Investment Pitches

Pitch Summary:
In real estate, we bought into Sun Hung Kai Properties, a Hong Kong realty company that operates and manages hotels, properties, car parking and transportation infrastructure. The company holds a large market share of Hong Kong private real estate, a sector that has been revived by more favorable mortgage rates and a return of mainland China buyers. In its interim results for the first half of FY2026, the company reported a 16.7% increase in underlying profit.

BSD Analysis:
The manager initiated a position in Sun Hung Kai Properties based on improving fundamentals in the Hong Kong real estate market and the company's dominant market position. The investment thesis centers on the revival of Hong Kong's private real estate sector, driven by more favorable mortgage rates and the return of mainland Chinese buyers to the market. Sun Hung Kai Properties benefits from its large market share in Hong Kong private real estate, positioning it to capitalize on this market recovery. The company's diversified real estate portfolio includes residential and commercial properties, hotels, car parking, and transportation infrastructure, providing multiple revenue streams and defensive characteristics. Recent financial performance supports the recovery thesis, with the company reporting a 16.7% increase in underlying profit in the first half of FY2026. The manager appears to view Sun Hung Kai Properties as a high-quality way to gain exposure to Hong Kong real estate recovery while benefiting from the company's market-leading position and operational diversification.

Pitch Summary:
Elsewhere, we added Fujikura, a Japanese manufacturer of fiber-optic cables, connectors and wiring solutions used in telecom networks and data centers. We believe the company is well positioned to benefit from rising demand for high-speed connectivity in AI infrastructure, particularly as data centers become more complex and require more sophisticated optical cabling. What attracted us most was Fujikura's operation in a severely supply-constrained market, where pricing is rising in tandem with production growth.

BSD Analysis:
The manager presents a compelling bull case for Fujikura based on its strategic positioning in the rapidly growing AI infrastructure market. The company manufactures critical fiber-optic cables, connectors, and wiring solutions that are essential for high-speed connectivity in increasingly complex data centers. The investment thesis centers on rising demand for sophisticated optical cabling driven by AI infrastructure expansion, where data centers require more advanced connectivity solutions to handle massive computational workloads. The manager is particularly attracted to Fujikura's operation in a severely supply-constrained market environment, which creates favorable pricing dynamics as demand outstrips supply capacity. This supply-demand imbalance allows Fujikura to achieve both volume growth and pricing expansion simultaneously, driving strong revenue and margin expansion potential. The combination of structural demand growth from AI infrastructure buildout and favorable market dynamics in a supply-constrained environment makes Fujikura an attractive play on the digital infrastructure theme.

Pitch Summary:
One holding we are excited about is CSG, a European defense company that went public in January. We believe the company offers exposure to continued growth in European defense spending, particularly in ammunition, as governments across the region prioritize defense readiness and increase domestic industrial capacity to solidify supply chains. The shares fell in March due to an investigation tied to financial irregularities in its FMG division's 120mm tank ammunition contracts. However, we viewed that weakness as an opportunity to begin building a position in a company operating in an area of sustained demand.

BSD Analysis:
The manager expresses strong conviction in CSG as a new investment opportunity in the European defense sector, despite near-term challenges. The investment thesis centers on CSG's exposure to growing European defense spending, particularly in ammunition manufacturing, as governments prioritize defense readiness and domestic supply chain security. The manager views the company as benefiting from sustained demand driven by geopolitical tensions and the strategic imperative to build domestic defense industrial capacity. While shares declined in March due to an investigation into financial irregularities in the FMG division's tank ammunition contracts, the manager viewed this as an attractive entry opportunity rather than a fundamental concern. The manager appears confident that the underlying demand drivers for ammunition and defense systems remain intact, making the temporary weakness an opportunistic buying moment. CSG's positioning in a supply-constrained market with government-backed demand provides a compelling long-term growth trajectory despite short-term operational challenges.

Pitch Summary:
BFF Bank, an Italian financial institution focused on factoring and specialty finance, was the portfolio's largest detractor during the quarter. The shares came under pressure after the financial institution was forced to announce €95 million in one-off provisions to de-risk its Italian factoring portfolio. BFF has an excess of invoices owed by Italian public entities, and court rulings have made payment delays more costly than the bank previously expected. The provisions led the bank to lower its 2026 earnings target, and an untimely CEO departure added to investor concerns. While these developments hurt sentiment in the near term and led us to trim the position, we will monitor the situation through the lens of the company's longer term earnings power.

BSD Analysis:
The manager expresses concern about BFF Bank following significant operational and management challenges that have impacted the investment thesis. The company was forced to take €95 million in one-off provisions to de-risk its Italian factoring portfolio, primarily due to payment delays from Italian public entities becoming more costly than anticipated following adverse court rulings. This provision requirement led management to lower 2026 earnings targets, indicating material impact to near-term profitability. The untimely CEO departure adds management uncertainty at a critical juncture for the company. While the manager acknowledges trimming the position in response to these developments, they maintain some interest in monitoring the company's longer-term earnings power potential. The combination of credit quality concerns, earnings target reductions, and management instability creates a challenging investment environment that warrants a more cautious approach to this Italian specialty finance play.

Pitch Summary:
UBS was one of the main detractors during the quarter. Although the company reported broadly solid Q4 results, the shares traded lower as investors remained focused on uncertainty surrounding potential Swiss capital reforms that could require the bank to hold meaningfully higher levels of capital. Weaker-than-expected net new asset trends in the US wealth management business added to the pressure, as restructuring-related advisor departures continued to weigh on flows. In our view, the market reaction reflected concern that regulatory uncertainty could stunt otherwise solid operating progress, including profitability, ongoing cost savings and continued capital return. In our view, the market overreacted to short-term headwinds, but we will continue to watch developments in the government's decision-making on capital reforms.

BSD Analysis:
The manager takes a measured view on UBS, acknowledging both the company's operational progress and legitimate regulatory concerns. While UBS delivered solid Q4 results with continued profitability improvements and cost savings, the investment case faces headwinds from potential Swiss capital reforms that could require significantly higher capital levels. The manager views the market reaction as excessive given UBS's underlying operational progress, but recognizes that regulatory uncertainty creates genuine risk to the investment thesis. Weaker net new asset trends in US wealth management, driven by restructuring-related advisor departures, add near-term pressure to growth prospects. The manager appears to be taking a wait-and-see approach, monitoring regulatory developments while maintaining conviction in UBS's long-term franchise value. The tension between solid operational execution and regulatory uncertainty creates a balanced risk-reward profile that warrants careful monitoring rather than aggressive positioning.

Pitch Summary:
Investor sentiment toward Hanwha Aerospace improved as management highlighted a robust 2026 outlook supported by deliveries to Poland, Egypt and Australia, alongside a growing opportunity set in Saudi Arabia and other European markets. The company ended 2025 with an order backlog of 37.2 trillion won (approximately $25 billion) for land-based systems, providing a window into future potential growth. Shares were additionally supported by Hanwha's acquisition of a stake in Korea Aerospace Industries, which reinforced the company's position in the broader Korean aerospace and defense ecosystem.

BSD Analysis:
The manager maintains a bullish outlook on Hanwha Aerospace based on strong order visibility and expanding global market presence. The company's robust 2026 outlook is supported by confirmed deliveries to Poland, Egypt, and Australia, while growing opportunities in Saudi Arabia and European markets provide additional growth vectors. The massive 37.2 trillion won ($25 billion) order backlog for land-based systems offers exceptional revenue visibility and demonstrates the company's competitive position in international defense markets. Hanwha's strategic acquisition of a stake in Korea Aerospace Industries strengthens its position within the Korean aerospace and defense ecosystem, potentially creating synergies and market access benefits. The manager views Hanwha Aerospace as well-positioned to capitalize on elevated global defense spending and the increasing relevance of South Korean defense companies internationally. The combination of substantial order backlog, geographic diversification, and strategic positioning within the Korean defense complex makes Hanwha Aerospace an attractive long-term defense play.

Pitch Summary:
Investors focused on LIG Nex1's air defense exposure. Management highlighted a growing overseas backlog, ongoing manufacturing expansion and continued strong export demand for its medium-range surface-to-air missile (M-SAM) systems that can intercept ballistic missiles. An important caveat to that point—overseas orders for Korean defense equipment carry higher margins than domestic business. The company's shorter lead times relative to many European and US industry peers have also become an important advantage in the current environment. More broadly, we believe LIG Nex1 remains attractively positioned through its exposure to missiles, radar, anti-drone systems and other higher value defense electronics, which continue to see rising demand as countries invest in more modern and responsive defense capabilities.

BSD Analysis:
The manager presents a compelling bull case for LIG Nex1 based on strong export demand and competitive advantages in the global defense market. The company benefits from growing overseas backlog and strong export demand for its M-SAM missile systems, with overseas orders carrying higher margins than domestic business. LIG Nex1's shorter lead times compared to European and US competitors provide a significant competitive advantage in the current geopolitical environment where defense procurement urgency is elevated. The investment thesis centers on the company's exposure to high-value defense electronics including missiles, radar, and anti-drone systems, which are experiencing rising demand as countries modernize their defense capabilities. The manager views LIG Nex1 as well-positioned to capitalize on increased global defense spending driven by geopolitical tensions. The combination of margin-accretive export growth, competitive manufacturing advantages, and exposure to next-generation defense technologies makes LIG Nex1 an attractive play on the defense modernization theme.

Pitch Summary:
Conversely, SPIE was a detractor during the quarter. Its shares traded lower due to near-term concerns about higher energy costs and weaker-than-expected organic growth for 2025 in several regions, and a full-year 2025 free cash flow total that fell short of its target. However, we believe the market reaction was overdone, and investors failed to recognize the durability of SPIE's long-term growth opportunities. Management also raised its medium-term EBITDA margin target, reflecting confidence in continued margin improvement driven by operating leverage and acquisition integration as well as growing demand across transmission and distribution projects, data center builduits and industrial automation.

BSD Analysis:
Despite near-term headwinds, the manager maintains conviction in SPIE as a long-term growth story that the market is undervaluing. While the company faced pressure from higher energy costs, weaker organic growth, and missed free cash flow targets in 2025, the manager views this as a temporary setback rather than a structural issue. The investment thesis rests on SPIE's exposure to durable growth drivers including transmission and distribution infrastructure, data center construction, and industrial automation. Management's decision to raise medium-term EBITDA margin targets signals confidence in the business model and operational improvements. The manager believes SPIE will benefit from operating leverage and successful acquisition integration, while growing demand across its key end markets should drive sustainable growth. The market's focus on near-term challenges has created an attractive entry point for a company with strong long-term positioning in electrification and digital infrastructure trends.

Pitch Summary:
National Grid also contributed positively during the quarter. In March, the company extended and upgraded its five-year financial framework through 2031; it raised its capital investment target to at least £70 billion, asset growth to around 10% and compounded underlying EPS growth to 8% to 10% from its FY26 baseline. We believe the combination of the upgraded framework, stressed electricity supply chains and continued progress under UK's regulatory framework reinforces National Grid's appeal as a regulated utility with visible earnings growth tied to transmission modernization in both the UK and the US.

BSD Analysis:
The manager maintains a bullish stance on National Grid based on the company's upgraded financial framework and strong regulatory positioning. The utility raised its capital investment target to £70 billion through 2031, signaling significant infrastructure spending that should drive asset growth of around 10% and EPS growth of 8-10%. This represents a meaningful upgrade to the company's growth trajectory and demonstrates management's confidence in the investment opportunity. The manager views National Grid as benefiting from stressed electricity supply chains and favorable regulatory frameworks in both the UK and US markets. As a regulated utility, National Grid offers visible earnings growth with lower execution risk compared to merchant power companies. The investment thesis centers on transmission modernization needs driven by grid expansion and electrification trends. The combination of upgraded financial targets, regulatory support, and exposure to structural transmission investment makes National Grid an attractive defensive growth play in the utilities sector.

Pitch Summary:
LS Electric was among the strongest performers. The company reported healthy earnings for 2025, with new orders growing 30% year over year and EPS close behind at 28% year over year. Investor sentiment strengthened further based on the company's growing exposure to North American AI data center power infrastructure and constrained global transformer supply. Model usage reports from large AI companies reinforced astronomical energy consumption projections for the space, supporting the market's view that the company is well positioned to benefit from rising power equipment demand.

BSD Analysis:
The manager presents a compelling bull case for LS Electric based on strong fundamental performance and favorable market positioning. The company delivered impressive 30% year-over-year new order growth alongside 28% EPS growth, demonstrating operational excellence and demand strength. The investment thesis centers on LS Electric's strategic exposure to the rapidly expanding AI data center infrastructure market in North America, where power equipment demand is experiencing unprecedented growth. The constrained global transformer supply environment creates a favorable pricing backdrop, while astronomical energy consumption projections from AI companies validate the long-term demand trajectory. The manager views LS Electric as optimally positioned to capitalize on the structural shift toward higher electricity consumption driven by AI infrastructure buildout. This positioning in a supply-constrained, high-growth market with visible demand drivers makes LS Electric an attractive play on the electrification theme.

Pitch Summary:
Tripadvisor – Digital experiences, dining and travel company Tripadvisor was a detractor for the quarter. As previously mentioned, we were pleased to see board improvement at the company. Unfortunately, this came after a disappointing quarter and a lack of board urgency up to this point. The legacy Tripadvisor business has been worse than we first thought a year ago. However, it has gone from only ~20% of our value then to now closer to 10%, while Viator and TheFork have grown. Macro travel trends got worse in the quarter as well. To the positive, we believe that the company is now acting on what is important to realize value per share. There are a variety of strategic options available to this company, and we look forward to how this year develops.

BSD Analysis:
Longleaf's TripAdvisor position represents a challenged turnaround story with improving governance dynamics. The fund successfully advocated for board improvements, adding Andy Cates as a director to drive strategic change. While the legacy TripAdvisor business has deteriorated more than initially expected, its contribution to total value has declined from 20% to 10% as Viator and TheFork have grown. Macro travel headwinds have compounded near-term challenges, but the fund believes management is finally focused on value realization. The investment thesis now centers on strategic optionality and potential asset separation or sale to unlock value from the higher-quality Viator and TheFork businesses. Active engagement appears to be driving improved capital allocation decisions.

Pitch Summary:
Mattel – Children's toy, media, and consumer products creator Mattel was a detractor in the quarter. The stock fell due to an unexpected $150 million (15% of EBITDA) in incremental spending on initiatives including mobile gaming, Brick Shop (Mattel's competitor to LEGO), and direct to consumer marketing. CEO Ynon Kreiz cited a one-year payback on this spend, but the market remains in show-me mode and the price declined proportionate to the 2026 earnings per share guidance reduction. This was compounded by 4Q results that missed expectations, especially in the US. To the positive, the company committed to $1.5 billion in share repurchase over the next 3 years, which equates to 33% of shares outstanding at today's price. 2026 should have demonstrated the true FCF power of Mattel given traction on IP initiatives including two new movies (Masters of the Universe and Matchbox), two new mobile game launches, and licensing momentum with Toy Story 5 and KPop Demon Hunters. Unfortunately, this was delayed, and we are focused on what we can do to improve this situation.

BSD Analysis:
Longleaf's Mattel investment reflects confidence in the company's intellectual property monetization strategy despite near-term execution challenges. Management's $150 million investment in mobile gaming, direct-to-consumer capabilities, and LEGO competition (Brick Shop) represents strategic positioning with promised one-year payback periods. The substantial $1.5 billion share repurchase program (33% of shares outstanding) demonstrates capital allocation discipline and management confidence. The fund views 2026 as a delayed inflection point for demonstrating free cash flow generation through expanded IP licensing, movie releases (Masters of the Universe, Matchbox), and mobile gaming launches. While disappointed by the timing delay, Longleaf appears focused on active engagement to accelerate value realization from Mattel's valuable brand portfolio.

Pitch Summary:
Becle – Spirits company Becle detracted after the company reported a quarter that the stock market did not like. This short-term earnings volatility (on a business that is 200+ years old) was driven by a shift in distribution that is the right thing to do for the long-term. While this means that reported revenues will be down a few percent in 2026, this sets the company up for growth in 2027 and beyond. As mentioned above on Boston Beer, industry trends did not get worse, but there remains debate about spirits consumption going forward. The biggest industry news came late in the quarter when it was confirmed that Pernod Ricard and Brown-Forman were discussing a merger. The industry is ripe for consolidation, and now this could be kicking off. Becle will be poised to act from a position of financial strength while being focused on the still fastest growing part of the spirits industry, tequila. We added to our position in the quarter after the stock declined.

BSD Analysis:
Longleaf views Becle's recent distribution strategy changes as prudent long-term positioning despite near-term revenue headwinds. The 200+ year-old business is undergoing temporary earnings volatility to optimize its distribution network, setting up stronger growth from 2027 onward. The fund added to their position on weakness, viewing the market reaction as short-sighted. Becle's focus on tequila positions it in the fastest-growing spirits category, while potential industry consolidation following Pernod Ricard-Brown-Forman merger discussions could create strategic opportunities. The company's strong financial position provides flexibility to capitalize on consolidation trends while maintaining focus on the premium tequila market where it holds leading positions.

Pitch Summary:
Rayonier and PotlatchDeltic – Timberland companies Rayonier and PotlatchDeltic completed their merger in the quarter to become our largest single position in the Fund. While the combination of the pre-merger-close price move up in PotlatchDeltic and the post-merger-close price move down in Rayonier did not combine to make this a large detractor, it is worth noting the post-merger weakness we believe did not line up with the solid value creation opportunity at a company like this. While some of the sell-off was likely short-term/technical (index rebalancing), timberland remains a great and long-term store of value. Interest rate moves and housing market sentiment can impact perception in the short term, but this asset class has historically been an inflation hedge that has performed well in a variety of environments. Post-merger, Rayonier has a strong balance sheet and the ability to go on offense. We believe that targeted asset sales and share repurchase can drive value per share growth from here.

BSD Analysis:
Longleaf's largest position following the Rayonier-PotlatchDeltic merger represents a bet on timberland as a superior long-term store of value and inflation hedge. The fund believes post-merger weakness was technical rather than fundamental, creating an attractive entry point. The combined entity possesses a strengthened balance sheet and enhanced scale to pursue value-accretive strategies. Management's ability to execute targeted asset sales and share repurchases should drive per-share value growth. The investment thesis centers on timberland's historical resilience across various economic environments, despite short-term volatility from interest rate movements and housing sentiment. The merger creates operational synergies while maintaining exposure to a scarce, income-producing natural resource.

Pitch Summary:
Empire State Realty (ESRT) and Alexander's – We wrote about these two New York real estate companies together in a previous note and will now do so again. Their stock prices moved in different directions this quarter. To the positive, Alexander's announced a great sale of a non-core, non-income-generating asset in Queens that puts the company further on offense. While ESRT is also actively looking to sell assets, they did not have any news on that front in the quarter and therefore declined with other real estate companies as fears about Al-driven job losses hit the sector. International travel trends also continued to impact their Observatory business. In spite of these headwinds, ESRT reported solid leasing results and should be able to grow cash flow this year. Both companies still have irreplaceable assets driven by aligned partners. Their divergent stock price moves led to us trimming Alexander's and adding to ESRT as the quarter went on.

BSD Analysis:
Longleaf views ESRT as owning irreplaceable Manhattan real estate assets with aligned management partners. Despite near-term headwinds from AI-related job loss fears and reduced international travel affecting the Observatory business, the company delivered solid leasing results and is positioned for cash flow growth. The fund took advantage of the stock's decline to add to their position while trimming the outperforming Alexander's. ESRT's active asset disposition strategy should unlock value, though timing remains uncertain. The investment thesis relies on the long-term value of prime Manhattan real estate and management's ability to optimize the portfolio through strategic sales and operational improvements.

Pitch Summary:
Shenandoah Telecommunications – Telecom company Shenandoah was a contributor for the quarter. The company reported a solid set of results that helped the market wake up to these off-the-radar assets that we started buying last year. While parts of this unique company are technically "legacy" telecom, Shenandoah made the wise call to focus on building out its fiber business years ago. This led to decreased short-term earnings power and a higher leverage ratio on reported EBITDA, but the company built a substantial amount of value with this capital allocation decision. Now a strong majority of its value comes from this great, growing business. Shenandoah also wisely securitized most of its fiber assets in the 4th quarter to improve the balance sheet. The company is now getting closer to FCF positive in 2027, and earnings growth should continue to be strong thereafter.

BSD Analysis:
Longleaf's thesis on Shenandoah centers on the company's strategic transformation from legacy telecom to a fiber-focused growth business. Management's prescient decision to invest heavily in fiber infrastructure years ago temporarily depressed earnings but created substantial long-term value. The recent securitization of fiber assets strengthened the balance sheet while maintaining operational control. The fund views this as an under-recognized asset that should achieve free cash flow positivity by 2027, followed by strong earnings growth. Shenandoah represents a classic value creation story where patient capital allocation is beginning to pay dividends as the market recognizes the quality of the underlying fiber business.

Pitch Summary:
Boston Beer – Alcoholic beverage company Boston Beer was a contributor for the quarter as industry data improved compared to last year. Sentiment around the industry appears to be leveling off after two years of headwinds from changes in consumption habits. The company reported solid first quarter results that were highlighted by continued improvement in gross margins. Recent innovation Sun Cruiser is growing volumes rapidly as the brand expands nationwide to take advantage of the sizable runway remaining in the ready-to-drink tea space. The company also continues to make progress in fixing problems at Twisted Tea, their largest brand. Boston Beer remains both an active share repurchaser and attractive acquisition target as alcohol industry consolidation looks to be on the horizon.

BSD Analysis:
Longleaf views Boston Beer as a turnaround story benefiting from industry stabilization after two challenging years. The fund highlights improving gross margins and successful product innovation with Sun Cruiser's rapid volume growth in the expanding ready-to-drink tea market. Management is addressing operational issues at their flagship Twisted Tea brand while maintaining an active share repurchase program. The investment thesis centers on Boston Beer's positioning for potential industry consolidation as an attractive acquisition target. The company's diversified portfolio across beer, hard seltzers, and ready-to-drink beverages provides multiple growth vectors as consumer preferences evolve.

Pitch Summary:
Mattel – Children's toy, media, and consumer products creator Mattel was a detractor in the quarter. The stock fell due to an unexpected $150 million (15% of EBITDA) in incremental spending on initiatives including mobile gaming, Brick Shop (Mattel's competitor to LEGO), and direct to consumer marketing. CEO Ynon Kreiz cited a one-year payback on this spend, but the market remains in show-me mode and the price declined proportionate to the 2026 earnings per share guidance reduction. This was compounded by 4Q results that missed expectations, especially in the US. To the positive, the company committed to $1.5 billion in share repurchase over the next 3 years, which equates to 33% of shares outstanding at today's price. 2026 should have demonstrated the true FCF power of Mattel given traction on IP initiatives including two new movies (Masters of the Universe and Matchbox), two new mobile game launches, and licensing momentum with Toy Story 5 and KPop Demon Hunters. Unfortunately, this was delayed, and we are focused on what we can do to improve this situation.

BSD Analysis:
Longleaf maintains conviction in Mattel despite near-term execution challenges and market skepticism around increased investment spending. Management's $150 million investment in mobile gaming, Brick Shop, and direct-to-consumer initiatives represents strategic positioning for long-term growth, with CEO citing one-year payback periods. The aggressive $1.5 billion share repurchase program over three years represents 33% of current market capitalization, demonstrating strong capital allocation commitment. Mattel's intellectual property portfolio provides significant monetization opportunities through upcoming movie releases (Masters of the Universe, Matchbox) and gaming launches. The licensing pipeline including Toy Story 5 and KPop Demon Hunters should drive meaningful revenue growth. While 2026 earnings guidance disappointed, the underlying free cash flow generation capability remains intact. The combination of strategic investments, substantial share buybacks, and IP monetization creates multiple value creation pathways despite temporary market pessimism.

Pitch Summary:
IDP Education – The leading international student placement agency and English testing service provider, was a detractor for the quarter. IDP reported solid results in a tough environment. Student placement volumes were down 25% year-over-year (YoY) in 1H driven by declines in markets like Canada and the UK. Despite this volume decline, student placement yield (revenue per student placed) was up 15%, demonstrating IDP's value proposition of bringing high quality international students to universities. English language testing volume was down 7% YoY driven by weak student flows from India, but revenue per test was up 8%. The company is on track to deliver 25 million AUD in net cost reduction in FY26 (quite meaningful for a business expected to deliver 125 million AUD in operating income this year). Despite this strong execution, the stock has been weak as the market is concerned about the growth outlook in FY27 given adverse immigration policy changes in key destination markets (UK, Canada and Australia) in recent years. After an over 50% decline in student volumes from post Covid highs, we believe the pendulum has swung too far to the negative and expect placement volume declines to slow down to mid-single-digit percentages in FY27, such that we expect IDP to deliver on its commitment of profitable and cash generative growth in FY27 and beyond. We added to our investment as the stock price pulled back to highly attractive levels.

BSD Analysis:
Longleaf views IDP Education as oversold following immigration policy headwinds, creating an attractive entry opportunity. Despite 25% volume declines, the company demonstrated pricing power with 15% yield increases, highlighting the value proposition for high-quality student placements. Management's execution of 25 million AUD cost reductions represents meaningful margin improvement for a business generating 125 million AUD in operating income. The 50% volume decline from post-COVID peaks appears excessive given the structural demand for international education. Immigration policy cycles are typically temporary, and IDP's market-leading position should benefit from eventual policy normalization. The company's dual revenue streams from student placement and English testing provide diversification and recurring income characteristics. Strong cost management and operational efficiency improvements position IDP to deliver profitable growth as volume trends stabilize in the mid-single-digit decline range for FY27.

Pitch Summary:
Delivery Hero (DHER) – A global food delivery platform, was a detractor for the quarter. The company reported largely inline FY25 results with FCF delivery stronger than our and street expectations. Beyond the Middle East conflict (the company operates in certain countries in the region) and short-term competitive pressure in a few regions, the stock has been weak due to uncertainty around its ongoing strategic review and the fate of Prosus's 27% ownership of the company. Deliver Hero announced the sale of its Taiwan operations to Grab Holdings for $600 million (at 0.35X Gross Merchandise Value (GMV), much higher than our value and 0.13X GMV where DHER trades) and while this was billed as a "decisive first step" in the ongoing strategic review, we and others want to see more action on additional asset sales. We added to our position as the valuation became even more attractive. There are many like-minded shareholders on the case, and we expect some of our key concerns to be addressed in coming months.

BSD Analysis:
Longleaf maintains conviction in Delivery Hero despite recent stock weakness, viewing current valuation as highly attractive. The company delivered strong free cash flow results exceeding expectations, demonstrating operational execution capabilities. The Taiwan asset sale to Grab at 0.35x GMV provides a valuation benchmark significantly above Delivery Hero's current 0.13x GMV trading multiple, highlighting the discount to intrinsic value. Management's ongoing strategic review and asset optimization program should unlock substantial shareholder value through portfolio rationalization. The presence of like-minded activist shareholders creates additional pressure for value-enhancing actions. Geopolitical concerns and competitive pressures appear temporary relative to the fundamental business strength and strategic optionality. The combination of strong cash generation, attractive valuation metrics, and catalyst-rich environment positions Delivery Hero for significant value realization as strategic initiatives progress.