Investment Pitches

Pitch Summary:
The Lovisa store rollout continued during the last half with a net 64 new stores opened during the period. The United Kingdom, Germany, Canada and the USA being the main growth markets. Revenues were up 22% and underlying profit up 21% as well. But despite these headline numbers the share price was down significantly and as you can see in the chart below, they are back trading near where they were in 2021 and 2022. Why is that? Well, it's the use of 'underlying' profits to exclude the larger than expected losses of $11.2m for the half-year incurred in their start-up brand Jewells that frightened investors. Jewells incurred $11.2m in losses on $2.5m of revenue from 6 stores in just six months. These are not numbers that will excite anyone. But from another perspective it is a reasonably small investment by a very successful retailing business to add another brand in an adjacent market without acquiring one. And the Lovisa founders have a great track record in founding new retail brands. In effect the market is capitalising these losses as a permanent part of the business when management have at least three options for the future. Firstly, the brand gains traction and these losses diminish and turn into additional profits. Alternatively, If the brand is considered a failure within the next 12-18 months, then the current handful of stores in the UK could be closed and the losses discontinued. And lastly, and probably least likely, Jewells is the baby of Brett Blundy, the Chairman and founder of Lovisa, and he could acquire the business from Lovisa and house it within his personal retail empire, again eliminating the losses that Lovisa is currently bearing. I believe the market is taking a very short-term view of the Jewells business, and it appears some of the Directors do too. Brett Blundy, who owns 39% of the company and has never bought or sold any shares since the company listed, bought $6m worth of shares on-market during March. Two other directors also made more modest on-market purchases. That is a good sign of Blundy's confidence in the future of the business.

BSD Analysis:
The manager maintains a bullish stance on Lovisa despite a 28% quarterly decline, viewing the market's reaction to Jewells losses as excessive. The core business demonstrates strong fundamentals with 22% revenue growth and 21% underlying profit growth, supported by aggressive international expansion with 64 net new stores. The manager argues the market is incorrectly capitalizing $11.2m Jewells losses as permanent when management has multiple exit strategies. Significant insider buying by founder Brett Blundy ($6m) and other directors signals strong management confidence. The valuation appears attractive given the company's proven retail execution track record and international growth runway. The manager views current pricing as a short-term overreaction to startup losses that represent a small portion of the overall business.

Pitch Summary:
For example, Microsoft's recent 35% decline from its previous highs has given us an opportunity to become shareholders in the company once again. Figure 2 illustrates this dynamic well. Within the S&P500, the valuation premium of the top 5 largest stocks by market capitalization has recently narrowed significantly.

BSD Analysis:
Focus Wealth Management has taken advantage of Microsoft's significant 35% decline from previous highs to re-establish a position in the technology giant. The fund views this selloff as creating an attractive entry point for a high-quality large cap U.S. business that had previously become prohibitively expensive. The manager emphasizes that the valuation premium of mega-cap stocks, including Microsoft, has narrowed significantly, making these names more attractive from a risk-adjusted perspective. This represents a tactical opportunity to own a fundamentally strong business at more reasonable valuations. The timing aligns with the fund's broader strategy of deploying capital into quality names during periods of market volatility. Microsoft's position as a dominant technology platform with strong cash generation capabilities makes it well-suited for the current uncertain environment. The fund's decision to re-enter reflects confidence in Microsoft's long-term competitive positioning despite near-term market turbulence.

Pitch Summary:
Nokia has seen a significant uptick in its stock price, driven by strategic partnerships and investments, notably a $1 billion investment from Nvidia to develop an AI platform for 6G. This collaboration positions Nokia at the forefront of next-generation telecommunications technology, with a potential market exceeding $200 billion by 2030. The company's recent upgrades by analysts, coupled with its strong momentum in optical systems and 800G technology, further bolster its growth prospects. Despite some concerns over valuation and dividend safety, Nokia's operational efficiencies and cost-cutting measures are expected to enhance margins. The company's leadership in edge routing and IP networks, along with its competitive stance against Huawei in broadband access, underscores its robust market position.

BSD Analysis:
Nokia's strategic focus on AI and 6G technologies aligns with industry trends towards advanced telecommunications solutions. The partnership with Nvidia not only provides financial backing but also technological expertise, enhancing Nokia's competitive edge. The company's ability to capitalize on hyperscaler cycles and its investments in 800G capabilities are likely to drive faster growth than anticipated. While valuation concerns exist, Nokia's market leadership and innovation in fixed networks and optical solutions provide a solid foundation for sustained growth. Investors should monitor Nokia's upcoming earnings for updates on its AI-RAN suite and market expansion efforts.

Pitch Summary:
ONEOK, Inc. is a leading midstream company with a robust pipeline network and a strong dividend yield of around 5%. The company has a well-distributed portfolio across geographic and commodity cycles, with minimal exposure to crude oil demand. Its fee-based model and strategic connections to major refining and distribution centers position it well for stable cash flows. Despite a high valuation, ONEOK's growth projects and the current high price environment due to geopolitical tensions could drive future earnings.

BSD Analysis:
ONEOK's strategic asset base, including its full-cycle connections and hard-to-replace infrastructure in major population centers, provides a competitive edge. The company's 2026 guidance suggests modest growth, but geopolitical factors like the U.S.-Iran-Israel conflict could lead to higher-than-expected prices, benefiting ONEOK. The company's capital allocation strategy, including a $2 billion share repurchase authorization and a history of dividend stability, supports shareholder returns. However, the high P/E ratio necessitates successful execution of growth projects to justify the valuation.

Pitch Summary:
Hims & Hers has experienced a significant re-rating, with its stock down nearly 40% since January and two-thirds from its peak. Despite this, the company has resolved its legal issues with Novo Nordisk and is now an authorized distributor for GLP-1 medications. The company is focusing on international expansion and new product lines, such as testosterone supplements and menopause treatments. With a market cap of $4.84 billion and a guided revenue growth of 15%-24% for FY26, Hims & Hers presents a growth opportunity at a reasonable price. The company's ability to scale profitably in new markets and specialties, along with its strategic acquisition of Eucalyptus, supports a bullish outlook.

BSD Analysis:
Hims & Hers is strategically positioned to capitalize on its recent partnership with Novo Nordisk, which alleviates previous legal uncertainties and opens new revenue streams. The company's focus on international markets, particularly in Europe and Canada, expands its addressable market significantly. Despite near-term margin pressures due to expansion costs, the long-term potential for profitability remains strong. The acquisition of Eucalyptus, although not immediately accretive, provides a foothold in Australia and Japan, further diversifying its market presence. The company's emphasis on high-margin offerings like diagnostic lab testing could enhance its profitability profile, making it an attractive investment in the telemedicine space.

Pitch Summary:
Mondelez has consistently outperformed Kraft Heinz since their split, delivering strong shareholder returns. The company benefits from significant pricing power, which has helped offset volume declines. Despite a challenging market environment, Mondelez's focus on strategic pricing and portfolio adjustments positions it well for continued growth. However, the company's exposure to commodity cyclicality and the need to adapt to changing consumer preferences present risks. Mondelez's current valuation, with a P/E of 19 and EV/EBITDA of 13.9, suggests it is fully priced. The company's strong financial performance and resilience in the face of market challenges support a hold rating.

BSD Analysis:
Mondelez's ability to leverage its pricing power and adjust its product portfolio will be crucial in maintaining its competitive edge. The decline in cocoa prices offers a potential boost to profitability, but the company must address volume declines to sustain growth. Mondelez's strong market position in biscuits and chocolate provides a solid foundation, but the company must navigate headwinds from shifting consumer preferences towards healthier options. The company's financial health, including its leverage ratio and commitment to buybacks, will be key factors in maintaining investor confidence. While Mondelez's growth prospects are promising, its current valuation limits the potential for significant upside.

Pitch Summary:
Kraft Heinz has faced significant challenges over the past decade, underperforming compared to its spin-off, Mondelez. However, with a new CEO and a strategic focus on adapting to market changes, there is potential for a turnaround. The company is taking a 'whatever it takes' approach to regain its competitive edge. Despite recent earnings misses and a weak outlook, the stock has shown resilience, maintaining a steady price around the $25 support level. Kraft Heinz's strong profitability profile, with a high EBITDA margin and attractive EV/EBITDA multiple, suggests potential for future growth. The company's commitment to shareholder returns, including a solid dividend, adds to its investment appeal.

BSD Analysis:
Kraft Heinz's current valuation presents an opportunity for investors seeking exposure to a turnaround story in the food industry. The company's focus on stabilizing sales and improving its product portfolio could lead to better financial performance in the coming years. While Mondelez has shown stronger growth metrics, Kraft Heinz's profitability and dividend safety make it an attractive option for income-focused investors. The market's current valuation of Kraft Heinz suggests that any positive developments in sales or strategic execution could lead to significant upside. Investors should monitor the company's progress under its new leadership and its ability to adapt to changing consumer preferences.

Pitch Summary:
SolarEdge Technologies has demonstrated a remarkable turnaround over the past year, recovering from a significant inventory glut and financial losses. The company's strategic shift to U.S. domestic manufacturing has allowed it to benefit from tax credits and improved demand, leading to a recovery in revenue growth and gross margins. SolarEdge's agreement with Infineon to develop a solid-state transformer for AI data centers positions it as a key player in the data center build-out, further enhancing its growth prospects. Despite challenges in the European market, SolarEdge's strong execution and market share gains in the U.S. solar market underscore its potential for continued growth. The company's focus on innovation and strategic partnerships supports its long-term growth trajectory.

BSD Analysis:
SolarEdge's strategic pivot to U.S.-based manufacturing has insulated it from potential policy changes and tariffs, while also capitalizing on tax incentives from the Inflation Reduction Act. The company's ability to triple its share value over the past year highlights its successful execution of a turnaround strategy. Despite the challenges posed by the cyclical nature of the solar industry, SolarEdge's strong market position and innovative product offerings, such as the SolarEdge Nexis system, position it well for future growth. However, the company faces competition from Enphase and Tesla, which could impact its market share. SolarEdge's financials show improvement, but the company must continue to manage its debt and inventory levels to sustain its growth momentum.

Pitch Summary:
BlackRock delivered a strong Q1 2026 performance, beating EPS expectations with $12.53 against a consensus of $11.50, and achieving 8% organic base fee growth despite challenging market conditions. The company's diversified platform allowed it to grow fee revenue even during a significant market drawdown, supporting the bull thesis of its all-weather capabilities. The stock responded positively, closing up 3.3% on the day of the earnings release. Key drivers included a sequential increase in fee rates and strategic developments like the DOL's proposed rule on private assets in 401(k) plans, which could significantly enhance BlackRock's growth prospects.

BSD Analysis:
BlackRock's ability to maintain strong organic base fee growth through adverse market conditions underscores its resilience and strategic positioning. The proposed DOL rule on private assets in 401(k) plans represents a substantial long-term growth opportunity, potentially allowing BlackRock to leverage its extensive LifePath franchise and alternatives platform. Additionally, the company's focus on higher-fee product categories and international markets is beginning to reflect positively in its fee rate, countering previous bear concerns about fee compression. The multibillion-dollar insurance mandates further enhance forward revenue visibility, suggesting sustained growth momentum.

Pitch Summary:
Aegon is in the process of selling its UK life-insurance business, with bids from major players like Lloyds and Standard Life. The sale is expected to bring in around €2 billion, which could be used for share buybacks or a US acquisition. This strategic move follows a broader review of Aegon's UK operations, aiming to unlock shareholder value. The potential divestment of the €3 billion ASR stake could further enhance capital allocation efficiency. The company's strong capitalization and strategic focus on core markets position it well for future growth.

BSD Analysis:
Aegon's strategic review and potential sale of its UK life-insurance business reflect a proactive approach to optimizing its portfolio and capital structure. The anticipated proceeds from the sale could significantly enhance shareholder returns through buybacks or strategic acquisitions. The involvement of prominent bidders underscores the attractiveness of Aegon's UK operations. Additionally, the potential divestment of the ASR stake could further streamline operations and focus resources on high-growth areas. Investors should watch for the final sale decision, as it could catalyze a revaluation of Aegon's stock.

Pitch Summary:
AKVA Group has initiated a strategic review to explore potential buyers, capitalizing on years of investment that are now yielding positive results in revenue and profitability. The company is targeting significant growth, with projected revenues of NOK 7 billion and an EBIT margin above 10% by 2030. This represents a compound annual growth rate of over 20% on EBIT, making it an attractive investment opportunity. The support from its two largest shareholders, who hold nearly 70% of shares, strengthens the case for exploring strategic options.

BSD Analysis:
AKVA Group's strategic review is well-timed, as the company is experiencing strong momentum in its financial performance. The projected growth targets indicate a robust outlook, supported by technological advancements in aquaculture. The backing of major shareholders suggests confidence in the company's strategic direction and potential for value creation. As the aquaculture industry continues to expand, AKVA Group is well-positioned to benefit from increasing demand for sustainable fish farming solutions. Investors should consider the potential for a strategic sale or partnership that could unlock further value.

Pitch Summary:
AstroNova has been under pressure from activist investor Askeladden Capital, which holds a 9.2% stake and is pushing for strategic alternatives to unlock shareholder value. Despite past underperformance due to acquisitions and disappointing growth, the company has announced restructuring measures, including a workforce reduction. The market is perceived to undervalue AstroNova, with its Aero segment alone potentially worth $15-20 per share. The strategic review could lead to significant value realization, similar to the Servotronics merger premium.

BSD Analysis:
AstroNova's decision to review strategic alternatives comes amid increasing pressure from Askeladden Capital, suggesting potential for significant corporate restructuring or sale. The Aero segment's valuation highlights the company's hidden value, which the market has not fully recognized. The restructuring efforts, including workforce reduction, indicate management's commitment to improving operational efficiency. The comparison to the Servotronics merger premium suggests potential for substantial upside if strategic alternatives are successfully executed. Investors should monitor the outcome of the strategic review closely, as it could lead to a re-rating of the stock.

Pitch Summary:
We used most of our Ametek proceeds to establish a new position in American Express in March, at a price of $294. Probably many of you hold at least one American Express card. It's one of the premier status brands in the world, with a customer base of prime borrowers who often pay hundreds of dollars a year for the privilege of earning lucrative rewards. Those same cardholders generally do not revolve loan balances, meaning Amex earns much more money from transaction fees and annual cardholder dues than it does in interest on monthly balances. It makes money because people transact with the card to earn rewards, not because they need to borrow money to make ends meet. A simpler question would be: do cardholders like the product and want to use it? The answer there is a clear yes. Spending on the card has been rising faster than overall consumer spending in recent years and lately has been accelerating. Paraphrasing an American Express executive at a recent investor meeting, "We keep raising the card fee to match the value, and the demand keeps rising." Cardholders seem keenly aware of the value they're getting back on their spending. Similarly, merchants very much want the patronage of American Express' wealthy cardholders, to the point that they fund a sizable portion of the rewards programs. This creates a virtuous cycle of American Express driving high spenders to participating merchants, who rebate a portion of their spending through rewards. Restaurants and shops want the customers, the customers want the rewards, and Amex plays matchmaker. We bought our shares after a recent 25% drop in the stock price amid outstanding earnings performance and conservative accounting for potential future credit losses. Amex continues to add premium cardholders at remarkable rates: it added 5.8 million new consumer card accounts in 2025 at an average annual fee above $210. Further, it is growing disproportionately among Gen-Z and Millennials: the company says premium cardholder growth with younger adults is 15% in the US and 20% internationally. Our purchase price represents a PE multiple of about 15 times the 2027 earnings estimate of ~$20 per share, a fair price for a business growing earnings 11%-13% per year and generating a return on equity above 30%.

BSD Analysis:
The manager initiated a new position in American Express at $294 following a 25% stock decline, viewing it as an attractive entry point for a premium brand with strong fundamentals. The investment thesis centers on Amex's unique business model that generates revenue primarily from transaction fees and annual dues rather than interest income, creating a more stable revenue stream. The company benefits from a virtuous cycle where wealthy cardholders drive spending to merchants who fund rewards programs, creating value for all parties. Strong customer loyalty is evidenced by accelerating card spending that outpaces overall consumer spending and management's ability to continuously raise fees while demand increases. Growth metrics are impressive with 5.8 million new premium accounts added in 2025 at average fees above $210, with particularly strong 15-20% growth among younger demographics. At 15x 2027 earnings estimates of $20 per share, the valuation appears reasonable for a business generating 11-13% earnings growth and over 30% return on equity. The manager acknowledges macro risks around peak affluence but believes the product's value proposition remains compelling.

Pitch Summary:
At the end of the first quarter one year ago, Constellation was our largest position and a 7.9% overall portfolio weight. The Toronto company's stock price in US dollars was $3,168. On March 31st, Constellation closed at $1,755 and represented a 3.9% weight despite us not selling a share. That amounts to a -44.5% return over one year. Software businesses have been marked down dramatically over the past six months or so, as the market believes AI-coded software will be cheap to produce and capable of replacing many existing applications. However, I am skeptical that Constellation will be displaced quickly or easily. To test this thesis, over the past few months we spoke to former Constellation employees, some of whom now work at competitors. Their feedback was consistent: the vast majority of Constellation's assets are data repositories or so-called Enterprise Resource Planning (ERP) systems that would be expensive and disruptive to displace, even if the act of coding got much cheaper. One of the most helpful insights from this round of conversations was the importance of service. When a small business owner needs help, they want to call someone they trust and who understands the intricacies of their business. Support is as important as the code itself. Turning then to Constellation, it typically functions as the ERP system for its customers, and it might hold decades worth of personnel records, customer data and accounting history. Often, that operating data is precious and, for regulatory or legal reasons, should not be compromised. One thing switching software vendors does every time is compromise data. It was frustrating for us to replace a tool. It would be a nightmare to interrupt the daily operations of our organization. I don't foresee America's small businesses or municipalities replacing their ERP systems unless they are badly broken or egregiously expensive. Meanwhile, Constellation churns out cash. Over the past five years, Constellation's free cash flow has grown 18% annually, from about $1.2 billion in 2020 to $2.7 billion in 2025. The stock over the five years ended March 31st, compounded at a modest 4.8% annualized rate. This disconnect between business results and stock price tells us the market believes the cash flow trajectory is unsustainable. For sure, the cost of creating new software is collapsing. That does not mean the cost of replacing software is also collapsing. I don't believe there is a good economic argument for replacing operating software that works and often constitutes less than 2% of an organization's operating budget. This is especially true for the kind of small enterprises that lack internal expertise to troubleshoot a conversion. Such firms are the foundation of Constellation's business. That said, the market is probably right that we will see slower growth rates for software firms in the future as clients steer innovation budgets to AI applications rather than new software products. For now, Constellation is growing: Wall Street thinks free cash flow will step up from $2.7 billion in 2025 to at least $3.0 billion this year, or more than $140 per share. If so, the stock trades at an 8% free cash flow yield.

BSD Analysis:
The manager presents a contrarian bull case for Constellation Software despite a 44.5% decline over the past year. The thesis centers on the defensive nature of Constellation's ERP systems and data repositories, which would be expensive and disruptive to replace even if AI makes coding cheaper. Primary research with former employees validates that switching costs remain high due to decades of embedded customer data and the critical importance of service support. The manager's personal experience switching performance reporting software reinforced this view, requiring over 100 hours of work for a simple tool replacement. Constellation's strong fundamentals support the thesis, with free cash flow growing 18% annually over five years to $2.7 billion in 2025. At current levels, the stock trades at an 8% free cash flow yield with Wall Street expecting growth to $3.0 billion in 2026. The manager acknowledges risks from AI-driven headcount reductions and slower software growth but believes small businesses will avoid costly ERP replacements. The lack of insider buying remains a concern for increasing the position size.

Pitch Summary:
Addition reflects our positive view of the aggregates industry (oligopoly with pricing power), strong return on capital, and double-digit operating margins. MLM's underappreciated network optimization initiative has delivered tangible cost-saving results. The aggregate end-market backdrop remains constructive as infrastructure spending continues to benefit from the Infrastructure Investment and Jobs Act (IIJA) funding. There remains -50% of funds still to be deployed and state DOT budgets aligned in MLM markets are growing at high-single-digit rates.

BSD Analysis:
The London Company increased their position in Martin Marietta Materials based on attractive industry dynamics and company-specific operational improvements. The manager emphasizes the aggregates industry's oligopolistic structure with inherent pricing power, while MLM demonstrates strong return on capital and maintains double-digit operating margins. A key catalyst is the company's underappreciated network optimization initiative that has generated tangible cost savings and operational efficiencies. The firm sees a constructive end-market environment driven by continued infrastructure spending from the Infrastructure Investment and Jobs Act, with approximately 50% of allocated funds still awaiting deployment. State Department of Transportation budgets in MLM's key markets are growing at high-single-digit rates, providing sustained demand visibility. The combination of industry structure advantages, operational execution, and favorable infrastructure spending backdrop supports their increased allocation to the position.

Pitch Summary:
D operates as a predominantly regulated utility, with more than 90% of its earnings generated from regulated electric and gas utilities in Virginia, North Carolina, and South Carolina, providing predictable cash flows and low revenue cyclicality. Since 2022, the company has sold non-core assets, reduced debt, and brought in a partner on its offshore wind project, strengthening the balance sheet and improving financial stability. Over the long term, D should benefit from growing power demand as data centers and AI usage expand in Virginia. Its exclusive service areas and regulated business model provide steady income. We remain attracted to its stable earnings, improving financial flexibility, attractive long-term growth drivers, and dividend. We have owned D in other portfolios for many years. Later in the quarter, we added to our position.

BSD Analysis:
The London Company initiated and increased their position in Dominion Energy, emphasizing the utility's defensive characteristics and improving financial profile. The manager highlights that over 90% of earnings come from regulated electric and gas utilities across Virginia, North Carolina, and South Carolina, providing predictable cash flows with minimal cyclical exposure. Since 2022, management has executed a strategic portfolio optimization, selling non-core assets, reducing debt levels, and partnering on offshore wind development to strengthen the balance sheet. The firm sees significant long-term growth potential from expanding data center and AI power demand in Virginia, where Dominion holds exclusive service territories. The regulated utility model provides steady income generation with rate base growth opportunities. The manager values the combination of stable earnings, enhanced financial flexibility, compelling growth drivers, and attractive dividend yield, leading them to increase their position during the quarter.

Pitch Summary:
GOOG was a bottom contributor despite solid operating results, as strong growth in Search and Cloud was offset by investor concerns around elevated capex and evolving AI monetization. Sentiment was further weighed down by uncertainty around AI-driven search disruption and moderating advertising spend. While the stock faced pressure, the company's dominant search franchise, growing cloud infrastructure business, and leadership position in AI development provide multiple growth drivers. We view the current valuation as attractive relative to the company's market position, cash generation, and innovation capabilities.

BSD Analysis:
The London Company maintains a bullish stance on Alphabet despite recent stock underperformance, viewing current weakness as disconnected from strong operational fundamentals. The manager highlights solid growth in both Search and Cloud segments, though acknowledges investor concerns about elevated capital expenditure levels and uncertain AI monetization timelines. Market sentiment has been pressured by fears of AI-driven search disruption and moderating advertising spending trends. However, the firm emphasizes Alphabet's multiple competitive advantages including its dominant search franchise, rapidly growing cloud infrastructure business, and leadership position in AI development. These assets provide diversified growth drivers and defensive moats. The manager views current valuation as attractive given the company's market-leading positions, strong cash generation capabilities, and continued innovation investments that should drive long-term value creation.

Pitch Summary:
V underperformed on weaker consumer confidence, lower spending expectations, and additional pressure that AI could pressure moats in payment businesses. We expect resilience across economic cycles and view the stock as attractively valued relative to both the market and fundamentals.

BSD Analysis:
Despite recent underperformance, The London Company maintains conviction in Visa's long-term prospects and defensive characteristics. The manager acknowledges near-term headwinds including weakening consumer confidence and reduced spending expectations that have pressured the stock. Additionally, AI disruption concerns regarding payment industry moats have created investor uncertainty about Visa's competitive positioning. However, the firm emphasizes Visa's historical resilience across economic cycles, highlighting the company's defensive business model and recurring revenue characteristics. The manager views current valuation levels as attractive relative to both broader market multiples and the company's fundamental strength. This suggests they see the recent weakness as a buying opportunity rather than a fundamental deterioration in the investment thesis.