Investment Pitches

Pitch Summary:
Comfort Systems USA is a leading national mechanical and electrical contractor that installs, maintains, and services HVAC, plumbing, piping, and electrical systems for commercial, industrial, and institutional buildings. The company has emerged as a critical infrastructure partner in the data center buildout, where its specialized mechanical and electrical capabilities are in high demand as hyperscalers expand capacity at an accelerating pace. During the quarter, shares contributed positively to performance after the company delivered better-than-expected fiscal fourth-quarter results, highlighted by strong revenue growth, record margins, and a backlog that nearly doubled year over year. Additionally, technology-related projects, primarily data center construction, now represent a substantially larger share of the revenue mix.

BSD Analysis:
The manager presents a compelling bull case for Comfort Systems USA, positioning the company as a direct beneficiary of the accelerating data center buildout driven by AI infrastructure demand. The investment thesis centers on the company's specialized mechanical and electrical capabilities being essential for hyperscaler capacity expansion. Recent fundamental performance validates this thesis, with the company delivering better-than-expected Q4 results featuring strong revenue growth and record margins. The near-doubling of backlog year-over-year provides strong visibility into future revenue streams. Most notably, the increasing mix of technology-related projects, particularly data center construction, demonstrates the company's successful positioning within this high-growth vertical. The manager views this as a structural growth opportunity rather than a cyclical upturn, given the sustained capital expenditure requirements for AI infrastructure.

Pitch Summary:
Reddit is an online community platform where users share, discuss, and engage with content across a wide range of topics. The company posted solid revenue growth and profitability, while the closely watched metric of logged-in user growth was somewhat disappointing. Additional uncertainty around upcoming large language model (LLM) data-licensing renewals also pressured sentiment. The company authorized a stock buyback and provides an appealing audience for advertisers, as roughly half of its users are not active on other social media platforms.

BSD Analysis:
The manager takes a neutral stance on Reddit following mixed quarterly results that showed both positive and concerning trends. While the company delivered solid revenue growth and achieved profitability, the disappointing logged-in user growth metric raises questions about platform engagement and long-term growth sustainability. Uncertainty around large language model data-licensing renewals creates additional near-term headwinds and revenue visibility concerns. However, Reddit's unique value proposition for advertisers is compelling, with approximately half of its user base not active on other social media platforms, providing access to a differentiated audience. The company's stock buyback authorization demonstrates management confidence and capital allocation discipline. The manager appears to be weighing the company's advertising potential and unique user base against user growth concerns and data licensing uncertainties. This represents a wait-and-see approach to a social media platform with both attractive characteristics and execution challenges.

Pitch Summary:
Roblox provides an online gaming platform for children, teens and, increasingly, adults. After a very strong 2025 when some new games became major viral hits, investors have become concerned about the lack of similar enthusiasm for new games. Furthermore, the growing concern globally around the use of social media and games aimed at younger audiences has also weighed on sentiment, although we have not seen any changes in user behavior thus far. We remain positive on the company given its massive base of engaged users, cash flow generation, and the potential for new gaming hits to reaccelerate growth.

BSD Analysis:
The manager maintains a bullish stance on Roblox despite recent investor concerns about gaming momentum and regulatory headwinds. The investment thesis is anchored on the company's massive base of highly engaged users across expanding demographics, including growing adult participation beyond the core children and teen audience. While investors worry about the lack of new viral gaming hits following a strong 2025, the manager views this as a temporary cyclical concern rather than a structural issue. The company's strong cash flow generation provides financial stability and supports continued platform investment. Regulatory concerns around social media and gaming for younger audiences represent a potential headwind, but the manager notes no actual changes in user behavior to date. The platform's potential for new gaming hits to emerge and reaccelerate growth remains intact given the large, engaged user base. The manager views current concerns as overblown relative to the company's fundamental strengths and long-term growth potential in online gaming and virtual experiences.

Pitch Summary:
Axon Enterprise, a market leader in next-generation law enforcement technology, delivered a strong quarterly update that drove upward revisions to key growth metric expectations. Despite this positive fundamental performance, the stock lagged as the market severely compressed valuation multiples across software and related industries, particularly those perceived as vulnerable to rapid advancements in artificial intelligence. In Axon's case, we believe this reaction is misplaced, as the company remains well positioned and has already demonstrated the ability to become a key adopter and implementer of AI, enhancing its product offerings while remaining mission-critical to customers' daily operations.

BSD Analysis:
The manager maintains a strong bullish view on Axon Enterprise despite recent stock underperformance, viewing the market reaction as misplaced. The investment thesis is based on strong fundamental performance with upward revisions to key growth metrics following a solid quarterly update. While the broader market has compressed valuations for software and AI-vulnerable companies, the manager believes Axon is uniquely positioned to benefit from AI advancements rather than be disrupted by them. The company has already demonstrated its ability to adopt and implement AI technologies to enhance its product offerings, creating competitive advantages rather than vulnerabilities. Axon's mission-critical role in law enforcement operations provides defensive characteristics and customer stickiness that should support long-term growth. The manager views the current valuation compression as a buying opportunity for a high-quality technology company with strong fundamentals. This represents a contrarian play on a market leader in law enforcement technology with AI integration capabilities.

Pitch Summary:
Carvana is an online used car retailer that enables customers to buy, sell, and finance vehicles through a fully digital platform. The stock sold off on quarterly results. While new units and revenue were strong, profitability trailed expectations. Costs associated with refurbishing vehicles rose more than expected. This cost issue is likely to take at least a quarter to regain control and in the near term takes the luster away from very strong unit growth.

BSD Analysis:
The manager takes a neutral stance on Carvana following mixed quarterly results that highlighted both strengths and operational challenges. While the company demonstrated strong top-line performance with robust new unit sales and revenue growth, profitability disappointed due to higher-than-expected vehicle refurbishment costs. This cost inflation issue appears to be a temporary operational challenge that management should be able to address within a quarter, but it overshadows the otherwise strong unit growth metrics. The manager recognizes Carvana's digital platform advantages and strong demand trends but remains cautious about near-term profitability pressures. The company's fully digital approach to used car retail represents a compelling long-term business model, but execution on cost control will be critical for investment returns. The manager appears to be monitoring the situation closely for signs of operational improvement. This represents a wait-and-see approach to a growth company facing temporary margin pressures.

Pitch Summary:
Ares Management is an alternative asset manager focused on private credit, private equity, real estate, and infrastructure investing. The stock was under pressure throughout the quarter as retail investors moved quickly to redeem private credit products, putting Ares' asset-raising capability and fund performance in question. Ares focuses more toward institutional products, and as this shakeout continues, we believe its business mix, diversification, and track record should help separate the company from peers.

BSD Analysis:
The manager maintains a contrarian bullish stance on Ares Management despite near-term headwinds from retail investor redemptions in private credit products. The investment thesis is based on Ares' differentiated business model that focuses more heavily on institutional products rather than retail channels, which should provide greater stability during market volatility. The manager views the current retail redemption cycle as a temporary shakeout that will ultimately benefit well-positioned players like Ares. The company's diversified platform spanning private credit, private equity, real estate, and infrastructure investing provides multiple revenue streams and risk mitigation. Ares' strong track record and institutional focus should help the company gain market share as weaker competitors struggle with retail outflows. The manager believes the company's business mix and operational diversification will allow it to outperform peers during this challenging period. This represents a contrarian value opportunity in alternative asset management with strong long-term fundamentals.

Pitch Summary:
XPO, a leading provider of less-than-truckload (LTL) freight transportation services, delivered strong performance despite a challenging freight environment that has persisted for several years. The company's execution has been particularly evident in improving service levels, helping to narrow the market share and pricing gap with its best-in-class peer. Additionally, a recovery in the Institute for Supply Management® manufacturing Purchasing Managers' Index® (PMI®) above the key 50 threshold, along with constructive forward commentary from management, supported improved sentiment and contributed to the stock's strong performance during the quarter.

BSD Analysis:
The manager presents a compelling turnaround story for XPO based on strong operational execution despite challenging industry conditions. The investment thesis centers on the company's ability to deliver strong performance while the broader freight environment has remained difficult for several years. XPO's focus on improving service levels is helping to close the competitive gap with best-in-class peers, suggesting potential for market share gains and pricing power improvement. The recovery in manufacturing PMI above the critical 50 threshold indicates improving demand conditions that should benefit freight transportation services. Management's constructive forward commentary provides confidence in the company's strategic direction and execution capabilities. The manager views XPO as well-positioned to benefit from both operational improvements and cyclical recovery in freight demand. Strong quarterly performance demonstrates the company's resilience and competitive positioning. This represents a cyclical recovery play with operational improvement potential in the LTL freight transportation market.

Pitch Summary:
Quanta Services, a leading provider of infrastructure solutions across electric utility, energy, and data center markets in North America, delivered another strong quarter supported by solid execution. Results were complemented by continued backlog growth and constructive management commentary, reinforcing a robust outlook for future expansion. As a full-scale solutions provider with exposure spanning the AI infrastructure value chain, Quanta is distinctly positioned to capitalize on this generational investment cycle, which is driven by accelerating demand for power, connectivity, and data center capacity.

BSD Analysis:
The manager maintains a bullish view on Quanta Services based on strong operational execution and strategic positioning within multiple high-growth infrastructure markets. The investment thesis centers on Quanta's comprehensive exposure to the AI infrastructure buildout, spanning electric utility, energy, and data center markets across North America. Strong quarterly results and continued backlog growth provide excellent revenue visibility and support future earnings projections. Management's constructive commentary reinforces confidence in the company's growth trajectory and market opportunities. Quanta's positioning as a full-scale solutions provider creates competitive advantages and allows the company to capture value across the entire AI infrastructure value chain. The manager views this as a generational investment cycle driven by accelerating demand for power infrastructure, connectivity solutions, and data center capacity. The company's diversified end-market exposure provides both growth potential and risk mitigation. This represents a high-conviction play on AI infrastructure spending with strong execution capabilities.

Pitch Summary:
Casey's General Stores operates a chain of convenience stores that sell fuel, groceries, and freshly prepared food, such as pizza, primarily in small-town and rural areas across the Midwest. The stock performed well, driven by strong quarterly results, with continued strength in fuel margins and robust in-store sales, particularly in prepared foods and pizza. It also benefitted from expectations that recent increases in oil prices could further expand fuel margins.

BSD Analysis:
The manager presents a positive outlook for Casey's General Stores based on strong operational performance and favorable market dynamics. The investment thesis centers on the company's successful execution in both fuel and food segments, with particular strength in prepared foods and pizza offerings that drive higher-margin in-store sales. Casey's geographic focus on small-town and rural Midwest markets provides a defensive competitive position with limited direct competition. Strong quarterly results demonstrate effective operational management and market positioning. The recent increase in oil prices creates a potential tailwind for fuel margins, which could provide additional earnings upside. The company's diversified revenue streams from fuel, groceries, and prepared foods offer stability and growth opportunities. The manager views Casey's as well-positioned to benefit from both operational excellence and favorable commodity price trends. This represents a defensive consumer staples play with growth potential from food service expansion.

Pitch Summary:
Teradyne designs and manufactures testing equipment for semiconductors. Investors have appreciated its strong position in testing for next-generation memory and application-specific integrated circuit (ASIC) testing for AI workloads. Additionally, there is potential for the company to gain market share with the largest semiconductor company in the world.

BSD Analysis:
The manager maintains a bullish stance on Teradyne based on its strategic positioning in semiconductor testing equipment, particularly for next-generation technologies. The investment thesis focuses on Teradyne's strong competitive position in testing next-generation memory and application-specific integrated circuits (ASICs) for AI workloads, which represents a high-growth market segment. The company appears well-positioned to benefit from the AI infrastructure buildout requiring sophisticated testing capabilities for advanced semiconductors. A key catalyst mentioned is the potential for significant market share gains with the world's largest semiconductor company, which could provide substantial revenue upside. The manager's confidence stems from investor appreciation of Teradyne's technological capabilities and market positioning. The focus on AI-related testing equipment aligns with broader secular trends in artificial intelligence and high-performance computing. This represents exposure to the critical semiconductor testing infrastructure required for AI advancement.

Pitch Summary:
Vertiv Holdings, a global leader in critical infrastructure for data centers and communication networks, delivered a quarter that significantly exceeded even the most bullish expectations. Strength was particularly evident in orders and backlog, providing strong visibility into future growth. The company is well positioned to benefit from accelerating data center investment, driven by rapid expansion in high-performance computing and artificial intelligence (AI). Vertiv's leadership in power and thermal management, combined with strategic relationships across leading semiconductor manufacturers and hyperscale customers, reinforces its role as a key enabler of next-generation AI infrastructure.

BSD Analysis:
The manager presents a compelling bull case for Vertiv Holdings based on exceptional quarterly performance that surpassed even optimistic expectations. The investment thesis centers on Vertiv's strategic positioning within the AI infrastructure boom, particularly benefiting from accelerating data center investments driven by high-performance computing and artificial intelligence expansion. The company's leadership in critical power and thermal management solutions, combined with established relationships with major semiconductor manufacturers and hyperscale customers, creates a strong competitive moat. Strong order growth and expanding backlog provide excellent revenue visibility and support future growth projections. The manager views Vertiv as a key infrastructure enabler for next-generation AI applications, positioning it to capture significant value from this generational technology shift. The emphasis on exceeding bullish expectations suggests strong operational execution and market positioning. This represents a high-conviction position benefiting from secular AI infrastructure spending trends.

Pitch Summary:
We initiated a position in DNOW, Inc. (DNOW), a distributor of energy and industrial products. Spun off from National Oilwell Varco in 2014, DNOW has grown revenue and improved profitability over the past five years despite a weak upstream E&P environment. In November 2025, DNOW merged with its largest competitor, MRC Global, forming a $2.22 billion company with a diversified revenue mix: approximately 41% upstream energy, 21% midstream, 21% gas utilities, and 17% downstream and industrial. We bought shares following the sharp sell-off after DNOW Inc. reported 4Q25 earnings. In our view, the release led to investor neglect due to numerous merger-related accounting charges and news that legacy MRC Global was experiencing significant issues with its Oracle ERP conversion. We believe this disruption has obscured the merger's substantial revenue and cost synergies, as well as a potential cyclical recovery in upstream and chemical spending. We also think investors are overly pessimistic about DNOW's ability to resolve the ERP issues by transitioning sales to its fully functional SAP system, as management has successfully integrated more than two dozen acquisitions since its spin-off. DNOW Inc.'s strong balance sheet supports both integration efforts and shareholder returns. Net debt to EBITDA was just 1.2x at year-end. While management has conservatively guided to $100–$200 million in free cash flow, it still targets a net debt-free position by year-end, implying roughly $264 million in debt reduction. Post-merger working capital remains elevated, with inventories and receivables high and days sales outstanding at 83 versus a historical -63 days. Management expects to generate cash as it normalizes these levels through 2026. DNOW has also been opportunistic with share repurchases. At current valuations, buybacks could be prioritized over debt repayment, given its ample liquidity, including a revolver with over $430 million of unused capacity. The company also retains flexibility to pursue additional M&A opportunities. We see meaningful catalysts for DNOW Inc.'s growth over 2026 and beyond. Its merger with MRC Global has significantly diversified the revenue mix, strengthening its midstream and international exposure. DNOW initially targeted $70 million in cost synergies over three years (about 20% of 2026E EBITDA) but has already raised its year-one target from $17 million to $23 million. Much of this increase reflects accelerated efforts to resolve MRC's ERP issues by shifting revenue onto DNOW's platform, in our view adopting the mantra "never waste a crisis". Management has indicated there could be upside to this $70 million, and we think this strong start supports this contention. Additionally, DNOW Inc. sees significant cross-selling opportunities driven by expanded geographic coverage and complementary customer bases, with legacy DNOW stronger among smaller private companies and MRC Global better penetrated with large corporates. DNOW Inc. expects strong growth in its midstream and gas utility markets in 2026 and beyond. In midstream, the company sees continued expansion in natural gas processing, produced water management, and emerging opportunities tied to data center infrastructure, where it grew its customer base to 11 by year-end from none in 2024. Gas utilities are also increasing capacity to meet rising energy demand, driven by data center development and broader economic growth. Finally, although we initiated our position before the Iran conflict, we think the resulting spike in oil and chemical prices could be the catalyst to break U.S. upstream and chemical downstream spending out of its roughly 3-years of stagnant growth. At the end of 1Q26, shares of DNOW were priced at $11.91, significantly under its February 11, 2026, high of $17.26. With a broader, more diversified revenue base, DNOW expects a more stable free cash flow profile and is targeting an 8% EBITDA margin by 2028, above its standalone performance in recent years. As margins improve and cash flows stabilize, we believe the stock can re-rate closer to industrial distributor peers, where valuation multiples are 50%--100% higher than current levels. We have set our price target at $17, up over 42% from current levels and still under February 2026 highs. Key catalysts include delivery of cost synergies, realization of cross-selling opportunities, continued bolt-on M&A, debt reduction, and potential share repurchases.

BSD Analysis:
Rewey Asset Management presents a compelling contrarian opportunity in DNOW following the MRC Global merger and subsequent market selloff. The manager identifies temporary ERP integration issues as creating investor pessimism that obscures substantial merger synergies and cyclical recovery potential. The investment thesis centers on DNOW's transformation into a more diversified energy distributor with enhanced scale and geographic reach. Strong balance sheet metrics including 1.2x net debt-to-EBITDA and over $430 million in unused revolver capacity provide financial flexibility for integration execution and shareholder returns. The manager's $17 price target implies 42% upside based on multiple expansion toward industrial distributor peers as margins improve and cash flows stabilize. Key catalysts include accelerating cost synergies, cross-selling opportunities, and potential energy sector recovery driven by geopolitical tensions.

Pitch Summary:
KD was our weakest performer in 4Q25, as it initiated a disappointing 2026 revenue growth forecast down 2 to 3%, vs. expectations of turning the corner to revenue growth, albeit a modest 1%. Additionally, the company unexpectedly replaced its CFO and General Counsel and noted it would report a financial reporting control deficiency in its 10K. Despite these setbacks, we think the KD transformation story remains in-tact, and that post IBM-spin revenue will accelerate in 2026 at higher margins. Notably, management reaffirmed its target of generating over $1 billion in free cash flow in fiscal 2028 (March 2028), which implies a potential a 34.2% FCF yield at the quarter-end stock price.

BSD Analysis:
Despite near-term operational challenges, Rewey Asset Management maintains conviction in Kyndryl's post-IBM transformation story. The manager acknowledges significant headwinds including disappointing revenue guidance, management turnover, and internal control deficiencies, yet views these as temporary setbacks rather than fundamental issues. The investment thesis centers on the company's transition to higher-margin services and eventual revenue acceleration. The compelling valuation metric of a potential 34.2% free cash flow yield by fiscal 2028 suggests significant upside if management executes on its $1 billion FCF target. This contrarian position reflects the manager's belief that current market pessimism creates an attractive entry point for a successful turnaround story.

Pitch Summary:
UCTT, highlighted in our 3Q25 letter, was our top performer in 1Q26, delivering a 141.5% return. The stock surged on strong quarterly results and a sharp inflection in the outlook for semi-conductor capital spending. Memory chips are now in short supply, as it has become apparent that artificial intelligence will be a massive consumer of memory. In response, major chipmakers have announced significant increases in capex, and we believe this upcycle is still in its early stages.

BSD Analysis:
Rewey Asset Management maintains a bullish stance on Ultra Clean Holdings following exceptional Q1 performance driven by semiconductor capital equipment recovery. The manager identifies AI-driven memory demand as a key catalyst, creating supply shortages that are prompting major chipmakers to significantly increase capital expenditures. The 141.5% quarterly return validates the manager's earlier thesis from Q3 2025. The investment case centers on UCTT's positioning within the semiconductor equipment supply chain during what appears to be an early-stage upcycle. The manager's confidence in continued momentum suggests they view current AI infrastructure buildout as a multi-year tailwind for semiconductor manufacturing equipment demand.

Pitch Summary:
Recruitment Consultancy Robert Walters (RWA) sank to a £50 million market cap during March. I couldn't help myself. Having declared "Turnaround, Turnaround" in January I had my eye on this bowl. Here's the maths I did. £116m NAV for £50m (Reduced from £85m market cap per my prior article) so YOU'RE GETTING PAID £30m cash/debtors net of creditors for a business that can generate £40m net profit in a good year. Yes, cash has reduced in the 1Q26 update but RWA also say the net cash is anticipated to be stable vs end of 2025 by the end of 2026. £116m NAV for £85m where ex-cash and debtors/creditors you're paying £5m for a business that in a good year that business can deliver a £40m per year net profit, and pay large parts of that in dividends. Today's update and rise still leaves RWA at a miserly £60m. So you only get paid £20m to buy RWA based on net current assets. Is RWA successfully navigating the bottom of a difficult cycle and beginning a pivot toward growth? While the headline figure of a 2% decline in net fees might seem negative, the underlying data reveals a significant "sequential improvement" to Net Fee Income (NFI) compared to the double-digit declines seen in 2025. Specifically we see a reasonable level of NFI growth in the UK and RoW with improvement in Asia (particularly Japan) and specific weakness in parts of Europe, but not Spain. Four of RWA's top markets are now growing they tell us. Of particular note was the contrast of Jan/Feb vs March. The quarter was down -2% and March was up 5%. That is highly encouraging because March was the month where there was conflict between the US and Iran. Group net fees in March were up 5% year-on-year. Efficiency Gains: Fee earner productivity rose 9%, and perm placements per fee earner increased by 6%. Management has successfully cut costs in the business, meaning any revenue growth will now drop more significantly to the bottom line. This is further evidenced by net fees falling by less than headcount. Cost Management: The monthly overhead cost run rate has been reduced to below £23.5m (from £24m at the end of 2025), showing disciplined operational control. Compared with £21.7m net fee income we are approaching break even. Approx. a -£1.8m Operating Loss for 1Q26. An 8.3% increase to NFI and/or a -7.6% reduction to overheads will tip RWA into profit. We know productivity improvements have been achieved largely through automation of tasks and systems meaning these can scale as revenue grows again without re-hiring back all the non-fee earners. Cash Position: Net cash of £20.1m is healthy, especially considering Q1 is a seasonally high-outflow period due to annual bonus payments. The fact that fee earners were ADDED is a further bullish signal. RWA are adding presumably from its competitors (who are also bleeding red). The ratio of fee earners to all employees now nearly reaches 60%. Overhead per non-fee earner strongly indicates investment into systems and automation where costs per person are 10% higher than 2025. Machine is replacing "man". Particularly as we know that non-fee earning activity has been moved out of high-cost locations (e.g. the Uk - thanks to Rachel) to lower-cost office locations. The "attractiveness" of RWA is its geographic diversification, which is currently working in its favour as different regions recover at different speeds: Asia Pacific up 4% YoY Japan (+13%) has returned to growth following actions taken late 2025 to improve performance; a vital sign for the Group's largest market. UK up 1% YoY RWA reported the market is stabilising; RWA is outperforming many smaller domestic rivals. Europe -16% YoY The "drag" on the Group. Northern Europe remains tough, though Spain is a bright spot (+13%). Recruitment Outsourcing+13% This is the first growth since 2022 and the increase is significant. Outsourcing is more defensive, long-term income. This is a strong indicator of recovering recruitment demand - since it shows businesses are committing to an ongoing service rather than just to a one-off recruitment assignment. The Bull Case: Operational Leverage: With headcount down 10% year-on-year but productivity up, RWA is "coiled" for a profit surge when hiring volumes improve, even slightly. Japan Recovery: Japan is RWA's "jewel in the crown." Its return to growth alongside the UK, Spain and New Zealand - half the top 8 markets is a significant leading indicator for recovery. Perm is high-margin and Japan saw better performance in Permanent Recruitment. So a higher result from higher-margin business. Dividends: RWA had a 25-year track record of maintaining dividends. I did say "had". But it'll come back. A theory posited by RWA Management in answer to an analyst question of why is RWA positive when your competitors are bleeding badly was that "we are 4 years from the last recruitment surge post covid in 2022. People get an itch after "a few years" to move roles and that plus the UK's rising cost of living is prompting more people to seek new roles." The Bear Case: European Fragility: The 16% decline in Europe (and 36% in Belgium) shows that a full global recovery is not yet here. We have "more work to do" says CEO Fowlston perhaps wiping the blood from his scythe. Macro/Geopolitical Sensitivity: Management explicitly noted potential downstream impacts from Middle East tensions. Could the conflict flare up and worsen? Perm vs. Temp: Permanent recruitment (65% of the mix) fell 2%, while Temp fell 11%. A heavy reliance on Perm makes the company more sensitive to economic confidence than firms with larger Temp/Contracting bases. Conclusion: RWA has provided further evidence how scything, whipping and grafting delivers results and green shoots of recovery. The business has stabilised, costs are down, and the most profitable regions (Japan, UK) are showing green shoots. Investors reacted today with RWA up 7% to the news that the "worst is over," though the pace of the share price recovery will likely be dictated by how quickly underperforming Northern Europe can be improved. Or scythed. But given the March exit rate of +5% growth, the 1Q26 results mask today's performance and perhaps 2026's outlook. RWA is likely operating profit profitable now in April. Overheads are now below -£23.5m right? 1Q25 was £67.3m so a third of that would be £22.43m. Plus 5% YoY is £23.53m.

BSD Analysis:
The Oak Bloke presents a compelling turnaround thesis for Robert Walters, emphasizing the extreme valuation disconnect where investors pay £60m for a business with £116m in net asset value and historical £40m annual profit capability. The manager highlights sequential improvement in Net Fee Income despite headline declines, with March showing 5% year-over-year growth and four of the top eight markets now expanding. Operational efficiency gains are substantial, with fee earner productivity up 9% and overhead costs reduced to £23.5m monthly, positioning the company near breakeven with only modest revenue growth needed for profitability. The geographic diversification provides defensive characteristics, with Japan's 13% growth particularly encouraging as the largest market. Management's strategic cost-cutting through automation and geographic optimization creates significant operational leverage for when recruitment demand fully recovers. The investment case centers on buying a cyclically depressed asset at a substantial discount to book value with clear signs of operational turnaround and early market recovery. However, European weakness and geopolitical sensitivity remain key risks to monitor.

Pitch Summary:
Nu Holdings (aka Nubank) is a leading digital banking platform headquartered in Brazil that is transforming consumer banking across Latin America by delivering a superior, low-cost, mobile-first experience. NuBank was built as a technology company rather than a traditional bank, and it focuses on serving mass-market and underbanked consumers with products such as credit cards, digital accounts, loans and insurance, all integrated into a seamless platform. With more than 131 million customers across Brazil, Mexico and Colombia, the company has achieved significant scale while maintaining strong financial performance, including high returns on equity and industry-leading efficiency. Its mission-driven approach—aimed at reducing complexity and increasing financial inclusion—positions it at the center of a large and underpenetrated market opportunity across the region. For fiscal year 2025, the company generated $11.2 billion in revenue on a $75 billion asset base. The company has a 38% operating margin and a return on equity of 30%. We believe Nu Holdings represents a rare combination of durable growth, strong profitability and a structural competitive advantage. The company's low-cost, technology-driven model enables it to serve customers more efficiently than traditional banks, creating a powerful flywheel where high engagement and an expanding product suite drive increasing revenue per customer over time. Its use of proprietary data and AI-driven underwriting supports resilient credit performance, even with a large unsecured lending base. Importantly, Nu is still early in monetizing its large customer base, particularly outside Brazil, providing a long runway for growth. Combined with aligned founder-led leadership and exposure to a massive total addressable market, Nu stands out as an EGC with the potential to compound value over many years.

BSD Analysis:
Brown Capital Management adds Nu Holdings as a compelling fintech play targeting Latin America's underbanked population through a technology-first digital banking platform. The investment thesis emphasizes Nu's massive scale with 131 million customers across Brazil, Mexico, and Colombia, while maintaining exceptional financial metrics including 38% operating margins and 30% return on equity on $11.2 billion revenue. The manager highlights Nu's structural competitive advantages through its low-cost, mobile-first model that creates a powerful customer acquisition and retention flywheel with expanding product suites driving higher revenue per customer. Key differentiators include proprietary AI-driven underwriting capabilities that enable resilient credit performance despite significant unsecured lending exposure, and early-stage monetization opportunities particularly outside Brazil. The fund views Nu as positioned at the center of a massive underpenetrated market opportunity focused on financial inclusion across Latin America. Strong founder-led leadership provides strategic alignment, while the technology-driven approach enables superior efficiency versus traditional banks. The combination of durable growth prospects, strong profitability, and structural advantages in a large addressable market aligns with Brown Capital's EGC framework for long-term value compounding.

Pitch Summary:
Safran is a France-headquartered, market leading, global aerospace and defense company that designs and manufactures critical systems and equipment for aircraft, including engines, landing gear, nacelles, avionics and cabin interiors. Its business is anchored by aerospace propulsion (roughly half of revenue), complemented by equipment & defense and aircraft interiors. The company plays a central role in the global aviation ecosystem, with its CFM56 and LEAP engine families forming one of the largest installed bases in the industry. Safran enjoys both a durable revenue stream and a defensible market position in that its business model is built around long-lived engine programs, where initial engine sales are followed by decades of high margin aftermarket service revenue tied to flight hours. In addition, the company benefits from accelerating defense spending, sustained growth in narrow-body aircraft demand, a backlog of over 11,000 LEAP engines, and a massive installed base that drives predictable aftermarket revenue and roughly 70% of operating income. This dynamic supports a long runway for 10%-plus annual revenue growth and mid-teens earnings growth, supported by pricing power, margin expansion through operating leverage. Combined with high barriers to entry, recession-resistant demand tied to global air travel, and decades-long product life cycles, Safran possesses the durability, scalability and profitability that define a true EGC.

BSD Analysis:
Brown Capital Management presents Safran as a new addition exemplifying their Exceptional Growth Company criteria through its dominant position in aerospace propulsion and aftermarket services. The investment thesis centers on Safran's razor-and-blade business model where initial engine sales generate decades of high-margin aftermarket revenue tied to flight hours, creating predictable cash flows and defensive positioning. The manager highlights the company's massive installed base with CFM56 and LEAP engine families, plus an impressive backlog of over 11,000 LEAP engines providing multi-year revenue visibility. Safran benefits from multiple growth drivers including accelerating defense spending, sustained narrow-body aircraft demand, and aftermarket services representing 70% of operating income. The fund projects a compelling growth trajectory with 10%+ annual revenue growth and mid-teens earnings expansion supported by pricing power and operating leverage. Key competitive advantages include high barriers to entry, recession-resistant demand linked to global air travel, and decades-long product lifecycles that create switching costs. The combination of durable cash flows, scalability, and profitability aligns with Brown Capital's EGC investment framework, making this a strategic addition to diversify beyond AI-impacted holdings.

Pitch Summary:
Cochlear researches, develops and sells cochlear implants for severely hearing-impaired individuals around the world. Founded in 1981 and based in Sydney, Australia, the company has cumulatively provided more than a million implants to patients. These mission-critical devices improve the quality of life and serve an underpenetrated addressable global market. Worldwide, there are 1.5 billion people with hearing loss, but more than 60 million have severe (31 million), profound (17 million) or complete (13 million) hearing loss. Patients in this segment can benefit from an implantable solution like Cochlear, but the segment remains less than 5% penetrated. Cochlear is the market leader with a 60% market share and enjoys significant barriers to entry from competitors and limited risk of technological substitution. The company holds 2,300 patents and spends more than 12% of sales on R&D, or $189 million in fiscal year 2025 (ended June). Product development focuses on sound processing, connectivity, smaller and lighter form factors, and longer battery life. Implants are about 61% of revenue, and associated services are more than 25% of revenue. During the quarter, the company reported flat year-over-year revenue growth vs. expectations of about 5%. The primary reason for the shortfall was a longer contract process for the new Nexa Implant System, marketed as the world's first cochlear implant system which allows for technology upgrades over the patient's lifetime. The delay affected product availability and reimbursement in the short term. Now that the Nexa system is broadly available, we expect stronger results in the second half. Cochlear's value proposition remains intact, and we continue to like the company's long-term growth prospects.

BSD Analysis:
Brown Capital Management maintains conviction in Cochlear despite near-term headwinds, emphasizing the massive underpenetrated market opportunity with less than 5% penetration among 60+ million severe hearing loss patients globally. The manager highlights Cochlear's dominant 60% market share, substantial competitive moats including 2,300 patents, and significant R&D investment at 12% of sales ($189 million in FY2025). The investment thesis centers on the mission-critical nature of hearing implants and strong barriers to entry with limited technological substitution risk. While Q1 results disappointed with flat revenue growth versus 5% expectations, the shortfall was attributed to longer contract processes for the innovative Nexa Implant System, which offers lifetime technology upgrades. The manager views this as a temporary setback with the Nexa system now broadly available, expecting stronger second-half performance. Cochlear's diversified revenue model with 61% from implants and 25% from higher-margin services provides recurring income streams. The long-term growth outlook remains attractive given the vast addressable market and the company's technological leadership position in this specialized medical device segment.

Pitch Summary:
Camtek is an Israel-headquartered maker of metrology and inspection equipment used in the production of integrated circuits. The company's products are used to measure, inspect and confirm that chips are functioning as they should before they are sold to electronics manufacturers, for whom solid connections are essential for reliable performance. One of Camtek's specialties is its high-performance, three-dimensional inspection equipment, which uses white light to more accurately measure "bump heights," or the height of the contacts on the stacked chip packages. Camtek's customers use its technology to test a variety of chips, including graphical processing units (GPUs) and high-bandwidth memory (HBM) for AI applications. During the quarter, the company reported fiscal year 2025 revenue and operating income growth of 16% and 15% year over year, respectively, and forecasted 2026 revenue to grow double digits. This growth trajectory is underpinned by the structural tailwinds of AI and Advanced Packaging (the complex stacking and interconnecting of multiple chips), which now constitute approximately 70% of the company's total business. We believe Camtek is well-positioned to capture further market share in inspection and metrology as it leverages sustained, high-intensity demand across both logic and memory for AI-centric applications.

BSD Analysis:
Brown Capital Management highlights Camtek as a top contributor benefiting from the AI semiconductor boom through its specialized metrology and inspection equipment. The company's competitive advantage lies in its high-performance 3D inspection technology using white light to measure critical "bump heights" on stacked chip packages, essential for GPU and HBM testing in AI applications. Camtek delivered solid fundamentals with 16% revenue growth and 15% operating income growth in 2025, while guiding for continued double-digit revenue expansion in 2026. The investment thesis centers on structural AI tailwinds and Advanced Packaging trends, which now represent 70% of total business, providing sustainable demand visibility. The manager emphasizes Camtek's positioning to capture additional market share in the critical inspection and metrology segment as AI-centric chip demand intensifies across both logic and memory applications. The company's Israel headquarters and specialized technology focus align with the fund's strategy of identifying mission-critical technology providers in high-growth segments. Strong execution and favorable industry positioning support the bullish outlook.

Pitch Summary:
SAP is a global leading enterprise software company headquartered in Germany. We estimate that it has 300,000+ customers of all sizes with a presence in over 120 countries. The company has been in our investment program since 2012. In the last nine months, the market has slashed the company's valuation on a free cash flow basis by roughly 50% compared to its 10-year average, largely because of AI. Let's take a closer look at SAP's real risks. Data vulnerability: SAP is its customers' enterprise backbone, being the system of record or primary repository for critical business data that other systems must link back to. Workflow stickiness: SAP's customers have complex and deeply integrated workflows in areas like finance, supply chain and manufacturing that connect back to SAP's system of record. This creates a significant structural moat, making it difficult for customers to easily replicate or replace SAP with AI or other competitors. We estimate net revenue retention is above 100%, driven by a cloud migration tailwind. AI substitution: A customer example recently used by SAP's CEO is illustrative. A company that uses SAP used a large language model (LLM) to build a cash flow agent. The LLM could read emails and support tickets to find out why some of the company's customers were not paying their bills on time. However, the company found the cash flow agent was of little value because it needed training on proper structure and business context that only SAP's system could provide, such as business data, inventory reports, bank statements and additional customer data. Instead of being replaced by LLMs, SAP is critical for their development. In fact, about two-thirds of SAP's cloud deals in the fourth quarter of 2025 included integrating AI functionality. Going forward, AI integration is likely to be a standard part of all SAP solutions. Organizational adaptability: Over SAP's 54-year history, it has witnessed five major technological eras: (1) the mainframe era that the company was born into and lasted two decades; (2) the client/server shift which also lasted a similar time frame; (3) the in-memory revolution bringing traditional data processing from disk-based databases to high-speed memory; (4) the pivot to the cloud; and now (5) AI and the agentic era. The company's history shows that management adaptability is a part of the company's DNA. So, our framework tells us that SAP is actually positioned to benefit—not suffer—from the further proliferation of AI. With the company's share price down 43.10% since June 30 largely from the AI derating, we are excited by this holding and others like it.

BSD Analysis:
Brown Capital Management presents a compelling contrarian case for SAP amid the AI-driven market selloff that has compressed the stock's valuation by 50% on a free cash flow basis. The manager's detailed AI risk framework analysis reveals SAP's defensive positioning, highlighting the company's role as the enterprise backbone with irreplaceable data repositories and deeply integrated customer workflows. The thesis centers on SAP being essential for AI development rather than being displaced by it, evidenced by two-thirds of Q4 2025 cloud deals including AI functionality integration. The manager emphasizes SAP's 54-year track record of successfully navigating five major technological transitions, demonstrating organizational adaptability as core DNA. With net revenue retention above 100% driven by cloud migration tailwinds and the stock down 43% since June, the fund views current levels as an attractive entry point. The investment case relies on SAP's structural moats, mission-critical positioning, and AI enablement capabilities rather than displacement risk. Brown Capital's conviction appears high given their 14-year holding period since 2012.