat in its core business to expand into faster growing markets including warehouse robotics and machine vision. Meanwhile ZBRA continues to deliver prodigious free cash flow which we believe will continue to be deployed towards both growth and share repurchases.

BSD Analysis:
Zebra is the backbone of warehouse and retail digitization, and while the downturn hurt hardware demand, its software and automation layers are now the real story. As supply chains normalize and retailers retool, Zebra’s scanning, printing, RFID, and workflow solutions reclaim budget priority. The company is positioned directly in front of the next logistics automation cycle, with a margin profile that rebounds quickly once volumes rise.

Pitch Summary:
Title insurer, First American Financial Corporation (FAF) also traded lower in the quarter as investors remain concerned that elevated interest rates and a weakening consumer environment will keep housing activity muted. Additionally, uncertainty remains over whether regulation to improve housing affordability will negatively impact demand for title insurance. Despite the noise and continued economic uncertainty, FAF delivered a top-and bottom-line earnings beat with broad-based revenue strength continuing to underscore steady margin improvement. While this year’s financial performance is off to a better start than management anticipated, FAF expects earnings to grow from current levels and believes the mortgage origination market is in the early stages of recovery. In our view, investors continue to underappreciate FAF's scale, operating leverage and investment portfolio.

BSD Analysis:
First American is a title insurer with a fortress balance sheet, best-in-class claims discipline, and a data franchise that gives it a durable edge in a volatile housing market. Yes, volumes are down — but when rates fall, this stock snaps back hard. First American’s digital initiatives and automation push are strengthening margins even during the downturn. This is a cyclical rebound story backed by a structurally advantaged business.

Pitch Summary:
In contrast, oil services company, Core Laboratories, Inc. (CLB) declined in the quarter as challenges across both segments pressured results. Although increased demand for diagnostic services, flow profilers and completion modeling aided the Production Enhancement segment, this growth was neutralized by weaker-than-expected Reservoir Description performance due to seasonality, geopolitical tensions, tariff concerns and commodity price volatility. Importantly, management noted tariffs should not have a significant impact on CLB’s ability to provide reservoir description services. CLB’s product sales are also primarily manufactured and consumed domestically. Looking ahead, the company continues to project international growth from projects in the Middle East, Asia Pacific and West Africa and remains laser focused on generating positive free cash flow, reducing debt and improving its return on invested capital.

BSD Analysis:
Core Labs is the oilfield services company that survives every cycle because it sits at the reservoir-science heart of drilling — not the commodity slugfest. Its rock analysis, reservoir optimization, and production enhancement services are mission-critical as operators shift to efficiency over brute-force volume. Core’s margins outperform peers, capex is light, and cash conversion is excellent. When upstream spending stabilizes, Core’s high-margin, knowledge-driven model shines.

Pitch Summary:
Israel-based provider of products for information technology security, Check Point Software Technologies Ltd. also traded lower during the period despite robust earnings, highlighted by a significant beat in product revenues and double-digit billings growth. Consumers are adopting more pillars of Check Point’s platform and engaging in larger strategic commitments with Infinity and Quantum Force. Meanwhile, new CEO Nadav Zafrir, expanded the executive team to balance corporate and go-to-market leadership roles as well as bring more attention to customer facing functions. Check Point continues to be an astute steward of capital, pursuing organic growth and utilizing surplus cash to return capital to shareholders. We also like the company’s exposure to the fast-growing cloud security market and its industry leading profitability.

BSD Analysis:
Check Point is the cybersecurity veteran that keeps outperforming because it doesn’t chase hype — it delivers protection that actually works. The company has quietly rebuilt its product suite around next-gen firewalls, cloud security, and AI-powered threat detection. Gross margins are elite, FCF is massive, and Check Point’s conservative culture means no blowups, just steady compounding. In a chaotic cybersecurity market, consistency is a weapon — and Check Point has it.

Pitch Summary:
New holding, Lasertec Corporation, which is a Japan-based niche manufacturer of semiconductor and flat panel display production equipment, was a top contributor over the period. A recent pullback in the stock following order cuts, product inspection delays and concerns about the threat of new competitors provided an attractive entry point. Following our initiation, improving investor sentiment lifted shares as Lasertec remains the only company with commercialized inspection systems that use extreme ultraviolet lithography (EUV) light sources. Management also reiterated their expectation for an order recovery in 2026 with the number of specific projects increasing and visibility in the outlook improving. Moreover, we believe Lasertec’s process control intensity is nearing an inflection as the business shifts towards high volume manufacturing. Notably, the company’s actinic patterned mask inspection (APMI) tool also provides a cheaper alternative to advanced semiconductor materials lithography (ASML). We think this in combination with an expansion of EUV processes in semiconductor production offers significant upside over the long-term.

BSD Analysis:
Lasertec doesn’t compete — it dictates the rules. EUV pellicle inspection, mask defect detection, reticle qualification: every advanced-node wafer touches Lasertec’s value chain. As fabs push to 2nm and beyond, inspection steps proliferate, not shrink. The company’s growth is tied directly to advanced-node complexity, which is literally exponential. This is a premium equipment supplier with a near-monopolistic moat.

Pitch Summary:
We bought Spain-based global commercial bank Banco Bilbao Vizcaya Argentaria SA (BBVA) which operates the largest bank in Mexico and has leading franchises across South America and Turkey. We expect loan growth in Mexico to be driven by market share gains, low levels of leverage and the potential near shoring of US production. We also favor BBVA’s exposure to Turkey and its attractive age demographics. Falling inflation and a reduction in the policy rate in the country should help revenues prosper. A potential merger between BBVA and Banco Sabadell would also unlock significant value via market share gains, cost synergies and scale in product offerings as well as technological investments. Even though BBVA offers a superior return-on-equity relative to peers, at current levels shares are trading at a meaningful discount.

BSD Analysis:
BBVA is one of Europe’s most mispriced banks — a capital-rich, high-ROE franchise with massive exposure to Mexico’s structural growth, where credit demand is booming. NII is strong, credit quality stable, and digitization keeps pushing efficiency higher. Europe adds ballast; Mexico adds torque. Despite strong profitability and capital returns, the stock still trades at a deep discount because the market can’t let go of outdated risk stereotypes. This is a stealth compounder masquerading as an emerging-market bank.

Pitch Summary:
New holding, Lasertec Corporation, which is a Japan-based niche manufacturer of semiconductor and flat panel display production equipment, was another top contributor over the period. A recent pullback in the stock following order cuts, product inspection delays and concerns about the threat of new competitors provided an attractive entry point. Following our initiation, improving investor sentiment lifted shares as Lasertec remains the only company with commercialized inspection systems that use extreme ultraviolet lithography (EUV) light sources. Management also reiterated their expectation for an order recovery in 2026 with the number of specific projects increasing and visibility in the outlook improving. Moreover, we believe Lasertec’s process control intensity is nearing an inflection as the business shifts towards high volume manufacturing. Notably, the company’s actinic patterned mask inspection (APMI) tool also provides a cheaper alternative to advanced semiconductor materials lithography (ASML). We think this in combination with an expansion of EUV processes in semiconductor production offers significant upside over the long-term.

BSD Analysis:
Lasertec owns the mask inspection niche at the bleeding edge of EUV manufacturing — a bottleneck that’s only getting more critical as error tolerances shrink. Its tools are essential for every major foundry, and orders keep climbing alongside advanced-node complexity. Margins are huge, backlog is heavy, and Lasertec’s tech advantage is measured in years, not quarters. If AI and HBM keep exploding, Lasertec’s inspection empire becomes even more indispensable.

Pitch Summary:
Bio-Techne is a leading provider of essential life science products, including reagents (such as proteins), analytical instruments, and related services. Its products are primarily used by customers in biopharmaceutical companies, academic and government research institutions, and clinical laboratories to support drug development, advanced scientific research, and innovative diagnostic techniques. Shares of Bio-Techne detracted from performance in the second quarter after the company delivered solid fiscal third-quarter results but lowered its guidance for the fiscal fourth quarter, citing challenging macroeconomic conditions. Management highlighted near-term concerns related to uncertainty over global tariffs, constraints on academic research funding, and pressures on drug pricing, all of which could temporarily weaken demand. However, despite these short-term challenges, we maintain a favorable view of the company’s long-term fundamentals, driven by its innovative product portfolio, experienced management team, and strong underlying business model.

BSD Analysis:
Bio-Techne is the research-tools powerhouse quietly embedded in every corner of biotech, proteomics, and cell therapy. Its reagents, proteins, and instruments are high-margin, high-recurrence products that labs can’t easily switch away from. Growth slowed with the biotech funding downturn, but Bio-Techne’s product breadth and innovation pipeline give it leverage once capital flows normalize. The company is diversified across diagnostics, life sciences, and bioprocessing, providing stability in volatile cycles. Bio-Techne isn’t a hype-driven biotech — it’s the picks-and-shovels supplier with structural demand. When R&D spending rebounds, margins and revenue should re-accelerate sharply.

Pitch Summary:
Neogen develops, manufactures, and markets a diverse range of products dedicated to food and animal safety. Its Food Safety segment includes diagnostic test kits and related products used by food producers and processors to detect harmful or unintended substances in human food and animal feed. Its Animal Safety segment provides pharmaceuticals, vaccines, veterinary instruments, disinfectants, diagnostic products, rodenticides, and genomic testing services. Shares detracted from performance during the quarter after the company reported fiscal third-quarter revenue and profitability below expectations. Additionally, management modestly lowered its full-year 2025 guidance, citing a weaker macroeconomic environment impacting food production volumes and the strategic decision to exit non-core areas within its animal genomics business.

BSD Analysis:
Neogen is a food and animal safety platform riding secular growth in global biosecurity — a trend that’s not slowing. The integration of the 3M food safety business gives it scale, cross-sell power, and a broader product suite. Margins are improving, operating leverage is building, and Neogen’s recurring consumables revenue is sticky. Global regulations around testing, traceability, and contamination play directly into Neogen’s hands. The company is still digesting acquisitions, but the long-term picture is a cleaner, stronger, more defensible business. The stock trades like a slow grower, but the fundamentals say otherwise.