Investment Pitches

Pitch Summary:
GENI – The digital gaming rights provider continues to execute as expected with several favorable developments recently occurring. In June, the NFL re-upped and extended its data rights deal with GENI to 2029, well in advance of the 2027 expiration date of the previously existing agreement. Genius also recently secured an exclusive data rights deal with the NCAA through 2032. Together, these data rights deals, as well as the lion’s share of data rights deals which were renewed last year, give the company a great deal of visibility into its data costs going forward, paving the way for future incremental revenues to flow through to the bottom line at very attractive incremental margins going forward. With sports-betting now legal in Brazil, legalization in a handful of meaningful U.S. states still to come and a trend that favors continued growth in in-game betting where the company generates a higher take rate on bets placed, incremental revenue opportunities should continue to follow at a healthy pace in a market that itself should continue to grow at a low-double digit rate. Ad revenues are also quickly emerging as meaningful source of new revenues, with Genius’s nascent FanHub engine producing another attractive revenue stream for advertisers seeking to tie ads directly to specific players. Recently the company has stated it is now targeting a 30% EBITDA margin by 2030, a step higher from the prior target of 25%. With strong incremental margins and attractive topline growth likely near 20% for the next several years, the company looks set to grow EBITDA at a ~30%+ CAGR for the next several years. This financial algorithm will sustain the company solidly into the Rule of 40 club (which sums EBITDA margins and revenue growth) for the foreseeable future where most peers trade at 6x sales or better. Today trading at less than 4x sales and at an increasingly wide valuation disparity relative to larger peer Sportsradar Group (SRAD), it stands to reason strong revenues and incremental profits and greater investor understanding of this company and its duopolistic industry structure will continue to provide tailwinds to shares in time.

BSD Analysis:
Genius benefits from long-term contracted data rights that lock in costs and create high operating leverage as revenues scale. With revenue growth near 20% and EBITDA guided toward 30% margins, the Rule-of-40 financial profile supports premium multiples relative to peers. Trading at under 4x sales vs. peer averages ~6x suggests meaningful valuation upside as investors better appreciate the firm’s duopoly position. Catalysts include U.S. state legalization, growth in in-game betting, higher-margin advertising revenue, and EBITDA compounding at ~30%+. The extended NFL and NCAA deals reduce uncertainty and enhance long-term visibility.

Pitch Summary:
U.S. direct-to-consumer pool and spa care services company, Leslie’s Inc. (LESL) continued to weigh on results amid weaker-than-expected demand and lingering inventory and execution challenges. Nonetheless, we believe Leslie’s maintains a leading market share and benefits from a large base of recurring, non-discretionary demand for chemicals and maintenance products. In our view, the company’s investments in omnichannel capabilities and loyalty programs should strengthen customer relationships and support long-term growth. We expect improved inventory management, pricing actions, and cost controls to aid margin recovery over time. Given the stock’s significant pullback and the durability of underlying demand, we see an attractive risk-reward profile for patient investors.

BSD Analysis:
Leslie’s is a pure-play on pool ownership — a niche that looks boring until you remember how expensive and recurring pool maintenance actually is. Parts, chemicals, and services are non-discretionary if you want to avoid turning your backyard into a swamp. The company’s national footprint and loyalty program give it data, scale, and margin advantages independent pool shops can’t touch. Yes, they stumbled on inventory and demand guidance, but the installed base of pools isn’t going away. Over time, Leslie’s should be able to squeeze more wallet share from existing customers through higher-margin services and private label. The stock trades like demand is permanently broken; the reality is more like a temporary reset in a sticky, annuity-like category.

Pitch Summary:
J.M. Smucker Co. (SJM) declined during the period as the company navigated integration of the Hostess Brands acquisition and near-term cost inflation, which weighed on margins and investor sentiment. Despite these challenges, we believe Smucker’s strong portfolio of trusted brands and its growing presence in higher-growth categories such as pet snacks support a solid long-term outlook. We anticipate that synergy capture from the Hostess transaction, productivity initiatives, and disciplined pricing will drive margin recovery over time. In our view, the market is overly focused on short-term earnings noise and underappreciates Smucker’s cash generation and commitment to shareholder returns. Accordingly, we continue to view SJM as an attractive core holding within the Fund.

BSD Analysis:
Smucker has quietly evolved from a sleepy jam-and-jelly outfit into a serious snacking, coffee, and pet-food operator with real pricing power. The Hostess deal gave it a high-margin, impuLondon Stock Exchange-snack weapon that fits neatly into its distribution wheelhouse. Coffee and pet categories remain sticky and resilient even when consumers tighten up, and Smucker has shown it can push price without destroying volume. Supply-chain execution is tight, synergies are real, and free cash flow conversion is consistently strong. This isn’t a flashy CPG giant, but it’s a ruthless, efficient one. At today’s valuation, you’re basically getting a defensive compounder that just added a growth engine.

Pitch Summary:
Core Laboratories, Inc. (CLB) traded lower during the quarter amid investor concerns about the trajectory of global upstream spending and the durability of international and offshore activity. We believe the market is overly discounting Core Lab’s long history of innovation, high-margin, asset-light service offerings, and differentiated technologies. In our view, the company remains uniquely positioned to benefit from increased focus on maximizing recovery from existing reservoirs, which can be more attractive than greenfield development in many cases. While recent results have been pressured by project timing and regional mix, we expect improved activity levels and disciplined cost management to support better profitability over time. We continue to hold CLB based on its attractive long-term earnings power and strong returns on invested capital.

BSD Analysis:
Core Labs is the brainy oilfield services name that earns its keep by telling operators where and how to drill more profitably, not just throwing more iron at the ground. Its reservoir characterization and production enhancement work matter even more in a world obsessed with capital discipline and free cash flow. As shale matures, squeezing more out of existing basins is a science project — and that’s exactly where Core gets paid. The model is asset-light, margins are structurally higher than generic OFS, and international work adds a steady layer of resilience. It won’t show the wild top-line spikes of a frac pumper, but it also doesn’t implode every time rig counts wobble. For investors wanting leveraged exposure to oil without pure volume risk, Core Labs is still one of the smartest ways to play it.

Pitch Summary:
Northern Trust Corporation (NTRS) advanced following strong quarterly earnings results and rumors of a potential merger with Bank of New York Mellon, which partially reversed prior underperformance. In our view, NTRS remains a trusted name offering diversified products in a favorable industry with high barriers to entry. We believe Northern’s 135-year track record highlights its stability and strength in navigating macroeconomic volatility with a conservative operating approach. Moreover, we see opportunity for management to improve operating efficiency and enhance profitability through ongoing technology investments and cost initiatives. We continue to hold NTRS as a high-quality financials position within the portfolio.

BSD Analysis:
Northern Trust is the bank you own when you want exposure to global wealth and institutional assets, not overdraft fees and branch drama. Its fee-heavy model in custody, asset servicing, and wealth management gives it more resilience than traditional lenders when the rate cycle turns. Yes, higher short rates helped NII, but the real story is sticky, recurring trust and asset-servicing revenue from some of the world’s largest pools of capital. Capital ratios are conservative, credit risk is boring in the best way, and the franchise value with ultra-high-net-worth clients is enormous. The stock trades at a discount because investors lump it in with generic regionals. That’s a mistake — this is an infrastructure play on global wealth, not just another bank.

Pitch Summary:
Shares of global leader in for-profit education, Adtalem Global Education, Inc. (ATGE), traded higher following strong quarterly results featuring robust enrollment trends and continued margin expansion. We believe Adtalem’s focus on healthcare education provides a defensive growth profile supported by long-term demand for nurses and physicians. In our view, management has executed well on portfolio simplification and cost initiatives, leading to improved returns on invested capital and free cash flow. While political and regulatory risk remain inherent to the for-profit education space, we think Adtalem’s emphasis on program quality and student outcomes differentiates it from many peers. As such, we continue to view ATGE as an attractive holding for the Fund.

BSD Analysis:
Adtalem is quietly turning from a troubled for-profit operator into a focused healthcare-education cash machine. By leaning into nursing, medical, and healthcare programs, it’s tied itself to one of the tightest labor markets in the U.S. — chronic shortages with governments and hospitals desperate for talent. Regulatory baggage still scares off lazy investors, but Adtalem’s outcomes and licensure pass rates are far stronger than the old for-profit stereotype. The company has cleaned up its balance sheet, tightened enrollment quality, and is now seeing operating leverage as demand for healthcare degrees stays elevated. Pricing power is real when your graduates walk into jobs immediately. At today’s multiple, the market is still pricing in an old regulatory horror story instead of a rehabbed, mission-critical education platform.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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