Investment Pitches

Pitch Summary:
We have rotated into high-quality names like J.P. Morgan in our Large Cap Yield Strategy, as well as Arista Networks and Trane Technologies in our Concentrated Equity Alpha Strategy, where we see long-term value amid recent stock pullbacks. Arista is a leading provider of data center networking and switching equipment. The company has been taking share in its core markets for years and is seeing continued growth due to the acceleration in AI-related data center spend.

BSD Analysis:
Sandhill has strategically added Arista Networks to their Concentrated Equity Alpha Strategy during recent market weakness, recognizing the company's strong competitive position in data center networking infrastructure. The fund highlights Arista's consistent market share gains in its core networking and switching equipment markets, demonstrating the company's technological superiority and customer loyalty. The investment thesis centers on the accelerating demand for AI-related data center infrastructure, which directly benefits Arista's high-performance networking solutions. This secular growth driver positions the company to capitalize on the massive capital expenditure cycle underway in cloud and enterprise data centers. The managers view the recent stock pullback as an attractive entry point for a market-leading technology company with exposure to one of the most compelling growth themes in technology. Arista's focus on software-defined networking and cloud-scale solutions aligns with the ongoing digital transformation trends. The addition reflects confidence in the company's ability to maintain its competitive edge and benefit from the structural shift toward AI workloads requiring advanced networking capabilities.

Pitch Summary:
We have rotated into high-quality names like J.P. Morgan in our Large Cap Yield Strategy, as well as Arista Networks and Trane Technologies in our Concentrated Equity Alpha Strategy, where we see long-term value amid recent stock pullbacks. J.P. Morgan is the largest and highest quality bank in the market.

BSD Analysis:
Sandhill Investment Management has added J.P. Morgan to their Large Cap Yield Strategy during the recent market dislocation, viewing it as a high-quality opportunity at attractive valuations. The fund emphasizes JPM's position as the largest and highest quality bank in the market, suggesting confidence in its competitive moat and financial strength. This move aligns with their strategy of focusing on companies with strong balance sheets and resilient business models during periods of uncertainty. The timing of this addition during market pullbacks indicates the managers see compelling value in the current price levels. JPM's status as a systemically important financial institution with diversified revenue streams likely appeals to their quality-focused investment approach. The inclusion in their yield strategy suggests they value JPM's dividend-paying capacity and capital return profile. This position reflects their broader thesis that periods of market stress create opportunities to acquire premier franchises at discounted valuations.

Pitch Summary:
While SE has performed well, NU is on the opposite end of the spectrum, currently down 35% from its November 2024 highs. This weakness has been driven in part by a deterioration in the Brazilian Real against the U.S. dollar toward the end of 2024. However, the currency has rebounded in Q1. Another concern has been elevated credit risk in Brazil. While NU did not report an increase in delinquency rates in Q4, it has tightened eligibility criteria for lower-credit bands in PIX financing. As I mentioned in the earnings review, when management is cautious, investors should be too. That said, I believe a lot of negativity is already priced in, with the stock now trading at just 18 times forward earnings.

BSD Analysis:
The manager maintains a cautiously bullish stance on NU despite significant underperformance, viewing the 35% decline as creating an attractive entry point at 18x forward earnings. The analysis acknowledges legitimate concerns including Brazilian Real weakness and elevated credit risk, while noting management's proactive tightening of credit standards as prudent risk management. The manager's thesis relies on mean reversion, suggesting current negativity is overdone and already reflected in the compressed valuation. The Brazilian Real's Q1 recovery provides some fundamental support for the investment case. However, the manager demonstrates appropriate caution by acknowledging credit risk concerns and management's conservative approach to lending standards. The contrarian positioning at depressed valuations suggests belief in NU's long-term digital banking opportunity in Latin America despite near-term headwinds.

Pitch Summary:
SE has held up exceptionally well this year and is the best-performing stock in the portfolio YTD. One reason for its resilience is that it remains immune to U.S. tariff concerns, which have weighed on broader market sentiment. The company posted superb earnings last month, with all three business segments now profitable and self-sufficient while continuing to accelerate top-line revenue growth.

BSD Analysis:
The manager highlights SE as the portfolio's top performer year-to-date, attributing its outperformance to immunity from U.S. tariff concerns that have pressured other holdings. The investment thesis centers on the company's achievement of profitability across all three business segments while maintaining accelerating revenue growth, demonstrating operational leverage and business model maturation. The manager views SE's geographic focus outside the U.S.-China trade corridor as a defensive advantage in the current geopolitical environment. The combination of profitability, self-sufficiency, and growth acceleration suggests the company has reached an inflection point in its business development. The manager's positive tone and reference to "superb earnings" indicates strong conviction in SE's execution and market positioning across its gaming, e-commerce, and fintech operations.

Pitch Summary:
I took advantage of the market correction to add to my position in META, which is currently down 21% from its all-time high in February. META is a high-quality business and one of the few companies already seeing tangible benefits from its investments in AI. The stock is currently trading at 22 times forward earnings, which I believe is very reasonable for a company of this caliber.

BSD Analysis:
The manager views META as an attractive value opportunity following a 21% decline from February highs, emphasizing the company's high-quality business fundamentals and early AI monetization success. The investment thesis highlights META's differentiated position among technology companies in generating tangible returns from artificial intelligence investments, suggesting operational leverage from AI integration across its platforms. At 22x forward earnings, the manager considers the valuation compelling for a company of META's scale and market position. The decision to add during market weakness demonstrates a contrarian approach and confidence in the company's long-term competitive advantages. The manager's emphasis on META being "one of the few companies already seeing tangible benefits from AI" suggests belief in sustainable competitive advantages and revenue growth acceleration from AI-driven product improvements.

Pitch Summary:
I added to my position in ASML, which was the most recent addition to the portfolio in February. Earlier this month, TSMC announced a $100 billion investment in U.S. chip manufacturing, involving the construction of five additional facilities. More plants mean more ASML machines will be required. Also this month, reports emerged that China has developed its own EUV machine to rival ASML. While this headline might seem alarming at first, a deeper look suggests otherwise. First, the equipment is only scheduled for trial production in Q3 2025, with full-scale manufacturing by 2026. Unlike DeepSeek, which had a detailed research paper accompanying its release, these reports remain unconfirmed, with limited transparency, raising questions about reliability and yield rates. Based on current information, ASML's monopoly remains intact. The company controls ~90% of the global lithography market and remains the sole supplier of High-NA EUV systems. Even if China successfully develops a competing system in the long run, I find it highly unlikely that companies outside of China would adopt these machines due to geopolitical concerns. China is set to account for 20% of ASML's revenue in 2025.

BSD Analysis:
The manager maintains a bullish stance on ASML despite emerging competitive threats from China, viewing the company's monopolistic position as defensible. The investment thesis centers on ASML's dominant 90% market share in lithography equipment and exclusive supply of High-NA EUV systems, which are critical for advanced semiconductor manufacturing. The manager sees TSMC's $100 billion U.S. expansion as a significant demand catalyst, requiring additional ASML machines for the five new facilities. While acknowledging Chinese competition, the analysis suggests these threats are overstated due to unconfirmed capabilities, delayed timelines, and geopolitical barriers that would limit adoption outside China. The manager's decision to add to the position during market weakness demonstrates conviction in ASML's technological moat and long-term growth prospects driven by global semiconductor capacity expansion.

Pitch Summary:
While SE has performed well, NU is on the opposite end of the spectrum, currently down 35% from its November 2024 highs. This weakness has been driven in part by a deterioration in the Brazilian Real against the U.S. dollar toward the end of 2024. However, the currency has rebounded in Q1. Another concern has been elevated credit risk in Brazil. While NU did not report an increase in delinquency rates in Q4, it has tightened eligibility criteria for lower-credit bands in PIX financing. As I mentioned in the earnings review, when management is cautious, investors should be too. That said, I believe a lot of negativity is already priced in, with the stock now trading at just 18 times forward earnings.

BSD Analysis:
The manager maintains a cautiously bullish stance on NU despite significant underperformance, viewing the 35% decline as creating attractive valuation opportunities. The analysis acknowledges legitimate concerns including Brazilian Real weakness and elevated credit risk environment, but notes currency recovery in Q1 2025. Management's proactive tightening of credit criteria for lower-credit PIX financing demonstrates prudent risk management, though the manager appropriately shares management's caution regarding credit conditions. The 18x forward earnings valuation is considered attractive given the negative sentiment already reflected in the stock price. The manager appears to believe the market has overreacted to near-term headwinds while the fundamental business model remains intact. The analysis suggests confidence in NU's long-term digital banking opportunity in Brazil despite cyclical challenges. The contrarian positioning reflects belief that current pessimism creates compelling risk-reward dynamics for patient investors.

Pitch Summary:
SE has held up exceptionally well this year and is the best-performing stock in the portfolio YTD. One reason for its resilience is that it remains immune to U.S. tariff concerns, which have weighed on broader market sentiment. The company posted superb earnings last month, with all three business segments now profitable and self-sufficient while continuing to accelerate top-line revenue growth.

BSD Analysis:
The manager highlights SE as the portfolio's top performer year-to-date, demonstrating strong fundamental execution and strategic positioning. The investment thesis emphasizes SE's immunity to U.S. tariff concerns, providing defensive characteristics during periods of trade uncertainty. The company has achieved a significant operational milestone with all three business segments—Garena, Shopee, and SeaMoney—reaching profitability and self-sufficiency. This diversified profitability reduces execution risk and demonstrates management's ability to scale multiple business lines effectively. The combination of profitability achievement and accelerating revenue growth suggests strong operational leverage and market positioning. The manager views SE's resilience during broader market weakness as validation of the company's defensive qualities and fundamental strength. The recent earnings performance appears to have exceeded expectations across all business segments. The analysis reflects confidence in SE's multi-platform strategy and geographic diversification benefits.

Pitch Summary:
I took advantage of the market correction to add to my position in META, which is currently down 21% from its all-time high in February. META is a high-quality business and one of the few companies already seeing tangible benefits from its investments in AI. The stock is currently trading at 22 times forward earnings, which I believe is very reasonable for a company of this caliber.

BSD Analysis:
The manager views META as an opportunistic buy during the market correction, emphasizing the company's quality and early AI monetization success. The investment thesis highlights META's ability to generate tangible returns from artificial intelligence investments, distinguishing it from competitors still in the investment phase. The manager considers the 21% decline from February highs as an attractive entry point for a high-quality business. At 22x forward earnings, the valuation is deemed reasonable for a company of META's caliber, suggesting the market has created a compelling risk-reward opportunity. The analysis reflects confidence in META's fundamental business strength and its competitive positioning in AI implementation. The decision to add during weakness demonstrates conviction in the company's long-term value creation potential. The manager appears to view the correction as temporary market sentiment rather than fundamental deterioration.

Pitch Summary:
I added to my position in ASML, which was the most recent addition to the portfolio in February. Earlier this month, TSMC announced a $100 billion investment in U.S. chip manufacturing, involving the construction of five additional facilities. More plants mean more ASML machines will be required. Also this month, reports emerged that China has developed its own EUV machine to rival ASML. While this headline might seem alarming at first, a deeper look suggests otherwise. First, the equipment is only scheduled for trial production in Q3 2025, with full-scale manufacturing by 2026. Unlike DeepSeek, which had a detailed research paper accompanying its release, these reports remain unconfirmed, with limited transparency, raising questions about reliability and yield rates. Based on current information, ASML's monopoly remains intact. The company controls ~90% of the global lithography market and remains the sole supplier of High-NA EUV systems. Even if China successfully develops a competing system in the long run, I find it highly unlikely that companies outside of China would adopt these machines due to geopolitical concerns. China is set to account for 20% of ASML's revenue in 2025.

BSD Analysis:
The manager maintains a bullish stance on ASML despite emerging competitive threats from China, viewing the company's monopolistic position as defensible. The investment thesis centers on ASML's dominant 90% market share in lithography equipment and exclusive supply of High-NA EUV systems, which are critical for advanced semiconductor manufacturing. The manager sees TSMC's $100 billion U.S. expansion as a significant demand catalyst, requiring additional ASML machines for the five new facilities. While acknowledging Chinese competition, the analysis suggests these threats are overstated due to unconfirmed capabilities, delayed timelines, and geopolitical barriers that would prevent adoption outside China. The manager views China's 20% revenue contribution as manageable risk given the company's technological moat. The decision to add to the position during market weakness demonstrates conviction in ASML's long-term competitive advantages. The analysis reflects confidence that ASML's technological leadership and manufacturing complexity create substantial barriers to meaningful competition.

Pitch Summary:
While SE has performed well, NU is on the opposite end of the spectrum, currently down 35% from its November 2024 highs. This weakness has been driven in part by a deterioration in the Brazilian Real against the U.S. dollar toward the end of 2024. However, the currency has rebounded in Q1. Another concern has been elevated credit risk in Brazil. While NU did not report an increase in delinquency rates in Q4, it has tightened eligibility criteria for lower-credit bands in PIX financing. As I mentioned in the earnings review, when management is cautious, investors should be too. That said, I believe a lot of negativity is already priced in, with the stock now trading at just 18 times forward earnings.

BSD Analysis:
The manager maintains a cautiously bullish view on Nubank despite significant underperformance, viewing the 35% decline as creating potential value. The analysis acknowledges legitimate concerns including Brazilian Real weakness and elevated credit risk environment, while noting some improvement with currency recovery in Q1. Management's proactive tightening of credit standards for lower-quality borrowers is viewed as prudent risk management, though the manager appropriately shares management's caution about the credit environment. The investment thesis centers on valuation, with the stock trading at just 18x forward earnings following the selloff, suggesting much of the negativity is already reflected in the price. The manager appears to be positioning for a potential recovery while remaining cognizant of the challenging operating environment in Brazil's consumer finance market.

Pitch Summary:
SE has held up exceptionally well this year and is the best-performing stock in the portfolio YTD. One reason for its resilience is that it remains immune to U.S. tariff concerns, which have weighed on broader market sentiment. The company posted superb earnings last month, with all three business segments now profitable and self-sufficient while continuing to accelerate top-line revenue growth.

BSD Analysis:
The manager maintains strong conviction in Sea Limited, highlighting its exceptional performance as the portfolio's top contributor with 23% gains year-to-date. The investment thesis emphasizes SE's defensive characteristics, particularly its immunity to U.S. tariff concerns that have pressured other holdings, providing portfolio diversification benefits. The recent earnings results validate the manager's thesis, with all three business segments (gaming, e-commerce, and fintech) achieving profitability and self-sufficiency while maintaining accelerating revenue growth. This operational milestone represents a significant inflection point for the company, demonstrating the scalability of its business model across Southeast Asian and Latin American markets. The combination of strong execution, geographic diversification, and insulation from U.S.-China trade tensions positions SE as a compelling long-term growth story in emerging markets.

Pitch Summary:
I took advantage of the market correction to add to my position in META, which is currently down 21% from its all-time high in February. META is a high-quality business and one of the few companies already seeing tangible benefits from its investments in AI. The stock is currently trading at 22 times forward earnings, which I believe is very reasonable for a company of this caliber.

BSD Analysis:
The manager views META as an opportunistic buy during the market correction, emphasizing the company's quality and early AI monetization success. The 21% decline from February highs is seen as creating an attractive entry point rather than reflecting fundamental deterioration. The manager highlights META's differentiated position among tech companies in generating tangible returns from AI investments, suggesting the company is ahead of peers in practical AI implementation. At 22x forward earnings, the valuation is considered reasonable for a high-quality technology company with established AI capabilities. The manager's decision to add during weakness demonstrates confidence in META's long-term competitive position and ability to capitalize on AI trends while trading at what appears to be a discount to intrinsic value.

Pitch Summary:
I added to my position in ASML, which was the most recent addition to the portfolio in February. Earlier this month, TSMC announced a $100 billion investment in U.S. chip manufacturing, involving the construction of five additional facilities. More plants mean more ASML machines will be required. Also this month, reports emerged that China has developed its own EUV machine to rival ASML. While this headline might seem alarming at first, a deeper look suggests otherwise. First, the equipment is only scheduled for trial production in Q3 2025, with full-scale manufacturing by 2026. Unlike DeepSeek, which had a detailed research paper accompanying its release, these reports remain unconfirmed, with limited transparency, raising questions about reliability and yield rates. Based on current information, ASML's monopoly remains intact. The company controls ~90% of the global lithography market and remains the sole supplier of High-NA EUV systems. Even if China successfully develops a competing system in the long run, I find it highly unlikely that companies outside of China would adopt these machines due to geopolitical concerns. China is set to account for 20% of ASML's revenue in 2025.

BSD Analysis:
The manager maintains a bullish stance on ASML despite emerging competitive threats from China, viewing the company's monopolistic position as defensible. The investment thesis centers on ASML's dominant 90% market share in lithography equipment and exclusive supply of High-NA EUV systems, which are critical for advanced semiconductor manufacturing. The manager sees TSMC's $100 billion U.S. expansion as a significant demand catalyst, requiring additional ASML machines for the five new facilities. While acknowledging Chinese competition, the analysis suggests these threats are overstated due to unconfirmed capabilities, delayed timelines, and geopolitical barriers that would prevent adoption outside China. The manager's decision to add to the position during market weakness demonstrates conviction in ASML's technological moat and long-term growth prospects driven by global semiconductor capacity expansion.

Pitch Summary:
While SE has performed well, NU is on the opposite end of the spectrum, currently down 35% from its November 2024 highs. This weakness has been driven in part by a deterioration in the Brazilian Real against the U.S. dollar toward the end of 2024. However, the currency has rebounded in Q1. Another concern has been elevated credit risk in Brazil. While NU did not report an increase in delinquency rates in Q4, it has tightened eligibility criteria for lower-credit bands in PIX financing. As I mentioned in the earnings review, when management is cautious, investors should be too. That said, I believe a lot of negativity is already priced in, with the stock now trading at just 18 times forward earnings.

BSD Analysis:
The manager maintains a cautiously bullish stance on NU despite significant underperformance, viewing the 35% decline from November highs as creating an attractive valuation opportunity. The investment thesis acknowledges legitimate concerns including Brazilian Real weakness and elevated credit risk, but suggests these factors are now reflected in the stock price. The manager notes management's prudent approach to credit risk through tightened PIX financing criteria, interpreting this conservatism as responsible risk management rather than a fundamental weakness. At 18x forward earnings, the valuation appears compelling for a leading digital banking platform in Latin America's largest market. The Brazilian Real's Q1 recovery provides some currency tailwind, while the manager believes credit concerns are temporary rather than structural. This contrarian position reflects confidence that current pessimism has created an oversold condition in a fundamentally sound fintech leader.

Pitch Summary:
SE has held up exceptionally well this year and is the best-performing stock in the portfolio YTD. One reason for its resilience is that it remains immune to U.S. tariff concerns, which have weighed on broader market sentiment. The company posted superb earnings last month, with all three business segments now profitable and self-sufficient while continuing to accelerate top-line revenue growth.

BSD Analysis:
The manager highlights SE as the portfolio's top performer year-to-date, demonstrating exceptional resilience in a challenging market environment. The investment thesis emphasizes SE's immunity to U.S. tariff concerns, providing a defensive characteristic that has supported outperformance amid broader market weakness. The company's recent earnings showcase a significant operational milestone with all three business segments achieving profitability and self-sufficiency while maintaining accelerating revenue growth. This combination of profitability across gaming, e-commerce, and fintech divisions represents a maturation of SE's business model and validates the manager's long-term investment thesis. The manager appears confident in SE's ability to continue generating strong returns through its diversified Southeast Asian technology platform. The company's geographic focus provides exposure to high-growth emerging markets while avoiding direct exposure to U.S.-China trade tensions.

Pitch Summary:
I took advantage of the market correction to add to my position in META, which is currently down 21% from its all-time high in February. META is a high-quality business and one of the few companies already seeing tangible benefits from its investments in AI. The stock is currently trading at 22 times forward earnings, which I believe is very reasonable for a company of this caliber.

BSD Analysis:
The manager views META as an opportunistic value play following a 21% correction from February highs, emphasizing the company's high-quality business fundamentals. The investment thesis highlights META's early success in monetizing artificial intelligence investments, positioning it ahead of peers in realizing tangible AI benefits. At 22x forward earnings, the manager considers the valuation attractive for a company of META's caliber, suggesting the market has overreacted to recent concerns. The position addition during weakness demonstrates conviction in the company's long-term prospects and ability to generate returns from AI initiatives. The manager appears confident that META's established social media platforms provide a strong foundation for AI integration and revenue growth. This contrarian approach reflects belief that current market sentiment has created an attractive entry point for a fundamentally sound technology leader.

Pitch Summary:
I added to my position in ASML, which was the most recent addition to the portfolio in February. Earlier this month, TSMC announced a $100 billion investment in U.S. chip manufacturing, involving the construction of five additional facilities. More plants mean more ASML machines will be required. Also this month, reports emerged that China has developed its own EUV machine to rival ASML. While this headline might seem alarming at first, a deeper look suggests otherwise. First, the equipment is only scheduled for trial production in Q3 2025, with full-scale manufacturing by 2026. Unlike DeepSeek, which had a detailed research paper accompanying its release, these reports remain unconfirmed, with limited transparency, raising questions about reliability and yield rates. Based on current information, ASML's monopoly remains intact. The company controls ~90% of the global lithography market and remains the sole supplier of High-NA EUV systems. Even if China successfully develops a competing system in the long run, I find it highly unlikely that companies outside of China would adopt these machines due to geopolitical concerns. China is set to account for 20% of ASML's revenue in 2025.

BSD Analysis:
The manager maintains a bullish stance on ASML despite emerging competitive threats from China, viewing the company's monopolistic position as defensible. The investment thesis centers on ASML's dominant 90% market share in lithography equipment and exclusive supply of High-NA EUV systems, which are critical for advanced semiconductor manufacturing. The manager sees TSMC's $100 billion U.S. expansion as a significant demand catalyst, requiring additional ASML equipment for five new facilities. While acknowledging Chinese EUV development, the manager dismisses the threat due to unconfirmed reports, delayed timeline (trial production Q3 2025), and geopolitical concerns that would limit adoption outside China. The position addition during market weakness suggests confidence in the company's technological moat and long-term growth prospects. With China representing 20% of revenue, ASML maintains significant exposure to global semiconductor demand while benefiting from supply chain diversification trends.

Pitch Summary:
MSCI is a leading provider of decision support tools and solutions for the investment community. Its offerings help clients better understand and analyse the drivers of risk and return, enhance transparency and ultimately build better portfolios. Whilst only spun out of Morgan Stanley in 2006, MSCI draws on over 50 years of deep knowledge of the investment process and expertise in research, data and technology. MSCI's product and service portfolio is comprised of four main components which in turn are its reporting segments: i) indexes (Index segment), ii) portfolio construction and risk management tools (Analytics), iii) environmental, social and governance and climate solutions (ESG & Climate) and private asset data and analytics (All other – Private Assets). At the nexus of MSCI was the Index business which remains its bedrock to this day whilst the other segments were largely built up via acquisitions. One of the most intriguing aspects of MSCI's business model – and common thread across its business portfolio – is that the majority (around 75%) of its sales come from recurring subscriptions with client retention rates typically in the mid 90s. This results in exceptional visibility on sales and earnings. The remaining quarter is mainly tied to the assets to which its products are benchmarked. MSCI's index segment exemplifies a benchmark business — a type of business we both know well and which features prominently in the LongRun fund. So why do we like benchmark businesses? Benchmark businesses are great businesses because i) in benchmarks ones does not really compete with peers (at least once a benchmark has been chosen), ii) they last for decades, if not centuries, (network effect), iii) they account for only a very small share of customer spend but are at the same time iv) very mission critical – one needs to have the right benchmark, otherwise one probably won't have a business in the first place or much longer. For MSCI's index business specifically, once entrenched, it is both cumbersome and risky for an asset manager to change index providers, as such a move could signal instability to investors. It is no surprise that retention rates, a key metric to quantify switching costs, in MSCI's index business consistently exceed 90%, and pricing power is strong, too. There is a strong need to use a benchmark people know which is why brand plays such a crucial role. This is particularly important for institutional investors which require a recognised benchmark. Along similar lines, there are strong network effects with winner-takes-all dynamics which have led to almost monopoly like situations for parts of the market. The index industry itself is essentially a parallel monopoly with MSCI having an iron grip on international markets, S&P Global dominating in the U.S. and FTSE Russell leading in the U.K. and in U.S. small cap markets. Important to note is that MSCI employs a somewhat different philosophy than its peers who view its indices as mere 'market barometers' (or, in 'consultant speak', cash cows). MSCI, by contrast, views its indexes as tools which are developed to solve real problems, for example 'what is the right benchmark for my strategy'. The focus on innovation and meeting client needs is a key part of MSCI's culture, and success. Good examples include its astute development of factor, thematic, and ESG indices. MSCI also employs a distinct go to market strategy, heavily courting asset owners as well as consultants which can act as veritable influencers for the investors they represent (and which have to foot the bill). The outstanding quality of MSCI's index business is mirrored in its profitability with operating margins comfortably eclipsing 70%. Index is the crown jewel of MSCI's business portfolio, accounting for over 75% of earnings thanks to continued double digit growth. MSCI's three other operating segments are of high but, unlike index, not outstanding quality, in our view. Important to note is that they often serve the same clients as in the index segment which is the main rationale for having them all under one roof. The 'OneMSCI' culture with a clear focus on product differentiation should help further with making the sum bigger than the parts. The Analytics segment provides risk management, performance attribution and portfolio management solutions. It has strong complementarity and fit with the index segment. This comes from the fact that as an asset manager, you will be benchmarked to an index and typical services from analytics such as performance attribution, portfolio construction and quantitative portfolio optimisation all will be done relative to an index. Analytics is a mid to high single digit growth business with 40%+ operating margins and a similarly strong cash profile to the Index segment given virtually all sales come from recurring subscriptions. Retention rates are similarly strong at just under 95%. The ESG and Climate segment is MSCI's fastest growing, having more than trebled in size over the last five years. MSCI was a first mover in ESG which they started to build out organically in the early 2000s. It has since become the clear market leader from which it will be hard to dislodge given the long track record of collecting and analysing ESG data. Margins are still more modest at around 30%+ as MSCI invests to drive growth and cement its market position, but are likely to continue expanding. The subscription revenue share and retention rates are both above 95%, too. In the All Other – Private Assets segment, MSCI essentially tries to repeat what they have done in ESG and Climate, namely to become the market leader in private assets. Given the high proportion of recurring revenues it should come as no surprise that MSCI's growth is very steady and persistent. In addition, the company benefits from strong pricing power in all parts of its business apart from asset-based fees given the mission critical nature of its services. On a Group level, organic growth has averaged a strong 10% over the last ten years with remarkable consistency – the only outlier was in 2021 when growth rebounded to +19% post Covid-19. We estimate around one-third of growth typically comes from pricing which MSCI pushes through with vigorous discipline. The excellent growth profile of MSCI is even bettered by its profitability and economics which are one of a kind. On a group level, operating margins routinely eclipse 50%, powered by its Index business. Cash conversion is equally strong, with free cash flow routinely exceeding 100% of earnings. This is mainly due to clients having to pay for their subscriptions upfront which pushes working capital deeply in the negative; clients effectively fund MSCI's operations. Return on invested capital is similarly stupendous, on account of exceptional profitability and low investment and working capital needs. Under the stewardship of visionary founder and owner operator Henry Alberto Fernandez, MSCI has done a commendable job in terms of capital allocation. Organic investments continue to increase its product differentiation, while strategic acquisitions have helped it tap into the growth potential of adjacencies such as analytics, ESG and private markets – each with outsized potential for profitable and durable expansion. More specifically, MSCI's owner operator culture is borne out with one of the most rigorous and disciplined capital allocation frameworks we have yet to come along, deeply grounded in a focus on value creation. This framework is anchored in optimizing financial leverage, maximize organic investments via its 'triple crown' approach, a payout ratio of 40-50% and opportunistic share buybacks and strategic mergers, partnerships and acquisitions. Of note is that MSCI has generated an IRR of above 30% on the close to USD7bn of stock it has assiduously bought back since 2012. MSCI is a hugely focused, quality company with one of the best businesses, Index, as its linchpin. We think it offers a pretty unique combination of strong secular growth with exceptional persistence, solid pricing power, outstanding profitability and cash generation with a true owner operator culture and management on top. A five year trough multiple of just under 30x forward earnings does not strike us as particularly expensive given these attributes, resulting in the potential for strong convexity in returns. We continue to expect double-digit compounding for years to come.

BSD Analysis:
LongRun Equity presents MSCI as the quintessential 'benchmark business' with exceptional competitive moats and financial characteristics. The manager emphasizes MSCI's dominant position in global equity indexes, particularly international markets, where switching costs are prohibitively high and retention rates exceed 90%. The business model's strength lies in its recurring subscription revenues (75% of sales), mission-critical nature to clients, and minimal share of customer spending despite being essential infrastructure. MSCI's Index segment generates over 70% operating margins and accounts for 75% of earnings, while complementary segments in Analytics, ESG, and Private Assets provide additional growth vectors. The company has demonstrated consistent 10% organic growth over a decade, with strong pricing power and exceptional cash conversion exceeding 100% of earnings. Under founder-CEO Henry Fernandez's leadership, MSCI has executed disciplined capital allocation, generating over 30% IRR on $7 billion in share buybacks since 2012. At under 30x forward earnings, the manager views the valuation as attractive for a business with secular growth tailwinds, network effects, and double-digit compounding potential.

Pitch Summary:
We seized the opportunity from the recent pullback to build a position in a business with durable double digit growth and almost unparalleled visibility at just under 30x earnings. GE Aerospace's business portfolio is its commercial aircraft engines segment, accounting for around three quarters of sales and an even a higher proportion of earnings. GE dominates the narrowbody engine segment through its CFM International joint venture with Safran and controls around half of the widebody engine market on its own. The aircraft engine market is characterised by near insurmountable barriers to entry, punitive switching costs and a very large and profitable aftermarket from servicing the installed base of these engines. These factors combined afford GE with strong pricing power. We think GE is in an outstanding position to drive highly profitable growth over the next decades with visibility to match.

BSD Analysis:
LongRun Equity established a position in General Electric Aerospace following a market pullback, acquiring shares at under 30x earnings for a business with exceptional growth visibility. The investment thesis centers on GE's dominant position in commercial aircraft engines, which represents three-quarters of sales and an even higher proportion of profits. The manager highlights GE's market leadership through its CFM International joint venture with Safran in narrowbody engines and its control of approximately half the widebody engine market. The aerospace engine industry's structural advantages include insurmountable barriers to entry, prohibitive switching costs, and a highly profitable aftermarket servicing business from the installed engine base. These competitive moats provide GE with significant pricing power and create a multi-decade growth runway with exceptional earnings visibility. The combination of market dominance, structural advantages, and long-term growth prospects makes this an attractive long-term investment opportunity.