Investment Pitches

Pitch Summary:
APD benefited from industrial gas demand improving and rising helium prices tied to the Iran conflict. Helium represents a low-teens percentage of earnings and has weighed on results in recent years due to a weak pricing environment. The current pricing tailwind should provide some near-term relief. Our long-term thesis continues to track against improved execution under new management.

BSD Analysis:
The London Company maintains a positive view on Air Products, benefiting from both cyclical and geopolitical factors driving performance. The manager notes improving industrial gas demand as a fundamental driver, while helium price increases related to Iran conflict provide near-term earnings support. Helium, representing low-teens percentage of earnings, had been a headwind in recent years due to weak pricing, making the current price recovery particularly meaningful for results. The firm emphasizes their long-term investment thesis centered on improved operational execution under new management leadership. This management transition appears to be a key catalyst for the company's operational improvements and strategic focus. The combination of improving end-market demand, favorable helium pricing dynamics, and enhanced management execution creates multiple positive drivers for the investment thesis.

Pitch Summary:
FDX was a top contributor following better-than-expected results, driven by disciplined pricing, improved revenue quality, and continued cost reductions. Margins expanded in the Express segment, while domestic volumes remained relatively resilient despite ongoing freight weakness. The company continues to generate strong cash flow and maintain a solid balance sheet, and we remain constructive given improving industry fundamentals supported by capacity rationalization.

BSD Analysis:
The London Company expresses confidence in FedEx following strong quarterly results that exceeded expectations through operational improvements and pricing discipline. The manager highlights margin expansion in the Express segment as evidence of successful cost management and pricing power execution. Despite broader freight market weakness, FedEx's domestic volumes have shown resilience, demonstrating the company's market position strength. The firm's ability to generate strong cash flow while maintaining balance sheet stability provides financial flexibility during challenging market conditions. The manager views improving industry fundamentals, particularly capacity rationalization across the logistics sector, as a supportive backdrop for FedEx's continued performance. The combination of operational execution and industry structure improvements underpins their constructive outlook.

Pitch Summary:
ENTG was a top contributor, benefiting from improving fab utilization and accelerating AI-driven semiconductor demand. It continues to gain share as advanced node transitions increase materials intensity per wafer. Looking ahead, fundamentals are improving with higher wafer starts, near-full utilization, and multiple growth drivers across advanced logic and memory. With its investment cycle largely complete and free cash flow expected to improve, we remain attracted to its strong competitive positioning and high barriers to entry.

BSD Analysis:
The London Company maintains a bullish stance on Entegris, highlighting the company's strong positioning in the semiconductor materials supply chain during a period of AI-driven demand acceleration. The manager emphasizes ENTG's market share gains as advanced node transitions require higher materials intensity per wafer, creating a structural tailwind for the business. Key fundamental improvements include rising fab utilization rates, higher wafer starts approaching full capacity, and diversified growth drivers across both logic and memory segments. The completion of the company's investment cycle positions ENTG for improved free cash flow generation going forward. The manager values the company's competitive moats and high barriers to entry in the specialty materials space, which should support pricing power and market position sustainability.

Pitch Summary:
HWKN is a specialty chemicals distributor and manufacturer with leading positions in water treatment, food, and industrial process chemicals. HWKN benefits from stable demand driven by essential end markets such as municipal water treatment, food processing, and industrial applications. HWKN's competitive advantage is centered around route density, technical service, and regulated end-market demand, particularly within its Water segment. The business has structurally improved as the portfolio has shifted away from bulk chemicals. The Water segment remains temporarily under-earning due to SG&A investment, integration costs, and synergies ramping from recent acquisitions. HWKN has demonstrated consistent growth through a combination of organic expansion and disciplined acquisitions while maintaining strong margins and cash generation. We believe HWKN is well positioned to benefit from long-term demand for water treatment solutions supported by regulatory requirements and infrastructure investment. Its asset-light distribution model and strong execution support attractive returns on capital. Finally, the family ownership and high ROICs are attractive for long term shareholders.

BSD Analysis:
The London Company initiated a position in Hawkins based on the company's leading market positions in essential specialty chemical markets including water treatment, food processing, and industrial applications. The manager highlights HWKN's competitive moats through route density, technical service capabilities, and exposure to regulated end markets that provide demand stability. The investment thesis centers on structural portfolio improvement as the company has shifted away from lower-margin bulk chemicals toward higher-value specialty products. While the Water segment is currently under-earning due to acquisition integration costs and SG&A investments, management expects synergies to ramp and margins to expand. The manager views the regulatory-driven demand for water treatment solutions as a long-term secular tailwind supported by infrastructure investment needs. The asset-light distribution model generates attractive returns on capital, while family ownership aligns management incentives with long-term shareholder value creation.

Pitch Summary:
QSR is one of the world's largest restaurant franchisors operating Burger King, Tim Hortons, Popeyes, and Firehouse Subs. The company earns steady royalty and fee income from thousands of franchise locations worldwide, producing naturally high profit margins and strong, predictable cash flow. QSR trades at a meaningful discount to peers like McDonald's and Yum! Brands, largely due to concerns around Burger King's U.S. performance. However, management has laid out a clear plan to simplify the business and improve restaurant quality, targeting a nearly fully franchised model by 2028. We see this as a classic 'self-help' story where the company's own actions drive improvement—not reliance on a strong economy. With durable global demand, growing international presence, an attractive dividend, and a clear path to closing the valuation gap with peers, we believe QSR is a strong long-term investment and fits well within our Quality-at-a-Reasonable-Price framework.

BSD Analysis:
The London Company initiated a position in Restaurant Brands International as a classic value opportunity with self-help characteristics. The investment thesis centers on QSR's asset-light franchise model that generates steady royalty income with high margins and predictable cash flows across four major brands. The manager identifies a clear valuation discount to peers like McDonald's and Yum! Brands, attributed to Burger King's U.S. performance issues. However, management's plan to transition to a nearly fully franchised model by 2028 provides a clear catalyst for margin expansion and operational improvement. The 'self-help' nature means success depends on management execution rather than economic conditions, reducing macro risk. The combination of global diversification, attractive dividend yield, and visible path to peer valuation multiples creates an asymmetric risk-reward profile.

Pitch Summary:
AAPL was a detractor despite strong results, including record iPhone revenue with demand partially constrained by supply. Investor sentiment focused on rising AI costs, including higher memory costs, overshadowing solid execution. We view this as a disconnect from fundamentals, as AAPL's ecosystem strength, pricing power, and capital discipline remain intact. Continued iPhone momentum and significant capital return support our long-term thesis.

BSD Analysis:
The London Company views Apple's recent underperformance as a temporary disconnect between market sentiment and fundamental strength. Despite record iPhone revenue and supply-constrained demand, the stock declined due to investor concerns about rising AI-related costs, particularly memory expenses. The manager emphasizes Apple's enduring competitive advantages: ecosystem strength that creates customer switching costs, pricing power that allows the company to pass through cost increases, and disciplined capital allocation. The combination of continued iPhone momentum and significant capital returns to shareholders supports the long-term investment thesis. This suggests the manager views Apple's AI investments as necessary for maintaining competitive position rather than margin-destructive spending.

Pitch Summary:
NTDOY was pressured this quarter by rising memory chip prices, a key input of its hardware, and concerns around increased competition in gaming from AI. Management does not expect memory prices to impact financials over the next year materially. Regarding the AI risk, we believe NTDOY's IP and integrated hardware-software ecosystem will become more valuable in a market saturated with low-cost content. We also see the upcoming new Mario Bros. movie as a potential catalyst for the stock and the Switch 2 ecosystem.

BSD Analysis:
The London Company views Nintendo's recent weakness as temporary, maintaining confidence in the company's unique competitive position within gaming. The manager dismisses near-term memory chip cost pressures based on management guidance and focuses on Nintendo's differentiated strategy. The investment thesis centers on Nintendo's valuable intellectual property portfolio and integrated hardware-software ecosystem, which the manager believes will become more valuable as AI creates content saturation. This suggests Nintendo's curated, high-quality gaming experiences will command premium pricing versus commoditized content. The upcoming Mario Bros. movie and Switch 2 ecosystem provide near-term catalysts, while the IP moat offers long-term protection against technological disruption.

Pitch Summary:
MSFT declined over concerns about AI monetization timelines, plus AI disruption risks weighed on sentiment. Despite near-term multiple compression, the company's dominant enterprise software franchises (Office, Azure, Windows), leadership in AI development, and strong recurring revenue model support durable earnings growth. We view the current valuation as attractive relative to the company's competitive moats and long-term growth trajectory.

BSD Analysis:
The London Company maintains conviction in Microsoft despite recent weakness, viewing the decline as a buying opportunity rather than a fundamental concern. The manager acknowledges market fears around AI monetization timelines and disruption risks but emphasizes Microsoft's dominant market position across enterprise software franchises. The combination of Office, Azure, and Windows provides multiple revenue streams with strong recurring characteristics and switching costs. Microsoft's leadership position in AI development through partnerships and investments positions the company to benefit from the technology rather than be disrupted by it. The manager's focus on 'competitive moats' and 'durable earnings growth' suggests confidence in Microsoft's ability to maintain market leadership and pricing power across economic cycles.

Pitch Summary:
APD benefited from industrial gas demand improving and rising helium prices tied to the Iran conflict. Helium represents a low-teens percentage of earnings and has weighed on results in recent years due to a weak pricing environment. The current pricing tailwind should provide some near-term relief. Our long-term thesis continues to track against improved execution under new management.

BSD Analysis:
The London Company views Air Products favorably, with the investment thesis centered on improved execution under new management rather than cyclical commodity price movements. While the manager acknowledges near-term benefits from rising helium prices due to geopolitical tensions, they emphasize that helium represents only a low-teens percentage of earnings, suggesting the core thesis isn't dependent on this tailwind. The focus on 'improved execution under new management' indicates this is a turnaround story where operational improvements and strategic changes are expected to drive long-term value creation. The industrial gas business provides essential services across multiple end markets, offering some defensive characteristics while benefiting from industrial demand recovery.

Pitch Summary:
CVX delivered exceptional returns as the price of crude increased to over $100 in response to escalating conflict in Iran. We do not speculate on the direction of commodity prices, and we generally do not favor commodity businesses given that the primary driver of results is outside their control. That said, we have a high degree of confidence in the management team at CVX. We appreciate the discipline and conservatism with which they run the business and the focus they place on shareholder returns.

BSD Analysis:
The London Company takes a measured approach to Chevron, acknowledging strong recent performance driven by geopolitical oil price spikes while maintaining philosophical reservations about commodity-dependent businesses. The manager explicitly states they don't speculate on commodity prices and generally avoid businesses where primary value drivers are outside management control. However, they make an exception for Chevron based on management quality, specifically praising the team's discipline, conservative approach, and shareholder return focus. This suggests the investment is more about management execution and capital allocation than oil price speculation. The neutral stance reflects the tension between strong recent performance and the inherent volatility of commodity-exposed businesses.

Pitch Summary:
GLW continues to outperform, driven by strong demand in Optical Communications, particularly for GenAI-related products. This demand is supporting higher pricing and margins while accelerating progress toward its medium-term outlook. The scale of hyperscaler partnerships is also enhancing longer-term visibility. We believe GLW's diversified portfolio of innovative, value-added products is well positioned to capitalize on secular growth trends across its end markets.

BSD Analysis:
The London Company maintains a bullish stance on Corning, highlighting the company's strong positioning in the GenAI infrastructure buildout through its Optical Communications segment. The manager emphasizes that demand for GenAI-related products is driving both pricing power and margin expansion, which suggests Corning is benefiting from favorable supply-demand dynamics in a high-growth market. The mention of hyperscaler partnerships provides confidence in revenue visibility and durability. However, the manager also noted trimming the position following strength in shares, indicating disciplined portfolio management. Corning's diversified product portfolio across multiple end markets provides some downside protection while maintaining exposure to secular growth trends in data infrastructure and connectivity.

Pitch Summary:
We added on recent weakness despite solid execution. ACIW's mission-critical payments infrastructure remains deeply embedded across global banks, supporting high retention and recurring revenue. The shift toward real-time and cross-border payments positions ACIW well for continued payment network modernization.

BSD Analysis:
The London Company increased its ACI Worldwide position during recent weakness, despite the company's solid operational execution. The manager emphasizes ACIW's mission-critical role in global payments infrastructure, with deep integration across major banks worldwide. This embedded positioning drives high customer retention rates and predictable recurring revenue streams. The ongoing industry shift toward real-time payments and cross-border payment solutions creates significant growth opportunities for ACIW's modernization capabilities. The company is well-positioned to benefit from continued payment network upgrades and digital transformation initiatives across the banking sector. The manager views the recent weakness as disconnected from the company's strong fundamental position and growth prospects.

Pitch Summary:
We added to our position amid weakness driven by temporarily slower new-product penetration and AI-related concerns. We believe concerns over AI disintermediation are overstated, as adoption of CCC's AI-enabled products continues to gain traction. CCC's deeply embedded platform and network effects across the insurance and repair ecosystem continue to strengthen its competitive moat.

BSD Analysis:
The London Company increased its CCC Intelligent Solutions position during recent weakness, viewing market concerns as overblown. The stock declined due to temporarily slower new-product penetration and broader AI displacement fears affecting software companies. The manager believes AI disintermediation concerns are overstated, noting that CCC's own AI-enabled products are gaining adoption traction. The company's deeply embedded platform within the insurance and repair ecosystem creates powerful network effects that strengthen over time. These network effects, combined with the mission-critical nature of CCC's solutions for insurance claims processing, provide a durable competitive moat. The manager views the current weakness as a buying opportunity given the company's strong market position and growing AI capabilities.

Pitch Summary:
COO is a global medical device company operating two divisions: CooperVision (contact lenses, >65% of revenue) and CooperSurgical (women's healthcare). CooperVision is a high-quality business in an oligopolistic industry where four players control 95% of the market. COO benefits from high customer switching costs, leading positions in faster-growing specialty lenses, and deep customer relationships that have driven above-market growth. While margins currently trail peers due to a multi-year investment cycle, significant expansion potential exists as capex moderates. Recent share price weakness reflects cyclical pressures rather than fundamental deterioration, activist involvement creates a catalyst for operational improvements. Valuation is attractive, supported by recent insider buying.

BSD Analysis:
The London Company initiated a position in Cooper Companies, viewing it as an attractive entry point following recent weakness. The manager highlights COO's dominant position in the oligopolistic contact lens market, where four players control 95% market share. CooperVision's competitive advantages include high customer switching costs, leading positions in faster-growing specialty lens segments, and deep customer relationships driving above-market growth. While current margins trail peers due to ongoing investment cycles, significant margin expansion potential exists as capital expenditures moderate. The manager believes recent share price weakness reflects temporary cyclical pressures rather than structural issues. Activist involvement provides a potential catalyst for operational improvements, while recent insider buying signals management confidence. The current valuation appears attractive given these multiple positive factors.

Pitch Summary:
AWI declined on weaker commercial construction activity and destocking in distribution channels. These factors were outside the company's control, but management partially offset the impacts through growth initiatives. Enhanced visibility in the backlog and momentum from initiatives pair well with AWI's pricing power, leading market position and recovering end markets.

BSD Analysis:
The London Company views Armstrong World Industries' recent decline as driven by temporary external factors rather than fundamental deterioration. Weaker commercial construction activity and distribution channel destocking pressured performance, but these cyclical headwinds were beyond management's control. The manager commends management's proactive response through strategic growth initiatives that partially offset these external pressures. Improving backlog visibility and momentum from recent initiatives provide confidence in the recovery trajectory. AWI's strong competitive positioning includes significant pricing power and leading market share in ceiling systems. The combination of these competitive advantages with recovering end markets supports the long-term investment thesis despite near-term cyclical challenges.

Pitch Summary:
CHDN fell as regional gaming revenue softened and legislation concerns about i-gaming continued. We believe these concerns are overdone and note that CHDN has responded rationally, buying back shares on weakness. CHDN has strong tailwinds ahead of the upcoming Derby, and the company has the optionality to create value through the potential sale of its regional casino portfolio.

BSD Analysis:
The London Company maintains a bullish view on Churchill Downs despite recent weakness from regional gaming softness and i-gaming regulatory concerns. The manager believes market concerns are overblown and highlights management's rational response through opportunistic share buybacks during the weakness. The iconic Kentucky Derby franchise provides strong seasonal tailwinds and represents an irreplaceable asset. The manager sees significant optionality in CHDN's ability to unlock value through the potential divestiture of its regional casino portfolio. This strategic flexibility, combined with the Derby's enduring appeal and management's disciplined capital allocation, supports the long-term investment thesis. The current valuation appears attractive given these multiple value creation levers.

Pitch Summary:
Despite a strong earnings report, QLYS sold off sharply as Anthropic's announcements around Claude's cybersecurity capabilities triggered indiscriminate selling across cyber names. We believe QLYS maintains defensible moats in its niches, and AI systems remain unsuitable for domains where errors carry severe consequences. The strong balance sheet and cash generation provide flexibility to invest in product innovation and drive market share gains. The risk/reward here is compelling for long-term holders.

BSD Analysis:
The London Company views the recent Qualys selloff as an overreaction to AI-related concerns in the cybersecurity sector. Despite strong earnings results, the stock declined due to market fears about AI displacement following Anthropic's Claude cybersecurity announcements. The manager believes QLYS maintains strong competitive moats within its specialized niches and argues that AI systems are inadequate for cybersecurity applications where errors have severe consequences. The company's robust balance sheet and strong cash generation capabilities provide strategic flexibility for continued product innovation and market share expansion. The manager sees the current valuation as presenting compelling risk-adjusted returns for long-term investors willing to look past near-term AI displacement fears.

Pitch Summary:
ESI rallied on strong demand for specialty chemicals across electronics and industrial coatings end markets. Quarterly results were solid, supported by strong performance in the Electronics business. Recent integrations have expanded their product offerings, providing incremental earnings from high growing businesses. ESI's timely investments, smart capital allocation and focus on higher growth end markets should enable the company to maintain its outperformance and margin expansion.

BSD Analysis:
The London Company maintains a positive outlook on Element Solutions, driven by robust demand across electronics and industrial coatings end markets. The manager highlights solid quarterly performance, particularly strength in the Electronics business segment. Recent strategic integrations have successfully expanded ESI's product portfolio, contributing incremental earnings from higher-growth business lines. The manager commends management's strategic approach, including timely investments and disciplined capital allocation decisions. ESI's strategic focus on higher-growth end markets positions the company well for continued outperformance. The combination of strong market positioning and operational execution is expected to drive sustained margin expansion going forward.

Pitch Summary:
MUSA outperformed in Q1 alongside the spike in fuel prices. Higher prices support top-line growth and cash flow. The company should also gain market share through its everyday low-price strategy in this environment. We expect excess cash flow generated during this period to be returned to shareholders. The company's low-cost rural/suburban positioning and consistent capital return program continue to create shareholder value.

BSD Analysis:
The London Company views Murphy USA favorably, particularly benefiting from the Q1 fuel price spike driven by geopolitical tensions. The manager highlights how higher fuel prices directly support both top-line revenue growth and cash flow generation. MUSA's everyday low-price strategy is expected to drive market share gains in the current high-price environment. The company's strategic positioning in rural and suburban markets provides a low-cost operating advantage. Management's disciplined approach to capital allocation, including consistent shareholder returns through excess cash flow distribution, reinforces the investment thesis. The manager expects continued shareholder value creation through this capital return program.

Pitch Summary:
ENTG was a top contributor, benefiting from improving fab utilization and accelerating AI-driven semiconductor demand. The company continues to gain share as advanced node transitions increase materials intensity per wafer. Looking ahead, fundamentals are improving with higher wafer starts, near-full utilization, and multiple growth drivers across advanced logic and memory. With its investment cycle largely complete and free cash flow expected to improve, we remain attracted to its strong competitive positioning and high barriers to entry.

BSD Analysis:
The London Company maintains a bullish stance on Entegris, highlighting the company's strong positioning in the semiconductor materials space during a period of AI-driven demand acceleration. The manager emphasizes ENTG's ability to gain market share as advanced node transitions require more materials-intensive processes per wafer. Key fundamental improvements include higher wafer starts, near-full fab utilization, and multiple growth drivers across both advanced logic and memory segments. The completion of the company's investment cycle positions it for improved free cash flow generation going forward. The manager values ENTG's competitive moat through high barriers to entry and strong market positioning in critical semiconductor manufacturing materials.