Investment Pitches

Pitch Summary:
FedEx – Global logistics company FedEx was a detractor for the quarter. The company faced macro headwinds, including tariff threats and ongoing demand weakness in the US. The company is growing market share and margins in its formerly challenged European business, and this was a driver for the Express business to report low-single-digit topline growth that turned into double-digit cash flow growth. The Freight business saw a decline like its peers who are also wrestling with weak industrial conditions. FedEx remains on track to separate into two entities: Express and Freight. This split should provide both companies with greater financial flexibility and accountability, allowing them to be run more efficiently. The market has consistently undervalued FedEx's Freight operations, and a large discount to UPS is no longer warranted for the Express business. Tariff headwinds will be challenging to navigate, but we are glad the company is more on offense now than it has been in previous downturns.

BSD Analysis:
Longleaf Partners maintains a bullish view on FedEx despite macro headwinds from tariff threats and weak US demand. The fund highlights significant operational improvements in the European Express business, with market share gains and margin expansion driving strong cash flow growth. The planned separation into Express and Freight entities represents a key catalyst for value creation through improved operational focus and accountability. Management's more aggressive strategic approach during this downturn contrasts favorably with previous cycles. The fund believes FedEx Freight operations are significantly undervalued by the market relative to peers. The Express business trades at an unjustified discount to UPS despite operational improvements. FedEx's enhanced operational efficiency and strategic repositioning should drive margin expansion and cash flow growth. Longleaf sees the current valuation as attractive given the company's improved competitive position and upcoming corporate restructuring benefits.

Pitch Summary:
CNX Resources – Natural gas company CNX Resources was a detractor for the quarter. While CNX was one of our stronger performers in 2024, it started the year with a disappointing outcome regarding government incentives for its coal mine methane gas capture program. The incentives were below our unrisked upside case that could have helped our value by $10-20/share+. While this was a disappointing few dollars per share hit to our risked value, the silver lining is that both we and CNX were able to buy more shares at a price that, in our view, does not fully appreciate all the other good things going on at the company. CNX remains focused on what is within its control, leveraging its low-cost structure and disciplined hedging strategy to generate FCF in a variety of price environments.

BSD Analysis:
Longleaf Partners maintains conviction in CNX Resources despite disappointment over reduced government incentives for coal mine methane capture programs. The fund views the incentive shortfall as a temporary setback that created attractive buying opportunities for both the company and investors. CNX's low-cost operational structure provides competitive advantages in various natural gas price environments. The company's disciplined hedging strategy helps generate consistent free cash flow regardless of commodity price volatility. Management's focus on controllable factors rather than external variables demonstrates operational discipline. The fund believes the market undervalues CNX's operational excellence and financial flexibility beyond the methane capture opportunity. Recent share purchases at attractive prices reflect confidence in the underlying business fundamentals. Longleaf sees significant value in CNX's Appalachian Basin assets and efficient capital allocation approach. The position benefits from both operational improvements and potential upside from future regulatory or commodity price developments.

Pitch Summary:
Bio-Rad – Life sciences company Bio-Rad detracted for the quarter. The company remains a stable business with growth potential. The quarter was a story of two halves. Early on, industry trends showed improvement after a period of normalization post-Covid, prompting us to trim on the back of price appreciation. However, later in the quarter, news of government funding cuts and a disappointing quarter of results weighed on the stock price. Despite this, we remain optimistic about Bio-Rad's outlook. Academic and government spending in the US accounts for only a low-single-digit percentage of this company's revenue, even though public perception suggests otherwise. Meanwhile, the company has a net cash balance sheet, a large hidden asset in its Sartorius stake and a proven history of smart capital allocation.

BSD Analysis:
Longleaf Partners maintains a bullish long-term view on Bio-Rad despite short-term headwinds from government funding concerns and disappointing quarterly results. The fund emphasizes that academic and government spending represents only a small percentage of revenue, contrary to market perception. Bio-Rad's strong balance sheet with net cash provides financial flexibility and downside protection. The company's significant stake in Sartorius represents a substantial hidden asset not fully reflected in the stock price. Management's proven track record of intelligent capital allocation supports the investment thesis. The fund views recent weakness as temporary, driven by misunderstood revenue exposure and cyclical factors. Bio-Rad's diversified life sciences platform provides multiple growth avenues beyond government-dependent segments. Longleaf sees the current valuation as attractive given the company's stable business model, strong balance sheet, and hidden asset value. The position reflects confidence in the long-term growth potential of life sciences tools and services.

Pitch Summary:
RTX – Aerospace and defense company RTX was a contributor this quarter. We purchased RTX at a significant discount in 2023 when concerns over Pratt & Whitney's Geared Turbofan (GTF) issues reached what turned out to be a point of max pessimism. We also were able to partner with great leaders in Greg Hayes & Chris Calio, who took advantage of this opportunity to repurchase a material amount of stock while improving operations. Just last quarter, we wrote how strong industry tailwinds, prudent capital allocation and a solid balance sheet provide a foundation for sustained growth and eventual full value recognition. That thesis played out this quarter, as the stock price traded through our value, and we exited our position at a gain.

BSD Analysis:
Longleaf Partners executed a successful contrarian investment in RTX, purchasing at maximum pessimism during the Pratt & Whitney GTF engine issues in 2023. The fund partnered with strong management leadership in Greg Hayes and Chris Calio, who demonstrated excellent capital allocation through aggressive share repurchases during the crisis. The investment thesis centered on strong aerospace industry tailwinds, prudent capital allocation, and a solid balance sheet supporting long-term growth. Management's operational improvements and strategic share buybacks during the downturn created significant value for shareholders. The fund's patience was rewarded as the stock price reached their intrinsic value estimate, prompting a profitable exit. This represents a classic value investing success story of buying quality assets during temporary distress. The position demonstrates Longleaf's ability to identify and capitalize on market overreactions to operational challenges. The successful exit validates their contrarian approach and disciplined valuation framework.

Pitch Summary:
Mattel – Global toy and media company Mattel contributed for the quarter, reporting solid results for the all-important 4Q, with 2% revenue growth and 6% growth in earnings before interest, taxes, depreciation and amortization (EBITDA). We were also pleased to see management repurchase a material amount of shares at great prices and commit to repurchasing at a high-single-digit percentage of shares outstanding in 2025 if the share price remains attractive. Mattel provided a relatively straightforward and growing outlook for 2025, even taking into account tariff risk at the time. Although conditions have deteriorated since then, CEO Ynon Kreiz's foresight in diversifying the company's supply chain years ago will pay dividends. The market continues to price in little future growth for the existing business or further success in media and gaming.

BSD Analysis:
Longleaf Partners views Mattel as an undervalued toy and media company with strong operational momentum and disciplined capital allocation. The fund highlights solid Q4 performance with revenue growth and margin expansion, demonstrating the company's resilience. Management's aggressive share repurchase program at attractive valuations signals confidence in the business outlook. CEO Ynon Kreiz's proactive supply chain diversification provides competitive advantages amid tariff uncertainties. The fund believes the market undervalues Mattel's growth potential in both traditional toy operations and expanding media/gaming initiatives. The company's commitment to returning capital through buybacks while maintaining growth investments reflects balanced capital allocation. Longleaf sees significant upside as the market recognizes the transformation beyond traditional toy manufacturing. The position benefits from both operational improvements and multiple expansion potential as growth initiatives gain traction.

Pitch Summary:
IAC – Digital holding company IAC was another solid contributor for the quarter. In January, the company announced that former CEO Joey Levin would be shifting his focus to become Executive Chairman at IAC portfolio business Angi. Barry Diller is taking on a larger role at IAC while continuing to be its Chairman. Initially, the market reacted cautiously, but as the quarter went on, the potential benefits became clearer, especially in conjunction with the recently completed spin-off of Angi. During the quarter, we published our first Research Perspectives note that provides more details on our investment case for IAC.

BSD Analysis:
Longleaf Partners maintains a bullish stance on IAC following management changes and the Angi spin-off completion. The fund views the leadership transition, with Joey Levin focusing on Angi and Barry Diller taking a larger operational role, as strategically beneficial for value creation. The market's initial cautious reaction provided an attractive entry point as the benefits of the restructuring became apparent. The Angi spin-off represents a key catalyst for unlocking value within the digital holding company structure. Longleaf has sufficient conviction in the investment to publish detailed research on their thesis. The position reflects their confidence in management's ability to optimize the portfolio of digital assets. IAC's diversified digital platform provides multiple avenues for growth and value realization. The fund sees significant upside potential as the market recognizes the benefits of the recent corporate actions.

Pitch Summary:
Albertsons – US grocery retailer Albertsons was a contributor for the quarter. Albertsons was a new purchase in 2024, after we had followed the company and its predecessors for years. In an otherwise turbulent quarter, Albertsons stands out as a stable business that remains undervalued because it had fallen off the radar during a protracted deal process with Kroger that ultimately failed. The company should grow at a moderate pace and has plenty of financial firepower to repurchase shares, all while it has multiple strategic options (such as unlocking its real estate value and/or selling non-core markets) to realize value per share.

BSD Analysis:
Longleaf Partners views Albertsons as an undervalued grocery retailer that has been overlooked following the failed Kroger merger. The fund emphasizes the company's stability in volatile markets and its strong financial position with significant cash generation capabilities. Management highlights multiple value creation levers including share repurchases, real estate monetization, and potential divestiture of non-core markets. The investment thesis centers on moderate organic growth combined with disciplined capital allocation. The fund believes the market has not fully recognized the company's intrinsic value following the merger uncertainty. Albertsons represents a defensive play with multiple paths to value realization through both operational improvements and strategic alternatives. The position reflects Longleaf's preference for stable, cash-generative businesses trading at attractive valuations.

Pitch Summary:
Park Hotels – Hotel owner and operator Park Hotels was a detractor for the quarter. As a stock that is sensitive to the macroeconomic environment, it traded lower as travel demand slowed even though the company reported solid results with 3%+ revenue per available room (RevPAR) growth. Park remains in a much better financial position than in recent years and will soon see debt related to former assets in San Francisco come off the books. The other positive is that we are finally beginning to see an uptick in hotel transaction activity, and we believe Park could be a compelling target.

Pitch Summary:
CNX Resources – Natural gas company CNX Resources was a detractor for the quarter. While CNX was one of our stronger performers in 2024, the company started the year with a disappointing outcome regarding government incentives for its coal mine methane gas capture program. The incentives were below our unrisked upside case that could have helped our value by $10-20+/share. While this was a disappointing few dollars per share hit to our risked value, the silver lining to the market's overreaction to this news is that both we and CNX were able to buy more shares at a price that, in our view, does not fully appreciate all the other good things going on at the company. CNX remains focused on what is within its control, leveraging its low-cost structure and disciplined hedging strategy to generate free cash flow (FCF) in a variety of price environments.

BSD Analysis:
The manager maintains strong conviction in CNX Resources despite recent disappointment regarding government incentives for the coal mine methane gas capture program. While the reduced incentives represented a $10-20+ per share hit to the unrisked upside case, the manager views the market's reaction as excessive relative to the actual impact on risked valuation. This market overreaction created an attractive buying opportunity, with both the fund and company management adding shares at depressed prices. The manager emphasizes CNX's strong operational fundamentals, including a low-cost structure that provides competitive advantages in the natural gas sector. The company's disciplined hedging strategy demonstrates prudent risk management and helps ensure consistent free cash flow generation across various commodity price environments. CNX's focus on controllable factors rather than external variables like government policy shows management discipline and operational excellence. The combination of strong 2024 performance, attractive valuation following the recent selloff, and solid operational execution makes CNX an compelling energy holding. The company's ability to generate free cash flow in multiple price scenarios provides downside protection while maintaining upside potential.

Pitch Summary:
Boston Beer Company – US beverage company Boston Beer detracted in the quarter. The stock price has been under pressure due to macro concerns around declining alcohol consumption trends, combined with concerns on the Truly brand's continued declines and overall company margins. Both we and the company believe these headwinds can be overcome, and the company has multiple drivers to grow in the next twelve months. Management is taking action to increase value per share in the meantime by being one of our larger share repurchasers in the portfolio currently. Expectations for growth have been reset to a flattish level, and from this lower base, we remain optimistic in the long-term opportunity.

BSD Analysis:
Despite recent underperformance, the manager maintains a bullish long-term view on Boston Beer Company, viewing current challenges as temporary headwinds rather than structural problems. The fund acknowledges legitimate near-term concerns including declining alcohol consumption trends and weakness in the Truly hard seltzer brand, which have pressured margins and stock performance. However, the manager expresses confidence that both the fund and company management believe these issues can be overcome through operational improvements and strategic initiatives. A key positive catalyst is management's aggressive share repurchase program, making Boston Beer one of the portfolio's largest share buyers, which should drive value per share accretion. The reset of growth expectations to flat levels provides a lower base from which the company can potentially exceed expectations going forward. The manager identifies multiple growth drivers expected to materialize over the next twelve months, though specific details aren't provided. The combination of depressed valuation, active capital allocation, and potential operational turnaround creates an attractive risk-reward opportunity for patient investors.

Pitch Summary:
PotlatchDeltic – Timberland and mill company PotlatchDeltic was a contributor for the quarter. The company performed fine in the quarter even though housing demand remains below trend. We slightly trimmed our position as the company was viewed as a potential tariff winner. While not the most exciting company, PotlatchDeltic remains an undervalued, reliable dividend payer with a disciplined management team.

BSD Analysis:
The manager maintains a cautiously bullish view on PotlatchDeltic, recognizing it as an undervalued timberland and mill operator with attractive defensive characteristics. Despite challenging housing market conditions with demand below trend levels, the company demonstrated resilience and delivered solid quarterly performance. The fund's decision to trim the position reflects tactical portfolio management as the stock gained recognition as a potential tariff beneficiary, suggesting the manager is taking profits at higher valuations. PotlatchDeltic's appeal lies in its reliable dividend payments and disciplined management team, providing steady income generation for the portfolio. The company's timberland assets offer inflation protection and long-term value appreciation potential, while the mill operations provide current cash flow generation. Although the manager acknowledges it's not the most exciting investment, the combination of undervaluation, dividend reliability, and quality management makes it a solid portfolio holding. The tariff tailwinds could provide additional upside as trade policies potentially benefit domestic timber and lumber producers.

Pitch Summary:
Gruma – The world leader in tortillas and corn flour, Gruma was a contributor in the quarter. The company delivered another quarter of solid growth and execution, with its core US business finishing 2024 with 5% annual earnings before interest, taxes, depreciation and amortization (EBITDA) growth. During the quarter, we published our first Research Perspectives note, which provides more details on our investment case for Gruma.

BSD Analysis:
The manager expresses strong conviction in Gruma as the global leader in tortillas and corn flour, emphasizing the company's dominant market position in a stable consumer staples category. The fund highlights consistent operational execution with solid quarterly growth, demonstrating management's ability to deliver results across market cycles. The core US business showed healthy 5% annual EBITDA growth in 2024, indicating strong fundamentals in Gruma's most important geographic market. The manager's decision to publish a dedicated Research Perspectives note on Gruma signals high conviction and suggests this is a significant portfolio holding with a compelling long-term thesis. As a consumer staples company with essential food products, Gruma benefits from defensive characteristics and steady demand patterns. The company's market leadership position provides pricing power and economies of scale advantages over competitors. The combination of market dominance, consistent growth, and defensive end markets makes Gruma an attractive core holding for the portfolio.

Pitch Summary:
Graham Holdings (GHC) – Diversified education, healthcare and media company Graham Holdings contributed for the quarter. The company reported a solid quarter of low-mid single-digit percentage value growth and continues to position itself well for tougher times with its net cash balance sheet. For a deeper dive into Graham, please listen to our podcast with CEO Tim O'Shaughnessy that we recorded in March.

BSD Analysis:
The manager maintains a bullish stance on Graham Holdings, highlighting the company's diversified business model across education, healthcare, and media sectors. The fund appreciates GHC's solid quarterly performance with low-to-mid single-digit value growth, demonstrating consistent operational execution. A key strength emphasized is the company's net cash balance sheet, which provides financial flexibility and defensive positioning during uncertain market conditions. The manager's confidence is further evidenced by their direct engagement with CEO Tim O'Shaughnessy through a podcast interview, suggesting deep fundamental research and management access. The diversified revenue streams across defensive sectors like education and healthcare provide stability during economic volatility. Graham Holdings appears positioned as a quality defensive holding that can generate steady returns while maintaining downside protection. The company's strong balance sheet and diversified operations make it well-suited for the current uncertain macroeconomic environment.

Pitch Summary:
Glanbia - Irish nutrition and ingredients company Glanbia was a detractor in the quarter. The company was unable to price through enough input cost inflation due to various factors, which resulted in a 9% downgrade to consensus expectations. The share price fell over 3x that impact. At 9x price-to-earnings (PE), the whole company now trades well below comparators for each of its segments: Sports Nutrition Brands, Supplements & Ingredients, and Dairy/Cheese producers. We have impressed upon the Board and Management the need to take actions such as increasing share buybacks and exploring a strategic process to separate and sell certain divisions. We believe the company is considering such a strategy, having already announced a reorganisation into three divisions as a necessary precursor to a sale of the new Dairy Protein segment, which could be worth approximately 50% of the company's enterprise value (EV) today. This would leave high quality brand and ingredient businesses that can return to growth in aggregate in the years to come while being attractive acquisition targets themselves.

BSD Analysis:
Longleaf Partners views Glanbia's current valuation as severely disconnected from intrinsic value following the market's overreaction to margin pressure. The 9% earnings downgrade triggered a 27% stock decline, creating an attractive entry point at 9x P/E multiples. Each business segment trades below comparable companies despite quality assets and market positions. The fund is actively engaging with management to accelerate value realization through share buybacks and strategic restructuring. The announced three-division reorganization sets the stage for potential divestiture of the Dairy Protein segment, worth approximately 50% of current enterprise value. This would unlock significant value while leaving high-quality Sports Nutrition and Ingredients businesses with better growth prospects. The remaining entities would be attractive acquisition targets given their market-leading positions and brand portfolios. Management's willingness to consider strategic alternatives demonstrates alignment with shareholder value creation. Current pricing provides substantial margin of safety with multiple catalysts for value realization including buybacks, divestitures, and operational improvements.

Pitch Summary:
FedEx – Global logistics company FedEx was a detractor for the quarter. The company faced macro headwinds, including tariff threats and ongoing demand weakness in the US. The company is growing market share and margins in its formerly challenged European business, and this was a driver for the Express business to report low-single-digit topline growth that turned into double-digit cash flow growth. The Freight business saw a decline like its peers who are also wrestling with weak industrial conditions. FedEx remains on track to separate into two entities: Express and Freight. This split should provide both companies with greater financial flexibility and accountability, allowing them to be run more efficiently. The market has consistently undervalued FedEx's Freight operations, and a large discount to UPS is no longer warranted for the Express business. Tariff headwinds will be challenging to navigate, but we are glad the company is more on offense now than it has been in previous downturns.

BSD Analysis:
Despite macro headwinds, Longleaf Partners remains constructive on FedEx's strategic transformation and operational improvements. The European turnaround story is gaining traction with market share gains and margin expansion driving the Express segment's impressive cash flow conversion. Low-single-digit revenue growth translating to double-digit cash flow growth demonstrates operational leverage and efficiency gains. The planned separation into Express and Freight entities represents a key catalyst that should unlock value through improved focus and accountability. Management's more offensive posture compared to previous downturns suggests better positioning for the current cycle. The fund believes FedEx Freight trades at an unjustified discount while Express no longer deserves a significant discount to UPS given operational improvements. Tariff uncertainty creates near-term volatility but doesn't alter the long-term value proposition. The corporate restructuring should allow each business to optimize capital allocation and strategic focus. FedEx's global logistics network provides defensive moats with cyclical upside as conditions normalize.

Pitch Summary:
CNX Resources – Natural gas company CNX Resources was a detractor for the quarter. While CNX was one of our stronger performers in 2024, it started the year with a disappointing outcome regarding government incentives for its coal mine methane gas capture program. The incentives were below our unrisked upside case that could have helped our value by $10-20/share+. While this was a disappointing few dollars per share hit to our risked value, the silver lining is that both we and CNX were able to buy more shares at a price that, in our view, does not fully appreciate all the other good things going on at the company. CNX remains focused on what is within its control, leveraging its low-cost structure and disciplined hedging strategy to generate FCF in a variety of price environments.

BSD Analysis:
Longleaf Partners views the government incentive disappointment as a temporary setback that doesn't diminish CNX's fundamental value proposition. While the coal mine methane program incentives fell short of the $10-20 per share upside case, this represents only a few dollars impact to risked valuation. The fund emphasizes CNX's core competitive advantages including low-cost structure and disciplined hedging strategy that enable consistent free cash flow generation across commodity price cycles. Management's focus on controllable factors rather than external variables demonstrates operational discipline. The recent share price weakness has created attractive buying opportunities for both the company and Longleaf to add shares at compelling valuations. CNX's Appalachian Basin assets provide some of the lowest-cost natural gas production in North America. The company's hedging program provides cash flow visibility and downside protection. Despite the quarterly disappointment, the fund maintains confidence in CNX's ability to generate attractive returns through operational excellence and capital discipline.

Pitch Summary:
Bio-Rad – Life sciences company Bio-Rad detracted for the quarter. The company remains a stable business with growth potential. The quarter was a story of two halves. Early on, industry trends showed improvement after a period of normalization post-Covid, prompting us to trim on the back of price appreciation. However, later in the quarter, news of government funding cuts and a disappointing quarter of results weighed on the stock price. Despite this, we remain optimistic about Bio-Rad's outlook. Academic and government spending in the US accounts for only a low-single-digit percentage of this company's revenue, even though public perception suggests otherwise. Meanwhile, the company has a net cash balance sheet, a large hidden asset in its Sartorius stake and a proven history of smart capital allocation.

BSD Analysis:
Despite quarterly underperformance, Longleaf Partners maintains conviction in Bio-Rad's long-term prospects and defensive characteristics. The fund emphasizes that government funding concerns are overblown, with academic and government spending representing only low-single-digit revenue exposure versus market perception. Bio-Rad's net cash balance sheet provides financial flexibility and downside protection in uncertain environments. The Sartorius stake represents a significant hidden asset that adds substantial value not reflected in current trading multiples. Management's proven track record of smart capital allocation gives confidence in future value creation initiatives. The post-Covid normalization period has created temporary headwinds, but underlying industry fundamentals remain intact. Bio-Rad's diversified life sciences platform serves both research and clinical diagnostic markets, providing multiple growth vectors. The fund views current weakness as a temporary setback rather than fundamental deterioration, maintaining optimism about the company's stable business model and growth potential.

Pitch Summary:
Millicom – Latin American telecommunications operator Millicom extended its strong 2024 performance into the first quarter of this year. The company reported solid results, exceeding its already twice-raised 2024 equity FCF guidance of approximately $650 million and guiding further growth to the $750 million range for 2025. The company implemented an improved dividend for a yield above 10%, finished listing solely in the US and also made progress on an accretive deal in Colombia. We are grateful for the work of our aligned partners at 40%-owner Iliad Group and believe that more upside remains with the stock still trading at a single-digit multiple of growing earnings.

BSD Analysis:
Longleaf Partners expresses strong confidence in Millicom's operational momentum and financial performance trajectory. The company has consistently exceeded free cash flow guidance, raising targets twice in 2024 before delivering $650 million and now guiding to $750 million for 2025. This represents impressive 15% year-over-year FCF growth, demonstrating the quality of Millicom's Latin American telecom assets. The dividend yield above 10% provides attractive income while the company trades at single-digit earnings multiples, suggesting significant undervaluation. The partnership with 40% owner Iliad Group provides strategic alignment and operational expertise. Recent corporate actions including US-only listing and Colombian deal progress indicate management's focus on value creation. The fund views current valuation as disconnected from the underlying business quality and growth prospects. Millicom's dominant market positions in Latin America provide defensive moats with growth upside as digital penetration increases.

Pitch Summary:
IAC – Digital holding company IAC was another solid contributor for the quarter. In January, the company announced that former CEO Joey Levin would be shifting his focus to become Executive Chairman at IAC portfolio business Angi. Barry Diller is taking on a larger role at IAC while continuing to be its Chairman. Initially, the market reacted cautiously, but as the quarter went on, the potential benefits became clearer, especially in conjunction with the recently completed spin-off of Angi. During the quarter, we published our first Research Perspectives note that provides more details on our investment case for IAC.

BSD Analysis:
Longleaf Partners maintains a bullish stance on IAC following management changes and the Angi spin-off completion. The fund views the leadership transition, with Joey Levin focusing on Angi as Executive Chairman while Barry Diller expands his IAC role, as strategically beneficial. Initial market skepticism has given way to recognition of the potential value creation from this restructuring. The Angi spin-off represents a key catalyst that should help unlock value within the IAC portfolio of digital assets. The fund's decision to publish a dedicated research note demonstrates high conviction in the investment thesis. IAC's holding company structure provides exposure to multiple digital businesses with distinct growth trajectories. The management changes are expected to drive more focused execution across the portfolio companies. Longleaf sees this as an opportune time to own IAC as the market begins to appreciate the strategic benefits of the recent corporate actions.

Pitch Summary:
Albertsons – US grocery retailer Albertsons was a contributor for the quarter. Albertsons was a new purchase in 2024, after we had followed the company and its predecessors for years. In an otherwise turbulent quarter, Albertsons stands out as a stable business that remains undervalued because it had fallen off the radar during a protracted deal process with Kroger that ultimately failed. The company should grow at a moderate pace and has plenty of financial firepower to repurchase shares, all while it has multiple strategic options (such as unlocking its real estate value and/or selling non-core markets) to realize value per share.

BSD Analysis:
Longleaf Partners views Albertsons as an undervalued stable grocery retailer that has been overlooked following the failed Kroger merger. The fund emphasizes the company's defensive characteristics in a turbulent market environment, highlighting its consistent cash generation capabilities. Management believes Albertsons offers multiple value creation levers including share repurchases supported by strong financial position, real estate monetization opportunities, and potential divestiture of non-core markets. The investment thesis centers on the company's ability to deliver moderate growth while returning capital to shareholders. The fund sees this as a classic value play where market neglect has created an attractive entry point. Albertsons' grocery retail model provides recession-resistant cash flows, making it an appealing defensive holding. The multiple strategic options available to management provide additional upside catalysts beyond the base case operational performance.