Investment Pitches

Pitch Summary:
Canal+ – French pay-TV operator Canal+ was a detractor for the quarter. The stock's performance was a quarter of two halves. The shares rallied meaningfully in January following a substantive synergy update in which management put hard numbers behind the value creation opportunity from integrating MultiChoice. We trimmed our holdings into this strength. Those gains were fully retraced and then some following the FY25 results announcement in March, which saw solid 2025 results but 2026 guidance signalling a year of deliberate investment ahead of more substantial earnings growth over the following three years. Mr. Market reacted poorly to the short-term earnings disappointment, pushing the stock to levels below the price in June 2025. This was a time when, by any fundamental measure, the business was considerably less attractive with a much wider range of outcomes – e.g. the VAT settlement with French authorities then remained unresolved (since clarified and better than expected), cost inflation from UEFA exclusivity rights renewal was an open question (renewed in November 2025, at a lower-than-expected renewal cost), and the MultiChoice deal was not yet closed. The conclusion of the bidding war for Warner Bros. Discovery this year also implies a healthy value for Canal+ well above where it trades currently. We have been adding again (alongside insider buying) at what we consider an attractive P/V.

BSD Analysis:
Longleaf views Canal+ as significantly undervalued following market overreaction to near-term guidance disappointment. The MultiChoice integration presents substantial synergy opportunities with management providing concrete value creation metrics. Key business uncertainties from 2025 have been resolved favorably, including VAT settlement and UEFA rights renewal at lower costs than expected. The company's deliberate investment strategy for 2026 positions it for accelerated earnings growth over the subsequent three years. Market pricing below June 2025 levels appears irrational given the improved fundamental position and reduced uncertainty. The Warner Bros. Discovery bidding war provides valuation benchmarking that suggests significant upside for Canal+. Management and insider buying activity alongside Longleaf's additions demonstrates confidence in the investment thesis and attractive risk-adjusted returns at current price-to-value levels.

Pitch Summary:
Rayonier/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 moves), 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, new 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 maintains strong conviction in the merged Rayonier entity, now their largest position, despite post-merger stock weakness. The combination creates a premier timberland company with enhanced scale and financial flexibility. Management's ability to execute targeted asset sales and share repurchases should drive meaningful value per share growth. Timberlands represent an attractive long-term store of value with historical inflation hedging characteristics across various economic environments. The post-merger balance sheet strength positions the company to pursue offensive strategies and capitalize on market opportunities. Short-term price volatility from technical factors and housing sentiment concerns create attractive entry points for a fundamentally sound asset class. The fund's confidence is reinforced by their detailed research coverage and the strategic value creation potential from the enlarged platform.

Pitch Summary:
Glanbia – Irish nutrition, ingredients and dairy company Glanbia contributed for the quarter. Shares held up well in a difficult market environment, though the stock continues to trade at undemanding multiples relative to global food and beverage staples peers. Full year 2025 was the last set of results burdened by the dilutive drag from the SlimFast and Body & Fit businesses before they were divested, and the business now enters 2026 with a better growth rate and more focus. Strategic optionality remains with the potential for the company to monetize its non-core dairy business.

BSD Analysis:
Longleaf views Glanbia favorably following strategic portfolio optimization through divestiture of underperforming assets. The company completed the sale of SlimFast and Body & Fit businesses, eliminating dilutive drag and improving the overall growth profile entering 2026. The stock trades at attractive multiples relative to global food and beverage peers, suggesting valuation upside. Management has demonstrated disciplined capital allocation by divesting non-core assets and focusing on higher-growth nutrition segments. Additional strategic optionality exists through potential monetization of the dairy business, which could further unlock shareholder value. The improved business mix and focus, combined with undemanding valuation multiples, positions Glanbia for enhanced returns as the streamlined operations gain traction.

Pitch Summary:
FedEx – Global logistics company FedEx was a contributor for the quarter. The stock responded to another quarter of strong execution, led by continued momentum at the Federal Express (FEC) segment, where volume growth, yield growth, and cost control again translated into meaningful profit growth. FEC delivered its most profitable peak holiday season ever, with margins expanding for a sixth consecutive quarter as more volume flowed through Network 2.0-optimized facilities and management continued to move the business toward higher-value B2B verticals. FedEx Freight remains on track to be spun off on June 1st and will be well positioned to benefit from a recovery in industrial demand as an independent company. Even after the stock price move, we continue to believe the market underappreciates the earnings power of the core parcels business and the value that can be unlocked through the Freight separation.

BSD Analysis:
Longleaf maintains a bullish stance on FedEx, highlighting strong operational execution and margin expansion. The Federal Express segment delivered its most profitable peak season with six consecutive quarters of margin growth, driven by Network 2.0 optimization and strategic shift toward higher-value B2B verticals. The upcoming FedEx Freight spinoff on June 1st represents a significant value catalyst that should unlock shareholder value. Management's continued focus on volume growth, yield improvement, and cost control demonstrates effective capital allocation. Despite recent stock appreciation, the fund believes the market still undervalues the core parcels business earnings power and the strategic value creation from the freight separation. The combination of operational improvements and corporate restructuring positions FedEx for sustained profitability growth.

Pitch Summary:
Founded in 1984 by five Bentley brothers, Bentley Systems maintains a leadership position in software that enables the design, construction and monitoring of civil infrastructure assets. Although the company hired its first outside CEO in 2024, it remains an owner-operator, with Greg Bentley serving as Executive Chairman, and the family holding just under 50% of the equity. Bentley is growing recurring subscription revenues at a consistent low-double digit rate while expanding operating margins annually. AI is beginning to enhance the productivity of designers, and will help the architecture, engineering, and construction industry attack the growing backlog of both developed and emerging market infrastructure projects. We foresee many years of strong growth ahead.

BSD Analysis:
Madison's Bentley Systems investment thesis focuses on the company's leadership position in civil infrastructure design software and its attractive owner-operator structure. The fund emphasizes Bentley's consistent financial performance, with low-double-digit recurring subscription revenue growth and expanding operating margins demonstrating strong execution. The family's significant 50% equity stake aligns management interests with shareholders while maintaining entrepreneurial focus despite recent CEO transition. Madison views AI as a positive catalyst rather than a threat, believing it will enhance designer productivity and help address the substantial global infrastructure project backlog. The investment benefits from secular tailwinds including aging infrastructure requiring replacement and emerging market development needs. Bentley's specialized software creates high switching costs and deep customer relationships in the architecture, engineering, and construction industry. The recurring subscription model provides revenue predictability and cash flow visibility, supporting margin expansion over time.

Pitch Summary:
Tyler Technologies is the leading maker of software for municipalities and states. Municipalities and states are laggards in spending on technology; many of them are on decades-old systems that are in dire need of upgrades. At the same time, citizens are increasingly demanding more tech-friendly interfaces with their governments. These two forces provide Tyler with a long runway for sales growth. Tyler has a strong track record of revenue growth and software implementations, and should be in pole position to continue winning contracts from municipal governments, who tend to be risk-averse, with a tendency to go with proven vendors with time-tested technologies.

BSD Analysis:
Madison's investment thesis for Tyler Technologies centers on the company's dominant position in municipal and state government software solutions. The fund managers highlight a compelling secular growth opportunity driven by two converging forces: aging government technology infrastructure requiring urgent modernization and rising citizen expectations for digital government services. Tyler's competitive advantage stems from its proven track record and established relationships with risk-averse government clients who prefer working with established vendors. The investment appears well-timed as the fund opportunistically added the position amid broader AI-related software sell-offs, potentially acquiring shares at attractive valuations. The long-term growth runway appears substantial given the massive installed base of legacy government systems nationwide. Tyler's sticky customer relationships and high switching costs in the government sector should provide revenue visibility and pricing power. The company's market leadership position and government clients' preference for proven solutions create significant barriers to entry for competitors.

Pitch Summary:
The second new investment was in Meta Platforms, which owns three dominant, global social network and communications apps in Facebook, Instagram, and WhatsApp. We believe revenue growth will remain strong as its user count grows and monetization of its apps improves. Meta is investing heavily in AI and seeing real benefits in the personalization and efficacy of ads in its social network. Additionally, WhatsApp is finally starting to commercialize its business after many years of focusing on acquiring users. Investors are concerned about increasing capital expenditures, but we believe much of it will garner strong returns, and management will remain prudent in managing spending over the long term.

BSD Analysis:
Madison initiated a position in Meta Platforms, attracted to the company's ownership of three dominant global social platforms: Facebook, Instagram, and WhatsApp. The managers expect continued strong revenue growth driven by expanding user bases and improved app monetization. They view Meta's heavy AI investments as already delivering tangible benefits through enhanced ad personalization and effectiveness across its social networks. A key catalyst they identify is WhatsApp's transition from user acquisition to revenue generation after years of growth focus. While acknowledging investor concerns about rising capital expenditures, Madison believes these investments will generate strong returns and trusts management's long-term spending discipline. The fund's thesis centers on Meta's platform dominance, AI-driven advertising improvements, and WhatsApp's monetization potential.

Pitch Summary:
Salesforce is the leading provider of customer relationship management and related software with an especially strong position among large enterprises. The business generates immense cash flow, and over the past several years, has appropriately shifted its capital allocation policies to reflect its more mature status. For example, shortly after we initiated our investment, Salesforce announced a $25 billion accelerated share repurchase plan, which we expect will be additive to per share value. While AI presents a potential threat, we believe Salesforce can leverage its operating platform, distribution, and deep customer relationships to commercialize its own suite of AI products. The market has punished its shares on the AI disruption risk and the stock trades for a low-to-mid-teens P/E ratio, which is unduly low in our view.

BSD Analysis:
Madison initiated a position in Salesforce, viewing the leading CRM provider as undervalued due to AI disruption fears. The managers highlight Salesforce's dominant market position among large enterprises and its substantial cash generation capabilities. They view the company's recent $25 billion accelerated share repurchase program as value-accretive for shareholders. While acknowledging AI as a potential threat, they believe Salesforce's established platform, distribution network, and deep customer relationships position it well to successfully commercialize its own AI products. The fund sees the current low-to-mid-teens P/E ratio as unjustifiably depressed, presenting an attractive entry point. Madison's thesis centers on the market overreacting to AI concerns while undervaluing Salesforce's competitive moats and capital allocation discipline.

Pitch Summary:
We initiated a new investment position in specialty distributor SiteOne Landscape Supply, the largest and only scaled consolidator in the landscape supply industry. SiteOne controls 18% of this $26 billion industry and has been growing revenue at a low double-digit compound annual growth rate (CAGR) over the past several years. SITE has the highest gross margins of any distributor following years of pricing initiatives (600 basis points of improvement since 2014), reflecting its defensive competitive moat and limited competition. After years of investment in sales and marketing, the company has a significant opportunity to expand its operating margin, which should help it overcome potential cyclical headwinds and drive earnings growth. Management has gained credibility in delivering on this thesis, with several quarters of margin expansion in a somewhat depressed end-market environment. The company has formidable network-effect-style moats, including a highly fragmented customer and supplier base. No single customer accounts for over 2% of sales, and the top ten customers account for less than 5% of total sales. No other competitor has the reach SiteOne has built, making it the most important intermediary for suppliers and buyers alike. SITE's breadth of offerings and purchasing power makes them an invaluable resource for local landscapers and suppliers. Management has a solid track record in mergers and acquisitions (M&A). Their network-effect moat is amplified through M&A, as scale begets scale. SiteOne is 3x the size of its nearest competitor and larger than numbers 2-10 combined. We conservatively estimate the intrinsic value to be $160.

BSD Analysis:
Madison initiated a position in SiteOne Landscape Supply, recognizing it as the dominant consolidator in a fragmented $26 billion landscape supply industry with significant competitive advantages. The company controls 18% market share and has demonstrated consistent low double-digit revenue growth while achieving the highest gross margins among distributors through successful pricing initiatives, improving margins by 600 basis points since 2014. SITE's defensive moat stems from its unmatched scale and network effects, serving a highly fragmented customer base where no single customer represents more than 2% of sales, providing revenue stability and pricing power. The company's breadth of offerings and purchasing power make it an indispensable intermediary for both suppliers and local landscapers, creating switching costs and customer loyalty. Management has proven execution capabilities in margin expansion despite challenging end-market conditions, with significant opportunity for further operating leverage as sales and marketing investments mature. SiteOne's M&A strategy amplifies its competitive advantages, as the company is 3x larger than its nearest competitor and larger than competitors 2-10 combined, enabling continued consolidation of this fragmented industry. At a conservative $160 intrinsic value estimate, Madison sees substantial upside potential in this defensive, cash-generative business model.

Pitch Summary:
We initiated a new position in the construction management software company Procore Technologies (~$9B market cap). Procore is a "system of record" for the construction industry, connecting owners, general contractors, and specialty contractors on a single digital platform. It generates recurring revenue via a tiered subscription based on the customer's total annual construction volume (ACV). This pricing model is a powerful lever: as customers build more, Procore's revenue grows without additional sales effort. The business is characterized by high gross margins (~80%) and strong customer stickiness (95% retention rate). Procore's formidable moat stems from classic "network effects"—project collaborators are often introduced to the software by the general contractor, creating a low-cost customer-acquisition funnel. The construction industry is large and underpenetrated by digital automation, providing a long runway for compounding growth at high returns. Our intrinsic value estimate for PCOR is $95.

BSD Analysis:
Madison initiated a position in Procore Technologies during the software sector selloff, viewing it as a high-quality franchise with defensive characteristics in construction management software. The company serves as a "system of record" for the construction industry, connecting all project stakeholders on a unified digital platform. PCOR's revenue model is particularly attractive, with tiered subscriptions based on customers' annual construction volume, creating automatic revenue growth as clients expand their business without additional sales effort from Procore. The business demonstrates strong unit economics with approximately 80% gross margins and exceptional customer retention at 95%, indicating high switching costs and customer satisfaction. Madison highlights Procore's network effects moat, where general contractors introduce the software to project collaborators, creating a viral, low-cost customer acquisition mechanism. The construction industry's large size and low digital penetration provide a substantial runway for growth. At a $95 intrinsic value estimate versus the current market cap of approximately $9 billion, Madison sees compelling value in this defensive software play.

Pitch Summary:
Matador Resources Company is a Delaware Basin Exploration and Production (E&P) company founded in 2003. The midstream asset is a joint venture that moves oil, gas, and water in and out of the Permian Basin. Production has grown 28% per annum since its Initial Public Offering (IPO). Matador has an entrepreneurial culture and a high level of employee ownership, with its CEO and founder, Joe Foran, personally owning ~4% of the shares. The company is an innovator in drilling design and has excellent well-based economics. The company also has Delaware-focused midstream assets, which have growing value as gas and water cuts increase in the basin. MTDR trades at 3.3x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), and sub-3x if we consider the midstream assets, a discount to its peers and our comp group. MTDR also trades at 9.8x earnings versus 15x for the group. We view this as compelling given the hidden midstream asset and the premium nature of MTDR's acreage. Our intrinsic value estimate of $95 is based on 5x EV/EBITDA, supported by increasing free cash flow yield.

BSD Analysis:
Madison initiated a position in Matador Resources, replacing their Chord Energy holding with this Delaware Basin E&P company that offers superior valuation and asset quality. The investment thesis highlights MTDR's impressive 28% annual production growth since its IPO, driven by innovative drilling techniques and premium acreage in the Delaware Basin. The company benefits from strong management alignment, with founder and CEO Joe Foran owning approximately 4% of shares, fostering an entrepreneurial culture focused on operational excellence. A key differentiator is MTDR's undervalued midstream assets, which provide growing value as gas and water cuts increase in the basin, creating a "hidden asset" not fully reflected in the stock price. At 3.3x EV/EBITDA (or sub-3x including midstream assets) and 9.8x earnings versus 15x for peers, Madison sees compelling relative value. The managers' $95 intrinsic value estimate, based on 5x EV/EBITDA, suggests significant upside potential supported by increasing free cash flow generation. This investment aligns with Madison's preference for quality energy assets with strong fundamentals and attractive valuations.

Pitch Summary:
ICU Medical is a medical device company that specializes in infusion therapy, vascular access, and vital care applications. The company's main business is intravenous delivery devices, and it provides both systems and consumables associated with these pumps. The business is headquartered in San Clemente, California, and has been around for over 40 years. ICUI's model is a sticky consumables stream that follows its equipment sale and installation. The industry is consolidated among three players, with ICUI being the smallest. ICUI has gained market share in the pumps business due to quality issues at Becton Dickinson (BDX) and underinvestment at Baxter (BAX). Additionally, the company's new high-volume pump has more connected features, which we believe will drive retention rates and incremental revenue. This is a boring company with a good market position and excellent cash flow that we view as well-positioned in this volatile market. We value this opportunity at 12x earnings before interest, taxes, depreciation, and amortization (EBITDA), which blends our intrinsic value estimate to $~$200/share.

BSD Analysis:
Madison initiated a position in ICU Medical, viewing it as a defensive play in the medical device sector with a compelling risk-reward profile. The fund's thesis centers on ICUI's sticky consumables business model, where equipment sales generate recurring revenue streams from ongoing consumable purchases. The company has been gaining market share in the infusion pump market due to competitive missteps by larger rivals Becton Dickinson and Baxter, creating an opportunity for the smaller player to expand its footprint. ICUI's new high-volume pump features enhanced connectivity capabilities, which Madison believes will improve customer retention and drive incremental revenue growth. The managers view this as a "boring" but well-positioned company with strong cash flow generation and a defensive market position. At 12x EBITDA, Madison sees the stock as attractively valued with a target price of approximately $200 per share. The investment appears to fit Madison's preference for quality, profitable franchises over speculative growth names in the current volatile market environment.

Pitch Summary:
The largest detractor during the quarter was our exposure to Prosus and Naspers, both of which traded lower. This reflected a widening of the discount to their respective Tencent stakes, alongside weakness in Tencent's share price. In Prosus, this was driven by negative sentiment around the sustainability of its open-ended buyback programme after the company announced that it would only partly fund the programme through the sale of Tencent shares. In Tencent itself, the market reacted negatively to an acceleration in AI-related capital expenditure. With the holding company discount now at historically elevated levels, we continue to believe the investment case remains highly compelling, especially as we believe that Naspers and Prosus can fund their ongoing buyback through the sale of other non-core assets.

BSD Analysis:
Steyn Capital's position in Naspers mirrors their Prosus thesis, focusing on the compelling holding company discount arbitrage opportunity. The manager maintains conviction despite quarterly underperformance, viewing the widening discount to Naspers's Tencent stake as creating enhanced value for disciplined investors. Market concerns about buyback program funding and Tencent's AI investment cycle have created temporary headwinds, but the fundamental value proposition remains intact. The manager's confidence stems from management's ability to monetize non-core assets to fund shareholder returns while preserving the valuable Tencent exposure. With the holding company discount at historically elevated levels, the risk-reward profile has become increasingly attractive. The investment thesis relies on eventual discount compression as markets recognize the underlying asset value and management's capital allocation discipline.

Pitch Summary:
The largest detractor during the quarter was our exposure to Prosus and Naspers, both of which traded lower. This reflected a widening of the discount to their respective Tencent stakes, alongside weakness in Tencent's share price. In Prosus, this was driven by negative sentiment around the sustainability of its open-ended buyback programme after the company announced that it would only partly fund the programme through the sale of Tencent shares. In Tencent itself, the market reacted negatively to an acceleration in AI-related capital expenditure. With the holding company discount now at historically elevated levels, we continue to believe the investment case remains highly compelling, especially as we believe that Naspers and Prosus can fund their ongoing buyback through the sale of other non-core assets.

BSD Analysis:
Despite short-term underperformance, Steyn Capital maintains conviction in Prosus based on an attractive holding company discount arbitrage opportunity. The manager's thesis centers on the historically elevated discount to Prosus's Tencent stake, creating significant value for patient investors. While market concerns about buyback program sustainability and Tencent's AI capital expenditure have pressured shares, the manager views these as temporary headwinds. The investment case relies on management's ability to fund ongoing buybacks through non-core asset sales rather than Tencent stake reductions. This approach would preserve the valuable Tencent exposure while still returning capital to shareholders. The widening discount creates an increasingly compelling risk-reward profile, with the manager positioning for eventual discount compression as the market recognizes the underlying value proposition.

Pitch Summary:
Our long position in Pan African Resources also contributed positively during the quarter, supported by strong gold prices, notwithstanding a correction in March following the outbreak of war in the Middle East. The company reported strong earnings in February and continues to benefit from a healthy production profile and low all-in sustaining costs in a high gold price environment.

BSD Analysis:
Steyn Capital's long position in Pan African Resources reflects a compelling value proposition in the gold mining sector. The manager's thesis is anchored on the company's competitive cost structure, with low all-in sustaining costs providing significant operating leverage in a high gold price environment. Pan African's healthy production profile ensures consistent output to capitalize on favorable gold pricing dynamics. The company's strong February earnings results validate the operational efficiency and cost management capabilities. Despite short-term volatility from Middle East geopolitical tensions affecting gold prices, the fundamental investment case remains intact. The combination of low-cost operations, stable production, and exposure to gold price appreciation creates an attractive risk-adjusted return profile for the fund.

Pitch Summary:
Other contributors included our long position in Glencore, which performed well in the first two months of the quarter alongside firm commodity prices and appreciated further in March following the closure of the Strait of Hormuz, as the company was seen as a likely beneficiary of higher energy and coal prices, as well as increased commodity price volatility through its trading business. We used this strength to reduce the position and reallocate capital elsewhere.

BSD Analysis:
Steyn Capital held a profitable long position in Glencore that benefited from multiple tailwinds during the quarter. The manager's thesis centered on Glencore's dual exposure to firm commodity prices and geopolitical disruptions. The company's diversified commodity portfolio positioned it well for the initial period of strong commodity pricing. Following the Strait of Hormuz closure, Glencore gained additional value from higher energy and coal prices, while its substantial trading business provided further upside from increased commodity price volatility. The manager demonstrated disciplined profit-taking by reducing the position after strong performance to reallocate capital to other opportunities. This tactical approach reflects both the opportunistic nature of the investment and prudent risk management in volatile commodity markets.

Pitch Summary:
The largest contributor to performance during the quarter was our high-conviction long position in AECI. The company reported strong earnings, with meaningful improvement in both operational and financial performance, as the business continues to dispose of non-core assets, reduce debt and improve cash flow generation.

BSD Analysis:
Steyn Capital maintains a high-conviction long position in AECI, driven by the company's strong operational turnaround and financial restructuring. The manager highlights meaningful improvements in both operational and financial performance as key drivers of the investment thesis. AECI's strategic focus on disposing of non-core assets demonstrates disciplined capital allocation, while debt reduction efforts are strengthening the balance sheet. The company's improved cash flow generation indicates operational efficiency gains and better working capital management. This comprehensive restructuring story, combined with strong quarterly earnings results, supports the manager's bullish stance. The position's significant contribution to quarterly performance validates the high-conviction sizing and investment rationale.

Pitch Summary:
The largest detractor during the quarter was our exposure to Prosus and Naspers, both of which traded lower. This reflected a widening of the discount to their respective Tencent stakes, alongside weakness in Tencent's share price. In Prosus, this was driven by negative sentiment around the sustainability of its open-ended buyback programme after the company announced that it would only partly fund the programme through the sale of Tencent shares. In Tencent itself, the market reacted negatively to an acceleration in AI-related capital expenditure. With the holding company discount now at historically elevated levels, we continue to believe the investment case remains highly compelling, especially as we believe that Naspers and Prosus can fund their ongoing buyback through the sale of other non-core assets.

BSD Analysis:
Steyn Capital views Prosus as an attractive value play despite recent underperformance, focusing on the structural discount opportunity. The manager demonstrates deep understanding of the Prosus-Naspers-Tencent structure and sees the current discount levels as historically compelling. The investment case relies on the manager's conviction that buyback programs can be sustained through non-core asset sales, reducing market concerns about Tencent stake dilution. The manager appears to view market negativity around AI capital expenditure at Tencent as short-term sentiment rather than fundamental deterioration. The emphasis on historically elevated discount levels suggests the manager sees this as a mean-reversion opportunity. Steyn Capital's continued conviction despite being the largest quarterly detractor demonstrates strong conviction in the structural arbitrage thesis. The manager's confidence in alternative funding sources for buybacks indicates sophisticated analysis of the broader asset portfolio beyond the Tencent stake.

Pitch Summary:
The largest detractor during the quarter was our exposure to Prosus and Naspers, both of which traded lower. This reflected a widening of the discount to their respective Tencent stakes, alongside weakness in Tencent's share price. In Prosus, this was driven by negative sentiment around the sustainability of its open-ended buyback programme after the company announced that it would only partly fund the programme through the sale of Tencent shares. In Tencent itself, the market reacted negatively to an acceleration in AI-related capital expenditure. With the holding company discount now at historically elevated levels, we continue to believe the investment case remains highly compelling, especially as we believe that Naspers and Prosus can fund their ongoing buyback through the sale of other non-core assets.

BSD Analysis:
Despite near-term underperformance, Steyn Capital maintains strong conviction in Naspers as a compelling value opportunity. The manager views the widening holding company discount to Tencent as creating an attractive entry point rather than a fundamental concern. The investment thesis centers on the historically elevated discount levels, which the manager believes are unsustainable. Steyn Capital demonstrates sophisticated understanding of the complex structure, recognizing that buyback funding can come from non-core asset sales rather than just Tencent stake reductions. The manager appears unfazed by market concerns about Tencent's AI capital expenditure, viewing this as short-term noise. The emphasis on the discount mechanism suggests the manager sees this as a structural arbitrage opportunity. The conviction in continued buyback capability through alternative funding sources indicates confidence in management's capital allocation strategy and asset portfolio depth.

Pitch Summary:
Our long position in Pan African Resources also contributed positively during the quarter, supported by strong gold prices, notwithstanding a correction in March following the outbreak of war in the Middle East. The company reported strong earnings in February and continues to benefit from a healthy production profile and low all-in sustaining costs in a high gold price environment.

BSD Analysis:
Steyn Capital maintains a bullish stance on Pan African Resources, leveraging the company's operational advantages in a favorable gold price environment. The manager emphasizes the company's low all-in sustaining costs as a key competitive advantage, providing strong margins even during gold price volatility. Pan African's healthy production profile suggests consistent operational execution and reliable output. The strong earnings reported in February validate the company's ability to convert favorable gold prices into bottom-line results. Despite short-term volatility from Middle East geopolitical tensions, the manager remains confident in the structural position. The combination of low-cost operations and strong gold prices creates a compelling margin expansion story. Pan African's focus on South African operations provides geographic concentration that the manager appears comfortable with given the operational metrics.