Investment Pitches

Pitch Summary:
Naver – The dominant search and e-commerce marketplace operator in Korea was a contributor for the quarter… Despite strong operating performance so far, there are legitimate long-term concerns around the terminal value of its search platform in light of increasing competition from generative AI applications… As price reached our value, we took the opportunity to exit Naver and recycle capital into more attractive opportunities.

BSD Analysis:
Naver is a high-growth, deeply undervalued South Korean tech giant whose stock is a leveraged bet on its aggressive pivot to become a global AI infrastructure and Physical AI leader. The core thesis is a massive, multi-year 1 trillion won ($690 million) investment in NVIDIA Blackwell GPUs (securing 60,000 units) to accelerate its AI infrastructure buildout. This CapEx is the foundation for its GPU-as-a-Service (GPUaaS) model, which will create a new, recurring revenue stream. Furthermore, the company is successfully embedding AI into its core services (like the AI Briefing generative search feature used by 30 million users) and its Physical AI division (robotics operating systems). Naver is a high-conviction play on the inevitable success of a technological titan controlling both its consumer platform and its core AI infrastructure.

Pitch Summary:
Entain – UK sports betting and online casino company Entain was a contributor during the quarter. Entain had a challenging 2024 being without a permanent CEO whilst trying to turnaround online market share losses in its key UK, US (through the BetMGM JV) and Brazilian markets, combined with regulatory concerns in New Zealand and the fallout from a Serious Fraud Office (SFO) fine in Turkey. This turnaround took longer than we had hoped but is now coming to fruition… Well-respected Chair Stella David was appointed as the permanent CEO… Importantly BetMGM has also delivered, with market share stabilization and, crucially, an improved profitability outlook for the year lending credibility to mid-term targets for $500 million EBITDA.

BSD Analysis:
Entain is a high-growth, high-stakes global gaming titan whose stock is an asymmetric bet on the successful monetization of the massive U.S. sports betting market through BetMGM. The core thesis is driven by the fact that the company is back to consistently delivering online growth and stabilizing market share globally, despite short-term headwinds in volatility-prone markets like Australia and Brazil. The key catalyst is BetMGM, which is ahead of expectations and is projected to return at least $200 million to its parents by year-end. Management is confidently maintaining its 2025 EBITDA guidance of £1,100 million- £1,150 million, backed by 7% constant currency online NGR growth. The stock is a conviction bet on its technological superiority and the non-cyclical, structural growth of the global regulated gaming sector.

Pitch Summary:
Melco Resorts – Macau casino operator Melco Resorts was a top contributor for the quarter. Melco reported a strong set of Q1 results beating street expectations while founder CEO Lawrence Ho struck an upbeat tone on April and May holiday performance. Having changed senior management and the marketing strategy last year, we saw early signs of market share gains this quarter. Melco was the biggest market share gainer in the quarter – its Macau Gross Gaming Revenue (GGR) market share increased from 14.7% in 4Q to 15.7% in 1Q (helped by VIP luck factor but even mass share increased by over 40 basis points year-over-year (YoY)). The company relaunched its popular show House of Dancing Water in May, which is bringing additional foot traffic to its flagship resort, enabling it to maintain its market share momentum… The company also bought back US $165 million worth of shares YTD (over 7% of market cap) despite high financial leverage.

BSD Analysis:
Melco Resorts & Entertainment is a high-beta, asset-rich casino pure-play whose stock is a conviction bet on the accelerating recovery of the Macau gaming market and its dominant position in the premium mass segment. The core moat is its ownership of premier, integrated resorts (City of Dreams, Studio City) and its disciplined focus on high-margin leisure and non-gaming revenue. The stock is an asymmetric recovery play, penalized by historical volatility, but poised for massive earnings leverage as mathbfChina's Group Tour Scheme and mathbfIndividual} Visit Scheme drive a sustained surge in visitation.

Pitch Summary:
Canal+ – French pay-TV operator Canal+ was a top performer in the quarter. Canal+ is one of the Vivendi spin-off entities we mentioned in our Q4’24 letter, and our only remaining position of those spun entities. It had a difficult start as a standalone listing. The problems were multifaceted, stemming from the timing of the spin (December 16th), the listing location (London, for a French company) and the governance structure (with the Bollore Group owning over 30% of the shares). Those factors notwithstanding, the value the market ascribed to Canal+ became, and in our view remains, farcical. It is true that the timing of the launch caused additional problems for Canal+, as they were going through a major tender offer process for the largest African pay-TV operator MultiChoice Group. Because the offer was awaiting South African competition commission clearance there has been an informational vacuum in which company executives have been heavily limited in what they can say about the financials of the business, including the synergy potential and longer-term financial objectives. Instead, the market has had to focus on the historic financial data available for the group, which we believe is very misleading in terms of the business potential. Canal+ is a turnaround story in its legacy geography of France. This business was loss-making but has since undergone a dramatic restructuring of both content and service. It now boasts a growing subscriber base, having successfully integrated the streamers onto its platform to become a super-aggregator. Canal+ France has reached breakeven, and with a significant ongoing cost-saving plan, including the rationalization of its sport-rights payments, it is on a path to solid profitability. However, the consolidated financials hide this potential, implicitly leading the market to capitalize on the historic losses in France and therefore ascribing a negative enterprise value to the French pay-TV business as a whole.
It is a similar story for the growth-engine, Africa… Canal+ is one of the most discounted stocks in the portfolio today, currently trading at half of what we believe it to be worth… Once the MultiChoice deal completes (likely in Q3) we believe the investment case will be transformed, allowing a far better understanding of these unique qualities, and also opening the door to more accretive capital uses, including buybacks.

BSD Analysis:
Canal+ S.A. is a high-growth, asset-rich media giant whose stock is a conviction bet on its aggressive international expansion into high-growth markets and its strategic content acquisition. The core moat is its dominance as a premium pay television and streaming operator across 70+ countries and 40 million subscribers. The key catalyst is its successful acquisition of a controlling stake in South Africa's MultiChoice Group, which cements its leadership in the sub-Saharan Africa pay-TV market. The stock is a high-leverage play on the accelerating demand for premium content and streaming across emerging and established global markets.

Pitch Summary:
Glanbia – Irish sports nutrition company Glanbia was a top contributor in the quarter, having been a top detractor in Q1. As we explained in our last letter, the volatility and uncertainty in Q1 made it a bad time to disappoint the market, and we were confident the market reaction to higher-for-longer input costs at Glanbia was a gross overreaction. In Q2 a touch more rationality started to prevail as Glanbia revealed Q1 results which were better than feared. While whey input costs remained high, they moved down from their peak levels, lending credibility to the expectation that prices will fall further as new whey production capacity comes online towards the end of the year. The second market concern, the impact of an own-brand Costco competitor, had a continued but stable impact on the topline trend quarter-on-quarter, again supporting the argument that the impact will be a one-off annualized effect rather than a constant headwind.
We firmly believe that from a fundamental perspective H1 will be the trough for both earnings and market perception for Glanbia. Margins in the Performance Nutrition division will start to improve as the whey price falls, benefitting from strong demand for protein products. The headwind on sales from the underperforming SlimFast and Body&Fit brands will also eventually abate as those businesses are going through a disposal/closure process. We are also expecting further progress on strategic rationalization in H2. Beginning July 1st, the Dairy Nutrition business began operating as a standalone unit, a precondition to launching a sale process for this division for which Glanbia is no longer the best owner. Our valuation of this division accounts for almost 50% of Glanbia’s current market cap, for a business the market largely ignores. That will force the market to reassess the implicit undervaluation of the core Performance Nutrition and Nutritional Health divisions. In the meantime, Glanbia has plenty of balance sheet capacity for further buybacks to create value from an undervalued share price.

BSD Analysis:
Glanbia is a high-quality, high-growth nutritional ingredients and performance pure-play whose stock is a conviction bet on the structural, global trend toward health and personalized nutrition. The core moat is its dual-engine model: Performance Nutrition (consumer brands like Optimum Nutrition) and Health & Nutrition (bespoke ingredients for businesses). The company is strategically positioned to capture massive growth from key megatrends in functional nutrition. This focus is delivering superior returns, with Adjusted EPS hitting 140.03c and high cash conversion.

Pitch Summary:
Jardine Matheson is an Asian-based owner and operator of strategic platforms, with a particular expertise in Southeast Asia, Hong Kong, and Mainland China. Having been in business for nearly 200 years, the company has narrowed its focus in recent years with some of its key investments currently including: (i) a 53% stake in separate-listed Hongkong Land Holdings, an owner, operator, and developer of premier mixed-use facilities in Asia, including dominant positions in Central Hong Kong and Marina Bay in Singapore, (ii) an 88% stake in separately-listed Mandarin Oriental, a global owner and operator of luxury hotels and resorts, as well as the One Causeway Bay project in Hong Kong, and (iii) an 85% stake in separately-listed Jardine Cycle & Carriage (“JC&C”), a Singapore-based conglomerate with exposure to a wide set of businesses in Southeast Asia, including meaningful investments in Indonesia.

As has long been the case, Jardine maintains a strong financial position, measured by both the quality and quantity of its resources. However, the company seems to have adopted more of an “aggressive conservative” approach under Executive Chairman (and significant shareholder) Ben Keswick. Since he assumed the role in 2018, Jardine has been as active in repositioning the business as any other point in many decades, in our opinion. As a matter of fact, in the last five years Jardine has (i) increased or consolidated ownership of its key platforms, (ii) initiated strategic reviews at several portfolio companies, (iii) recruited new executives while implementing incentive-based compensation structures, and (iv) executed capital recycling and share buyback initiatives in several instances.

As the impact of these enhancements materialize into improved results, Fund Management believes the Fund will benefit from the reversal of the “double discount” that persists with Jardine today. More specifically, Jardine common trades at more than a 25% discount to the value of its listed investments, without factoring in its privately-held holdings (i.e., Jardine Pacific, et al). However, Third Avenue is of the view that Jardine’s key listed businesses (i.e., Hongkong Land, Mandarin Oriental, and JC&C—all of which are held in other Third Avenue Funds) are trading at very modest valuations. Therefore, if these key holdings can surface incremental value through enhanced capital allocation, and other means, the “both discounts” should narrow over time—which could be quite rewarding for Jardine common with prices implying more than a 50% discount to the “look-through” NAV, by our estimates.

BSD Analysis:
Jarvis Securities is a deep-value, specialized financial services pure-play whose stock is an asymmetric recovery bet on its high-margin, fixed-income platform and SaaS services. The core thesis is driven by the company's dominance in providing custodial services and SaaS platforms to the UK financial industry. The stock is trading at a depressed valuation following a recent HMRC reassessment, creating a clear arbitrage opportunity. Jarvis is a conviction bet on the company's ability to successfully resolve its regulatory headwinds and convert its strong underlying profitability into a major stock re-rating.

Pitch Summary:
Champion Homes is a leading producer of “factory-built” housing in North America, having delivered more than 26,000 manufactured homes, modular homes, and accessory dwelling units (“ADU’s”) last year. While the company offers a wide array of brands (e.g., Titan, Champion, Skyline, et al), there is one common theme across its nationwide footprint: affordability. In fact, the average sales price of Champion’s deliveries was less than $100,000 more recently. At the same time, the company maintains a focus on financial strength with more than 30% of its assets in cash and the minimis levels of debt. Champion also operates with significant scale after merging with industry-peer Skyline in 2018—a tie-up that established the second largest position in terms of market share, only trailing Clayton Homes (a wholly-owned subsidiary of Berkshire Hathaway). That said, Champion seems to be much earlier on its journey to capture the economics throughout the value chain given its scale. For instance, the company has only recently entered the financing business, a long-time source of profitability for other industry players. It also seems to be in the early phases of consolidating independent retailers into captive sales outlets—one of the staples of the Clayton Homes model. Despite these attributes, Champion’s results have been mixed more recently with easing order activity and various cost pressures. As a result, Champion’s common stock was trading near five-year lows on most fundamental metrics and less than seven times peak earnings (after adjusting for the excess cash). Such a price seems quite modest for a leading platform in a consolidated and essential industry, in our view. It is also an implied valuation that does not seem to factor in any probability for a recovery in industry volumes—which could be aided by regulatory reform (i.e., HUD’s chassis requirements) and disproportionally benefit Champion given its under-utilized production capacity.

BSD Analysis:
Skyline Champion is a high-growth, factory-built housing specialist whose stock is a conviction bet on the structural shift toward affordable housing solutions. The core thesis is driven by the massive affordability crisis in the U.S., which makes its manufactured, modular, and park model homes an increasingly non-discretionary alternative to site-built homes. The company's superior scale and efficient factory model allow it to deliver high-quality, energy-efficient housing at a 20%–50% lower cost than traditional builders. The stock is a high-conviction play on the long-term, non-cyclical demand for affordable single-family housing.

Pitch Summary:
Wesco is a real estate-related business that is primarily involved with commercial distribution, logistics services, and supply-chain solutions—with a leading position in the distribution of parts and components underpinning electrical, communications, and utility-related property in North America. The company is also well-capitalized, in our view, with a cash generative business that provided more than $1.2 billion of pre-tax operating profit last year, or nearly 4.5 times its fixed-charges, thus leaving plenty of excess capital for tuck-in acquisitions, dividends, and share repurchases. In the company’s 100-plus year history, “the stars” have rarely been as aligned as they are today, though. Why so? Well, the company has finally paid off the high-cost capital associated with the untimely closing of its acquisition of Anixter in 2020. More importantly though, Wesco’s distribution business is focused on three segments that seem to be on the verge of a step-change in capital spending due to secular changes (as well as policy changes) driving reshoring, grid upgrades, and data center investments. At the same time though, Wesco common remains modestly priced, in our view, trading at nearly a 20% discount to a conservative estimate of NAV at quarter-end. Looked at through another lens, Wesco’s stock price implied a “free cash flow yield” exceeding 8% and an “EV to EBITDA” multiple of less than 9.0 times—the latter well below comparable multiples for private market transactions in the rapidly consolidating distribution space.

BSD Analysis:
WESCO is a high-growth, indispensable industrial and electrical distribution giant whose stock is a conviction bet on the multi-year electrification and infrastructure supercycle. The core moat is its massive scale and comprehensive services platform, providing essential products for the modernization of the electric grid, data centers, and industrial facilities. The company is successfully executing the integration of its Anixter acquisition, driving superior cost synergies and 15% organic growth in its Data Center and Network Solutions segment. WESCO is a high-quality compounder whose indispensable role in the AI infrastructure buildout secures its long-term, double-digit earnings growth.

Pitch Summary:
Prologis is the largest global owner of modern logistics real estate and is exceptionally well capitalized, generating more than $6.5 billion of recurring cash flow annually with loan-to-value below 25%. Fund Management believes Prologis is uniquely positioned to create value in a higher real-rate environment through mark-to-market rents, land-bank development, data center expansion, and rooftop solar initiatives. Despite these strengths, the shares trade at a meaningful discount to net asset value, implying an overly pessimistic cap rate and replacement cost assumption.

BSD Analysis:
Prologis is the unassailable, high-growth global logistics real estate oligopolist whose value is locked in its dominance of high-barrier-to-entry urban consumption zones. The core thesis is driven by the fact that its real estate assets are critical infrastructure for e-commerce, reshoring manufacturing, and AI data centers. Prologis is converting this dominance into unmatched pricing power, with rents continuing to accelerate. The company's massive scale and focus on sustainability and innovation widen its competitive moat, securing long-term, compounding rental income.

Pitch Summary:
Conduit Holdings Limited experienced a sharp decline in valuation following elevated catastrophe losses and management change. Despite these setbacks, the company maintains a debt-free balance sheet, a high-quality investment portfolio, and aligned management incentives. Fund Management initiated a position at a significant discount to book value, believing that normalized underwriting results and restored investor confidence could drive substantial upside. The Fund views the recent losses as cyclical rather than structural.

BSD Analysis:
Conduit Holdings is a high-quality, high-conviction reinsurance pure-play whose stock is a leveraged bet on the sustained hard market cycle in global reinsurance. The core thesis is driven by the company's low-cost, technology-driven platform and its lack of legacy liabilities, giving it a significant competitive advantage over established peers. This clean structure allows Conduit to write business more profitably and capitalize on the current market environment where premium rates are high and capacity is constrained. The stock is a pure-play on the non-cyclical, high-margin reinsurance market, leveraging its structural advantage to deliver superior underwriting returns.

Pitch Summary:
VF Corp manages apparel brands, including Dickies, The North Face, Timberland, and Vans. The company has brought on a new CEO who has fixed the balance sheet, improved capital allocation, and rebuilt the management team in an effort to return the business to growth. I believe that the company has good brands, the skills to manage them well, and a management team that can handle the challenges that the company faces. VF Corp currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
VF is a brand portfolio turnaround with meaningful operating leverage if management restores discipline across merchandising, inventory, and channel strategy. The balance sheet repair reduces financial risk, while strong brand equity offers a foundation for recovery. If Vans stabilizes and The North Face continues its momentum, the earnings base could rebuild rapidly. Shares trade at depressed multiples relative to historical norms.

Pitch Summary:
Siemens Energy combines a world-class electrical power generation business, a world-class electricity transmission business, and an onshore and offshore wind turbine business that is attempting a turnaround. The company spun out of Siemens in September 2020. After many years of weak electricity demand in OECD countries, Siemens Energy is benefiting from a cyclical boom in demand.

BSD Analysis:
Siemens Energy offers leveraged exposure to global electrification, grid modernization, and renewable build-outs. Strength in gas turbines and transmission offsets weakness in wind, where turnaround efforts are underway. The long-cycle nature of its backlog provides multi-year visibility. Shares remain discounted due to wind concerns, but improving order trends and restructuring progress provide upside optionality.

Pitch Summary:
GetBusy provides online document exchange systems—primarily for accountants. GetBusy spun out of Reckon in August 2017, and has continued to grow since then. GetBusy does not earn money, investing through higher expenses to grow its existing businesses and attempting to launch new products. The underlying businesses are profitable and sustainable in the U.K. and U.S.

BSD Analysis:
GetBusy is a small vertical-software operator reinvesting aggressively in growth, suppressing near-term earnings but enhancing long-term strategic value. Core products have strong retention and niche dominance within accounting workflows. Expansion into new modules and geographies provides optional upside. While unprofitable today, underlying unit economics remain attractive, and valuation reflects minimal expectations.

Pitch Summary:
Frontdoor sells home service plans to homeowners. The company contracts with HVAC and other contractors and dispatches them when customers have problems with one of their major home appliances and systems (furnace, air conditioning, refrigerator, electrical system, etc). Frontdoor spun out of ServiceMaster in October 2018. Frontdoor serves about 2% of U.S. homes, and uses its free cash flow to grow organically, pay down debt, repurchase shares, and acquire complementary businesses.

BSD Analysis:
Frontdoor operates a subscription-like model with sticky customers and recession-resistant demand, supporting recurring cash flow. Penetration remains low at ~2% of U.S. households, offering long runway for expansion. Management has been disciplined in capital allocation—deleveraging, repurchasing shares, and pursuing bolt-ons. Strengthening contractor networks and digital dispatching improve efficiency and margins. Shares trade at modest multiples despite stable mid-cycle cash generation.

Pitch Summary:
Fortrea is a contract research organization (CRO), which means they run clinical trials to test treatments that pharmaceutical companies are trying to get approved for use in patients. I have been following Fortrea since it spun out of Labcorp in June 2023. Back then, Fortrea seemed like an exciting, fast growing business earning good returns on capital, with a star CEO who had a reputation for running (and selling) a similar business. Things have fallen apart since then… Compared to the exciting period after COVID, fervor for new drug research has declined. Less money has flowed to biotech companies, who hire CROs to help run the clinical trials they need in order to market their therapies. In addition to this industry-wide headwind, Fortrea has gone through the expensive process of setting up its own IT systems and operations separate from Labcorp. Fortrea also has a decent amount of debt, which is common in spinoffs. All in, this once exciting business ran into an industry slowdown, increased spending on stand-up costs, and still had all that debt to deal with. Earnings turned to losses, the stock price dropped and kept dropping, and as of mid-May the star CEO was out. Okay…what is there to like about this situation? The positives are that Fortrea has been winning new clinical trials and growing its backlog. The company has nearly completed the stand-up of its own systems and separation from Labcorp’s – which means they can stop paying for two systems, reducing expenses. The financial picture is ugly, but I think that it is improving and that the company will avoid a painful financial restructuring. Also, the stock is priced for disaster. On the other side of the current unpleasantness is a good business in a good industry. Running clinical trials is not capital intensive – the drug company customer supplies the medicine, and the contract research organization finds investigators (doctors) who generally see the trial participants in the doctors’ own offices. While this capital-light model allows contract research organizations to earn good returns on capital, there are barriers to entry for would-be competitors. CROs have to know the science and regulations involved in getting drugs approved in different jurisdictions worldwide, they need to know and have a good reputation with doctors who can work on the clinical trials and bring in patients. And in addition to this know-how and know-who, drug companies need to feel confident that they are hiring a CRO who will give them a solid shot at getting their drug approved for use. Getting a new drug approved is a long and expensive process – and the drug company’s main goal is to maximize the time that their therapy is on-market and patent-protected. Anything that delays FDA approval—be it signing up investigators, recruiting and retaining patients, analyzing and presenting data, and generally jumping through regulatory hoops—eats into that patent-protected period and costs Fortrea’s customers a lot of money. Going with a lower priced new entrant, vs going with Fortrea or one of the other large players with a track record, is risky for the pharmaceutical company customer (and introduces career risk for the individual making the choice) because the new entrant may delay—by months, years, or even permanently—approval by the FDA and other regulators. New drug research should continue as long as patents are legally protected and valuable, and the aging global population increases demand for new treatments. I do not see the current political climate changing either of these long-term drivers. Increasing demand is met by a limited supply of CROs with a track record, which sets the industry up for continued growth at high returns on capital. Historically, CROs have used their free cash flow to grow and to buy back stock. While turnarounds often take more time than I would like, Fortrea should make it back to being a growing business earning high returns on capital, and that might even earn it an exciting earnings multiple. I think they are on track. We paid $5.85 per share for our position in Fortrea, which was about 4.5% of the fund. I thought that price was extremely cheap, though the stock has since dropped further.

BSD Analysis:
Fortrea is a distressed-valuation CRO with durable long-term fundamentals obscured by temporary separation costs, biotech funding cyclicality, and inherited leverage. Its growing backlog demonstrates relevance and customer trust, while completion of the Labcorp separation should unlock meaningful cost relief. CROs historically generate high ROIC through regulatory expertise and reputation-based moats—advantages Fortrea still possesses. Shares trade at crisis-level multiples inconsistent with mid-cycle earnings power. If biotech funding stabilizes and internal execution improves, the stock could re-rate significantly. Key risks include leverage, execution, and industry budget cycles.

Pitch Summary:
Credit Acceptance is a subprime auto lender, enabling subprime borrowers to buy vehicles from used car dealerships. The business has profitably gained share in a large and difficult market for more than two decades. Management allocates free cash flow to growing the business and repurchasing shares at attractive prices. Credit Acceptance currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
CACC’s decades-long track record of disciplined underwriting, countercyclical profitability, and aggressive share repurchases make it a uniquely resilient subprime auto lender. Its dealer-centric model generates robust returns even in tightening credit environments. Long-term EPS compounding is supported by consistent buybacks and strong cash generation. While regulatory scrutiny is an ongoing risk, CACC’s conservative loss provisioning and pricing power help mitigate downside. At current valuation levels, shares appear materially discounted relative to normalized earnings power.

Pitch Summary:
Advance Auto Parts is a store-based retailer of aftermarket automotive parts and supplies. This includes batteries, windshield wipers and fluid, air filters, motor oil, etc. The company has historically earned decent (approaching 20%) returns on tangible capital. The company is attempting a turnaround, and has fixed its balance sheet and is improving operations. Advance Auto currently trades at an attractive upside-to-downside ratio.

BSD Analysis:
AAP represents a classic balance-sheet-first turnaround with historically strong ROIC and a clear operational improvement path. As management rationalizes inventory, tightens cost controls, and restores category competitiveness, margins should recover toward mid-cycle levels. Shares trade below normalized earnings power, offering asymmetric upside if the turnaround sticks. The DIY and DIFM channels remain resilient and provide stable cash flow, while a cleaned-up balance sheet reduces solvency risk. Key catalysts include improving comps, margin expansion, and further capital allocation discipline.

Pitch Summary:
1. Mettler-Toledo International, Inc. (MTD) While MTD remains a best-in-class operator with leading market share in precision weighing and analytical instruments, macroeconomic pressures across its end markets continue to constrain its ability to achieve the mid-teens earnings growth it has delivered historically. China represents a high-teens percentage of MTD’s revenue, and ongoing US-China tensions create an additional headwind, limiting visibility into a return to historical growth rates in the region. Given these dynamics, we exited our position and redeployed the proceeds into investments with clearer long-term growth trajectories.

BSD Analysis:
MTD is a high-quality franchise, but its near-term growth outlook is challenged by cyclical lab and industrial spending softness and elevated China exposure. The company’s historic mid-teens EPS CAGR now looks difficult to sustain given macro headwinds and geopolitical friction. Valuation has often been at a steep premium to peers on the back of its track record, leaving limited margin of safety if growth normalizes lower. While margins and returns on capital remain strong, the risk-reward skews less favorably relative to other compounders with cleaner secular runways. Re-entry could be attractive if expectations reset and visibility into end-market recovery improves.

Pitch Summary:
3. Cloudflare, Inc. (NET): Based in San Francisco, Cloudflare secures over 20% of global internet traffic. Its unified platform, running identical software across 330+ cities, creates a powerful structural edge in cost, scalability, and speed to market. We initiated a position in 2Q as this architecture fuels rapid expansion from its networking core into a large and growing $200B+ addressable market spanning cybersecurity, developer tools, and AI workloads. With new enterprise leadership accelerating platform adoption, we believe the company has visibility into durable 25-30% revenue growth and expanding margins, positioning it as a compelling long-term compounder.

BSD Analysis:
Cloudflare’s globally distributed edge network gives it a unique cost and latency advantage versus traditional data-center-centric architectures. Its expansion from core content delivery into zero-trust security, developer platforms, and AI-adjacent workloads materially enlarges its addressable market. The business is still in the early innings of enterprise penetration, so sustained 25–30% top-line growth with improving operating leverage is plausible. Gross margins are high, and as sales and R&D efficiencies scale, free cash flow margins should expand. While the stock trades at a premium EV/sales multiple, the combination of secular tailwinds, product velocity, and platform effects justifies a long-duration growth thesis.

Pitch Summary:
2. Fair Isaac Corp. (FICO) A graduate of our SMid Cap Growth strategy, FICO provides credit-scoring and other services throughout a wide variety of industries to assist companies with providing credit, protecting against fraud, and analyzing customer data. The company’s successful growth in revenue and earnings has raised its market capitalization to levels appropriate for the Mid Cap Growth strategy, and we believe FICO continues to offer long-term capital appreciation potential.

BSD Analysis:
FICO benefits from a highly entrenched credit-score franchise with quasi-utility characteristics and growing demand for advanced decision analytics. Pricing power and volume growth in scores, combined with expanding software adoption, support strong, high-margin recurring revenue. The company’s asset-light model converts a large share of earnings into free cash flow, enabling buybacks and potential strategic investments. While the stock trades at a premium P/E relative to the market, its dominant competitive position and durable mid-teens EPS growth profile justify the valuation. Rising consumer credit usage and bank investment in risk analytics remain key tailwinds, though regulatory changes and macro credit cycles are risks to monitor.