Investment Pitches

Pitch Summary:
Semtech Corporation designs and manufactures analog and mixed-signal semiconductors for a wide range of applications, including Internet of Things (IoT), data centers, industrial equipment, and consumer electronics. The company is a global leader in low-power, high-performance solutions, with a focus on enabling connectivity, energy efficiency, and miniaturization across its target markets. Semtech operates in three business segments: Protection, Signal Integrity, and Wireless & Sensing. In February 2025, the company lowered revenue projections for its core data center product, Advanced Copper Cable (ACC), which connects GPUs at a lower power consumption while preserving signal integrity. Management attributed the revised guidance to architectural changes in GPUs from a major supplier, rather than issues with Semtech's product or execution. Consequently, shares declined due to delayed ACC revenues, negatively impacting performance during the quarter.

BSD Analysis:
The manager takes a neutral stance on Semtech Corporation following the company's revenue guidance reduction for its Advanced Copper Cable (ACC) product. While Semtech maintains leadership in low-power, high-performance semiconductor solutions across IoT, data centers, and industrial applications, near-term headwinds have emerged. The company's ACC product, which enables GPU connectivity with lower power consumption while preserving signal integrity, faces delayed revenues due to architectural changes from a major supplier. Management's attribution of the guidance reduction to external factors rather than product or execution issues suggests the underlying technology remains sound. The diversified business model across Protection, Signal Integrity, and Wireless & Sensing segments provides some stability. However, the dependence on major suppliers for data center products creates vulnerability to architectural shifts. The manager appears to view this as a temporary setback rather than a fundamental business issue.

Pitch Summary:
Progyny is a leading benefits management company specializing in fertility and family building solutions. It serves a significant but underserved market through unique plan designs, coordinated clinical care, and a carefully selected provider network, resulting in superior clinical outcomes and cost savings. Infertility is a widespread issue, affecting one in eight U.S. couples, according to the Centers for Disease Control and Prevention. In our view, the company has successfully broken the pattern of weaker performance seen throughout 2024, which was partly driven by an Alabama state ruling to suspend in vitro fertilization (IVF) procedures—a restriction that was subsequently lifted. Shares contributed positively to performance during the quarter, following solid fiscal fourth-quarter operating results driven by an expanding client base and improving utilization trends. Additionally, management raised both fiscal first-quarter and full-year 2025 revenue guidance above analyst estimates, citing member engagement trending back toward historical levels.

BSD Analysis:
The manager presents a bullish thesis on Progyny based on the company's leadership position in the large and underserved fertility benefits market. With infertility affecting one in eight U.S. couples, the addressable market opportunity is substantial and growing. The company's differentiated approach through unique plan designs, coordinated clinical care, and a curated provider network delivers superior clinical outcomes while generating cost savings for employers. The manager notes that Progyny has overcome the regulatory headwinds from 2024, including the temporary Alabama IVF suspension. Strong fiscal fourth-quarter results driven by client base expansion and improving utilization trends indicate recovering demand. Management's upward revision of both quarterly and full-year 2025 revenue guidance above analyst estimates reflects confidence in the business recovery. The return of member engagement to historical levels suggests normalized demand patterns are resuming.

Pitch Summary:
Palomar Holdings is a specialty insurance company providing property and casualty coverage focused on risks such as earthquakes, hurricanes, and floods, primarily serving residential and commercial clients in the United States. The company generates revenue by underwriting specialized insurance policies and collecting premiums from policyholders. We believe Palomar's targeted focus on underserved markets and strategic growth initiatives positions the company favorably to capture opportunities within niche insurance segments, supporting sustained profitability and growth. During the quarter, shares contributed positively to performance after the company reported strong fiscal fourth-quarter operating results, beating analyst earnings estimates for the ninth consecutive quarter. This performance was driven by robust premium growth and effective loss management. Additionally, management raised its fiscal 2025 earnings guidance above consensus expectations.

BSD Analysis:
The manager maintains a bullish stance on Palomar Holdings based on the company's specialized focus on underserved catastrophe insurance markets. The consistent execution is evidenced by nine consecutive quarters of beating analyst earnings estimates, demonstrating management's ability to effectively underwrite risk and manage losses. Robust premium growth indicates strong demand for the company's specialized coverage in earthquake, hurricane, and flood markets. The manager views Palomar's niche positioning as a competitive advantage that enables sustained profitability in underserved segments. Management's decision to raise fiscal 2025 earnings guidance above consensus reflects confidence in the business trajectory. The combination of effective loss management and premium growth in specialized markets positions Palomar to capitalize on opportunities in catastrophe insurance.

Pitch Summary:
VSE provides repair services, parts distribution, logistics, supply chain management, and consulting for commercial and government transportation assets across land, sea, and air. Historically operating in two primary segments—Aviation and Fleet—the company recently announced the planned divestiture of its Fleet operations. During the quarter, shares positively contributed to performance following the announcement of the planned sale of its Fleet segment, Wheeler Fleet Solutions, to a private equity firm, enabling VSE to concentrate further on its core aviation business. Additionally, VSE reported strong fiscal fourth-quarter results, exceeding analyst earnings estimates. Organic revenue growth in the Aviation segment accelerated to 17%, compared to 14% in the prior quarter. Further, management noted that they anticipate continued growth in 2025, driven by successful integration of recent acquisitions, a robust pipeline of organic opportunities, and potential future acquisitions. We believe management is effectively executing its strategic plan, forecasting sustained organic growth through 2025 and into 2026, which could potentially support further margin improvement.

BSD Analysis:
The manager presents a bullish thesis on VSE Corporation based on strategic portfolio optimization and strong operational execution. The planned divestiture of the Fleet segment allows management to focus resources on the higher-growth Aviation business, which demonstrated accelerating organic revenue growth of 17% versus 14% in the prior quarter. The company's ability to consistently beat analyst earnings estimates while executing successful acquisitions indicates strong management capabilities. The manager highlights a robust pipeline of organic opportunities and potential future acquisitions as growth drivers. With sustained organic growth forecasted through 2026, the concentrated focus on aviation services positions VSE to benefit from continued demand in commercial and government transportation markets. The strategic refocusing should enable margin improvement as the company optimizes its operations around its core competency.

Pitch Summary:
RBC Bearings, Inc. (RBC) also contributed. Like our other top contributors, strong financial results have driven RBC's stock higher, as the company reported steady growth for its aerospace and defense business. RBC sells highly engineered precision bearings and components to the industrial, defense and aerospace industries. We think its management team continues to execute at a high level and has done an excellent job integrating a fairly recent acquisition. We continue to like the company and believe investors underappreciate RBC's large, diversified aerospace business, especially given the strong worldwide growth in commercial aviation fleets.

BSD Analysis:
Wasatch maintains strong conviction in RBC Bearings based on consistent execution and underappreciated aerospace exposure. The company's highly engineered precision bearings serve mission-critical applications across industrial, defense, and aerospace markets, providing pricing power and customer stickiness. Management's successful integration of a recent acquisition demonstrates operational excellence and value creation capabilities. The aerospace and defense segments offer steady, long-cycle demand with high barriers to entry due to certification requirements and quality standards. RBC's diversified aerospace business positions the company to benefit from robust global commercial aviation fleet growth, a multi-year secular tailwind. The market's underappreciation of this aerospace exposure suggests valuation upside as investors recognize the quality and growth potential of this segment. Strong financial results and steady growth across business lines validate the investment thesis and management's strategic execution.

Pitch Summary:
Another large contributor was Dutch Bros., Inc. (BROS), a drive-through coffee company in the U.S. that serves customizable hot, iced and blended beverages. Strong fundamentals continue to lift the stock higher. In February, the company announced quarterly revenue and earnings growth that exceeded expectations and announced plans to open more than 150 new stores in 2025. While we like the concept of Dutch Bros.' stores, the stock has risen substantially in the short time we owned it, and we trimmed the position after those gains.

BSD Analysis:
Wasatch demonstrates disciplined portfolio management with Dutch Bros, maintaining conviction in the business model while taking profits after substantial gains. The company's drive-through coffee concept continues to deliver strong fundamental performance with revenue and earnings exceeding expectations. The aggressive expansion plan of over 150 new stores in 2025 indicates management confidence in unit economics and market opportunity. Dutch Bros' customizable beverage offerings and drive-through format provide competitive differentiation in the coffee market. The trimming action reflects prudent risk management rather than deteriorating thesis, suggesting the managers view current valuation as full but not necessarily overvalued. Strong same-store sales growth and successful new store rollouts support the expansion strategy. The position management demonstrates the fund's ability to harvest gains while maintaining exposure to compelling growth stories.

Pitch Summary:
Another detractor was Freshpet, Inc. (FRPT), a company that sells fresh, refrigerated meals and treats for dogs and cats. Revenue growth was a little lower than the market expected in Freshpet's most recently reported quarter, but we believe the stock-price reaction was overdone. We spoke with management after the earnings call and have done our own analysis of Freshpet's revenue streams. Based on our own analysis, we believe the company's growth over the next several years will be far more durable than the market expects. Additionally, as the company scales, we believe gross margins will increasingly benefit from more resilient and predictable demand, leading to more efficient manufacturing.

BSD Analysis:
Wasatch views the market's negative reaction to Freshpet's modest revenue growth miss as excessive, suggesting a contrarian opportunity. The managers conducted proprietary analysis of the company's revenue streams and engaged directly with management, providing confidence in their differentiated view. Their research indicates that Freshpet's growth trajectory will prove more sustainable than market expectations suggest. The investment thesis emphasizes operating leverage benefits as the company scales, with gross margin expansion driven by demand predictability and manufacturing efficiency gains. The fresh pet food category represents a premium market segment with strong secular growth trends. Freshpet's refrigerated distribution model creates barriers to entry and customer loyalty that should support pricing power. The combination of durable growth prospects and improving unit economics through scale makes the current valuation attractive despite near-term growth rate concerns.

Pitch Summary:
Agilysys, Inc. (AGYS) was another detractor. In January, the hospitality-software company announced earnings that were a little lighter than some investors may have expected. The company also reduced its revenue guidance. The lighter results and lower guidance were largely due to its hardware business segment, which sells point-of-sale devices. Management has identified some things it can do to improve that part of the business. However, we're more focused on the company's software business, which continues to grow at a strong rate. Over time, we expect that business to account for a much larger portion of Agilysys' earnings and revenues.

BSD Analysis:
Wasatch maintains conviction in Agilysys despite recent earnings disappointment and reduced guidance, attributing weakness primarily to the hardware segment rather than the core software business. The managers demonstrate a nuanced understanding of the company's business mix, focusing on the higher-quality software division that continues to deliver strong growth. This segment-specific analysis suggests confidence that hardware headwinds are temporary and addressable by management. The investment thesis relies on the software business becoming an increasingly dominant revenue and earnings contributor over time. This shift should improve business quality metrics including recurring revenue, margins, and predictability. The hospitality software market provides a specialized niche where Agilysys can maintain competitive advantages. Management's acknowledgment of hardware issues and identified improvement plans provides a pathway for near-term recovery while the software growth story remains intact.

Pitch Summary:
The largest detractor from strategy performance was Globant SA, a global IT-consulting firm. Operating results were mixed for Globant's most recently reported quarter, and guidance for 2025 was softer than expected. While the stock has been volatile, we continue to like the company. Global IT spending has been sluggish in recent quarters, but while spending has been uneven, we've been impressed that Globant has grown at a higher rate than industry peers. We recently talked to Globant's management team, and they suggested some firms may have paused spending temporarily on some IT projects. While that could weigh on earnings for the industry in the near term, we believe that businesses are in the early innings of implementing AI into their processes and Globant will be a key beneficiary of this trend over the long term.

BSD Analysis:
Despite recent underperformance and softer 2025 guidance, Wasatch maintains a bullish stance on Globant based on the company's superior growth relative to IT consulting peers. The managers acknowledge near-term headwinds from sluggish global IT spending and temporary project pauses but view these as cyclical challenges rather than structural issues. The investment thesis centers on Globant's positioning to benefit from the early-stage AI implementation trend across businesses. Management's direct communication with the company provides confidence in the temporary nature of current spending weakness. The fund views current volatility as potentially creating attractive entry points rather than signaling fundamental deterioration. Globant's ability to outgrow peers during a challenging spending environment demonstrates competitive advantages that should accelerate as AI adoption increases. The long-term secular tailwind of digital transformation and AI integration supports the continued holding despite short-term performance pressure.

Pitch Summary:
Avation has numerous catalysts to add significant value to shareholders at the current price of £1.44 per share: • Avation is unique – the sole publicly listed regional aircraft lessor with enormous optionality through its holding of ATR turboprop purchase rights; • Refinancing of ~ 48% of debt as at 31 December 2024 (pro-forma 43%) from high coupon unsecured notes to a lower cost arrangement; • Subject to this refinancing, the ability to fund existing orders for aircraft and future purchase rights to grow the leased fleet at higher lease rates than are currently been achieved, with the company having no currently available capacity (two new planes in late 2025) are pre-leased; • The overall hard market for airplane values and lease rates; • The regional growth profile for Avation's aircraft of choice – the only real turboprop of that size in production - and improved credit rating for its existing and likely client base; • Major changes amongst competitor lessors in Avation's key aircraft type, ATR 72-600's; and • All of these factors operating to close the gap between AVAP's share price of £1.44 and NAV per share of £1.66 excluding purchase rights, which add a further £1.14/share in forecast value. Over half of AVAP's fleet is comprised of ATR-72 aircraft; however, with 11 further ATR 72-600 planes on order over the next three years to June 2028 AND purchase rights over a further 24 planes for delivery between 2028-2034 (say 4 planes per annum); growth in the intrinsic value of AVAP clearly rests with its ability to utilise this turboprop. As we noted, investors can have a degree of patience since the first few planes for delivery in 2025 have been pre-sold (March/April) netting AVAP $5million; those deliverable in October and November have been pre-leased. Hence, AVAP is "speculatively committed" to 7 aircraft over the 2.5 years to June 2028 at a cost of ~$21million per plane. In addition, two aircraft come off lease in 2026. ATR (Avions de Transport Régional) is a 50-50 venture between Airbus – the world's largest aircraft manufacturer by revenue - and the Italian listed entity Leonardo SpA (LDO.MI) both of who have significant Government shareholders; Leonardo is an €18bn revenue defence, electronics and helicopter business. ATR was formed in 1981 to target this specific regional aircraft market and produced its first ATR 42-200 in mid 1984with first delivery in December 1985. ATR's have evolved from the original 200 series via a 300, 320, 400 and 500 to the current 600 series, with ATR focused on continued improvement rather than revolutionary overhaul of the current planes. ATR delivered its 1700th plane in mid-2024 and holds a rough 75% market share of the turbo-prop market. ATR production has fluctuated in recent years due to supply chain disruptions, peaking at 88 aircraft in 2015, falling to 25 in 2022, and 31 in 2023, with 41 in full year 2024. ATR aims to regrow to ~80planes per annum by 2026. Given the increasing access required to smaller airports for tourism and business purposes, the ability of ATR 72-600's to operate from runways as short as 800 metres suggests there to be an ongoing demand from developing countries for this type of aircraft. Our starting point to evaluate is to assume that AVAP does nothing other than take delivery of the all planes over the period to 2034, renews most leases which expire (especially in 2028) and debt fund 75% of the aircraft in a standard 3:1 gearing exercise. Assuming 85% capacity utilisation through the later years, yields in the high 10% range with 7% funding – an effective 4% spread – we can easily substantiate an after tax DCF of £3.10 a share (£1=US$1.30) out to 2034; this is consistent with the only sell-side research on the company's equity which ascribes a value per share of £2.93. We see four options to do so: • Innovative and/or cheaper refinancing of the 6.5% bonds (+kickers) expiring in October 2026; • In conjunction with this, introduction of a funding partner on an accretive basis; • Using cash flow to retire equity rather than pay dividends; and • Outright sale of the company considering increased sector interest and wider equity market disinterest. We believe that subject to global events, AVAP could fund future commitments from cash flow, albeit in an occasionally highly geared state. However, like many other companies, being the sole listed entity in a business of unlisted "Land of Giants" players, ones funded by extremely large institutions (Dubai Government, BlackRock), is very difficult. Continuous disclosure requirements dictate you are giving away significant commercial information to competitors; when your shares trade at a steep discount to intrinsic value and have few real followers, the question must be asked: is it worth it? We believe with the refinancing requirement later in October 2025 the question will be most strenuously examined, especially if equity values in the high £2's are made available. Given the company is now generating EBITDA of ~ $100million per annum before assorted adjustments – see historic sheet – an acquisition at >9x EV/EBITDA to gain the purchase rights and refinance the liabilities by an institutionally backed lessor – which would generate this price – is hardly a stretch, should management accede.

BSD Analysis:
East 72 presents a compelling deep-value opportunity in Avation, the sole publicly listed regional aircraft lessor trading at a significant discount to intrinsic value. The manager identifies multiple catalysts including debt refinancing opportunities that could reduce funding costs by 340bp, exclusive ATR turboprop purchase rights worth £1.14 per share, and a hard market for aircraft values driving lease rate improvements. The company's unique position in the regional aviation niche, with 75% market share held by ATR in turboprops, provides defensive characteristics and growth optionality through 24 purchase rights extending to 2034. Recent competitor consolidation (Nordic Aviation Capital acquisition by DAE) should improve pricing discipline in the sector. With shares trading at £1.44 versus DCF value of £3.10 and NAV of £1.66 excluding purchase rights, the discount appears unsustainable. The manager suggests multiple value realization paths including strategic sale to institutional lessors, given the company's isolation as the only listed player among "Land of Giants" competitors backed by sovereign wealth funds and private equity.

Pitch Summary:
Vivendi's investment in Telecom Italia (TIT), initiated in 2015, at prices around €1.55 per share, has been a serious bugbear – not just through financial loss, but also the vast management time consumption including litigation against other shareholders and TIT itself. Very surprisingly, part way through March, Vivendi announce the on-market sales of shares in TIT, followed by a late month divestment of a 15% block to Poste Italiane. We estimate Vivendi (VIV) has realised €923million from the sale of 3.26billion shares in March 2025. This sale is meaningful not just in reducing debt to an estimated €1.65billion but also refocusing management on adding value to the company by redeployment of assets. Prior to attributing an impost from capitalized corporate costs – estimated to run at €80million a year, VIV's 31 March 2025 NAV is approximately €5.20 per share – a 47% discount to the period end €2.76 share price; capitalizing corporate costs at 12x EBITA reduces adjusted NAV to €4.2billion or €4.24 per share, still a hefty 35% discount. This situation makes little sense but can be reasonably explained by investor unease of the company as a "Bolloré plaything". Many perceive little corporate direction other than as a receptacle for investment in old world European media – alongside other "barons" such as Silvio Berlusconi – diluting the attraction of owning UMG stock at a discount. With a minimum €1.47billion gap between equity price and value, of which €455million is attributable to Bolloré, and ~€1billion to "minority" shareholders, it would seem unlikely such a situation will continue indefinitely with such a skilled corporate raider as the controlling shareholder. The scope for a cheap offer at a significant premium to prevailing prices to the minorities is obvious. VIV in its current form is largely unable to be used as currency for anything, after the four-way split in December 2024. It trades at similar discounts to those of European investment holding companies with no track record of capital management, but with its worst investment now unlocked.

BSD Analysis:
East 72 presents a compelling value play on Vivendi following the company's strategic divestment of its problematic Telecom Italia stake. The manager highlights a significant discount to NAV of 35-47%, creating a €1.47 billion valuation gap that appears unsustainable given Bolloré's controlling position and track record as a corporate raider. The sale of TIT shares for €923 million not only reduces debt to €1.65 billion but refocuses management on value creation through asset redeployment. The thesis centers on the market's perception of Vivendi as a "Bolloré plaything" in old-world European media, which has created an attractive entry point for minority shareholders. With the four-way split completed in December 2024 and the worst investment (TIT) now divested, the company is positioned for potential corporate action. The manager suggests the scope for a premium takeout offer to minorities is obvious, given the controlling shareholder's reputation and the magnitude of the discount. This represents a classic sum-of-the-parts opportunity with clear catalysts for value realization.

Pitch Summary:
SigmaRoc is a prominent European producer of lime and minerals, founded in 2016 by a group of private equity investors. Inspired by the success of the U.S. market, they saw a significant opportunity to consolidate construction materials companies throughout Europe. Since then, SigmaRoc has made over a dozen strategic acquisitions in an effort to gain scale. This acquisition spree culminated in the purchase of CRH's European lime assets at the end of 2023, positioning SigmaRoc as the market leader in Finland, Sweden, Norway, the U.K., and Ireland, while securing the #2 spot in Germany, Poland, and the Czech Republic. Lime and aggregates in general are essential to many industries, providing SigmaRoc with a strong, resilient business model. These products are often local monopolies due to their limited transportability, with significant pricing power stemming from their short-distance economics. Even during periods of volume declines, prices generally still increase, a trend that was evident for SigmaRoc last year. Although aggregates are closely tied to construction demand, lime's applications extend far beyond this sector. While construction accounts for roughly half of SigmaRoc's revenues, the remainder is diversified across steel production, agriculture, chemical processes, and pulp and paper industries. We do believe much of SigmaRoc's broad exposure positions the company to benefit from several growth drivers, particularly increased defense and infrastructure spending in Europe. Germany, the company's largest market accounting for 30% of revenues, stands out as a key growth catalyst. The country recently announced a €500bn infrastructure investment plan alongside a commitment to increase defense spending, both of which are expected to drive demand of SigmaRoc's products. SigmaRoc represents a classic example of an underappreciated "analog" investment, with parallels to U.S.-listed aggregates players, particularly United States Lime & Minerals (USLM), a pure play lime producer. USLM currently trades at 20x P/E, while SigmaRoc is valued at only 9x, reflecting a significant discount. We expect this gap to narrow as SigmaRoc moves past the "roll-up" phase of their strategy following the CRH deal, and investors start to fully realize the scale and positioning the company has achieved.

BSD Analysis:
The manager presents a compelling bull case for SigmaRoc as a European construction materials consolidator with dominant market positions and significant pricing power. The company has successfully executed a roll-up strategy since 2016, culminating in the transformative acquisition of CRH's European lime assets, establishing market leadership across Nordic countries and the UK while securing strong positions in Germany and Eastern Europe. The investment thesis centers on SigmaRoc's resilient business model with local monopoly characteristics, pricing power from short-distance economics, and diversified end-market exposure beyond construction including steel, agriculture, and chemicals. The manager highlights Germany's €500bn infrastructure investment plan and increased defense spending as key catalysts for demand growth, particularly given Germany represents 30% of revenues. At 9x P/E, SigmaRoc trades at a substantial discount to U.S. peer United States Lime & Minerals at 20x P/E, suggesting significant valuation upside as the company transitions from roll-up phase to operational execution and investors recognize the scale achieved.

Pitch Summary:
Kitron is a Nordic electronics manufacturing services (EMS) provider specializing in high-mix, low-volume products in several industries with strong long-term outlooks, including defense and aerospace, industrials, and electrification. These sectors are particularly attractive within the EMS space, offering higher margins and more durable customer relationships. This is due to the more complex requirements and longer lifecycles associated with their products. The company has an impressive track record, achieving a 16% CAGR in revenue growth since 2014 and expanding EBIT margins from under 2% to high-single digits. This transformation coincides with the appointment of CEO Peter Nilsson in 2014. Under Nilsson's leadership, Kitron shifted its focus toward higher-growth segments, divested low-margin businesses such as its offshore segment, and improved cost efficiency by relocating manufacturing to low-cost countries and expanding automation in its processes. Looking ahead, we believe Kitron is well-positioned to continue its growth trajectory. The company's Defense and Aerospace segment is especially promising, with a record (and growing) backlog driven by increased geopolitical tensions and Europe's ongoing rearmament efforts. We expect this segment to grow 20-30% annually through 2030. Kitron's other key segments – Connectivity, Electrification, and Industrial – are cyclical but have strong structural growth trends. While last year saw a downturn, the company believes it will begin to see a recovery beginning in the second half of this year. Although Kitron's shares currently trade at a multiple of 20x P/E, much of the business is at cycle troughs. The company has strong visibility on its revenues, driven by existing customer relationships, and has set ambitious 2029 targets, projecting earnings power of NOK 4.50+ by that year. This implies a sub-10x P/E multiple before any share repurchases or additional growth from M&A. For context, U.S. peers with similar growth and margin profiles, such as Plexus (PLXS), have historically traded on multiples exceeding 18x P/E.

BSD Analysis:
The manager presents a strong bull case for Kitron as a specialized Nordic EMS provider with superior positioning in high-margin, long-lifecycle sectors including defense, aerospace, and electrification. The company has demonstrated exceptional execution under CEO Peter Nilsson since 2014, achieving 16% revenue CAGR while expanding EBIT margins from sub-2% to high-single digits through strategic portfolio optimization and operational improvements. The investment thesis centers on Kitron's defense and aerospace segment, which benefits from a record backlog driven by European rearmament and geopolitical tensions, with expected 20-30% annual growth through 2030. Despite trading at 20x P/E, the manager argues this multiple is attractive given cyclical troughs in several segments and the company's ambitious 2029 targets projecting NOK 4.50+ earnings power. The valuation case is strengthened by comparison to U.S. peer Plexus, which trades above 18x P/E, suggesting potential for multiple expansion as Kitron's superior growth profile becomes more apparent.

Pitch Summary:
Friedrich Vorwerk is a leading German infrastructure services provider, often described as a smaller European counterpart to U.S.-listed Quanta Services. Specializing in the installation of gas pipelines and high-voltage power transmission lines, the company commands a dominant market position in Germany, with an estimated 20–35% share across its core segments. Although Vorwerk is less than 5% the size of Quanta by market capitalization, it is the largest player in its niche in Germany. The company went public in 2021 and initially faced execution challenges on several large-scale contracts. Over the past two years, however, Vorwerk has demonstrated a marked turnaround – securing major new contracts, achieving solid growth, and strong profitability. The opportunity for Vorwerk seems only to be growing as several top-down initiatives will require the company's services. Germany is undergoing a multi-decade energy transformation requiring tens of billions of euros in infrastructure investment. This began in earnest with efforts to reinforce the national grid following the Ukraine war and is expected to accelerate in the years ahead. Vorwerk already boasts a robust €1.2 billion order backlog, with half stemming from a major power transmission project, but there are easily another €10 billion worth of projects on the horizon, with long-term prospects far exceeding that. In addition to power grid expansion, there are several other high-growth areas where Vorwerk is well-positioned: • Hydrogen Infrastructure: The German government is targeting €20–30 billion in hydrogen pipeline and facility investment. • Natural Gas Pipelines: Demand remains strong, with several €200–500 million projects in view and a total market opportunity potentially exceeding €10 billion over the next decade. • Carbon Capture & Storage (CCS): The potential here is significant as Germany looks to build out carbon pipeline networks to transport CO2 from emission-intensive factories to remote sequestration sites. From a valuation perspective, Vorwerk currently trades at around 9-10x forward EV/EBITDA or mid- to high-teens on a P/E basis. Given the potential to significantly accelerate growth, we believe these multiples appear too low, particularly when compared to Quanta Services. A re-rating to Quanta-like valuation levels, combined with earnings growth, could easily result in 50% or greater upside to the stock. We also find the company attractive as a focused European domestic play, driven by substantial government support for a genuine infrastructure need.

BSD Analysis:
The manager presents a compelling bull case for Friedrich Vorwerk as a dominant German infrastructure services provider positioned to benefit from Europe's multi-decade energy transformation. The company has successfully executed a turnaround following initial post-IPO challenges, now boasting a €1.2 billion order backlog and strong positioning across multiple growth verticals including power transmission, hydrogen infrastructure, and carbon capture networks. The investment thesis centers on Germany's massive infrastructure spending requirements, with €10+ billion in near-term projects and substantially larger long-term opportunities driven by grid reinforcement, energy transition, and defense spending initiatives. At 9-10x forward EV/EBITDA, Vorwerk trades at a significant discount to U.S. peer Quanta Services despite similar market positioning and growth prospects. The manager sees potential for 50%+ upside through multiple expansion and earnings growth as the company capitalizes on government-backed infrastructure investments. The pitch emphasizes Vorwerk's domestic focus and substantial government support as key competitive advantages in a genuine infrastructure buildout cycle.

Pitch Summary:
Berkeley Group also reaffirmed earnings guidance, projecting at least £975m of pre-tax profit across fiscal years 2025 and 2026. Management is focused and disciplined. The business has a market capitalisation of £3.6bn, sits on £500m in net cash, and holds £7bn in forward free cash flow orders. Of that, £1.5bn is contractually locked in. The execution plan is in place through 2035. Its return on equity target is 15%, which aligns with our minimum hurdle. In an uncertain environment, we are leaning into businesses with visibility, cash flow, and management teams that know how to allocate capital.

BSD Analysis:
Kernow presents Berkeley Group as an exemplary investment combining financial strength, operational visibility, and disciplined management. The homebuilder reaffirmed robust earnings guidance of at least £975m pre-tax profit across 2025-2026, demonstrating confidence in execution capabilities. With a £3.6bn market cap, £500m net cash position, and £7bn in forward orders (£1.5bn contractually secured), Berkeley offers exceptional visibility in an uncertain environment. The company's long-term execution plan extending through 2035 provides rare predictability in the volatile construction sector. Management's 15% ROE target aligns perfectly with Kernow's minimum investment hurdle, indicating strong capital efficiency expectations. The substantial forward order book and net cash position provide downside protection while enabling continued growth investment. Berkeley exemplifies Kernow's strategy of concentrating in businesses with predictable cash flows, competent management, and strong balance sheets during macro uncertainty. This defensive growth profile makes it an ideal core holding for navigating volatile market conditions.

Pitch Summary:
Elsewhere, the fundamentals continue to do the heavy lifting. Galliford Try posted strong interim results for the first half of 2025, with profit at the top end of consensus estimates and revenue increasing 13% to £923m.

BSD Analysis:
Kernow highlights Galliford Try as a fundamental winner delivering strong operational performance amid market uncertainty. The construction company reported robust interim results with profits meeting the high end of consensus expectations and revenue growth of 13% to £923m, demonstrating solid execution. The manager's emphasis on fundamentals "doing the heavy lifting" suggests confidence in the company's underlying business momentum independent of macro conditions. As one of their top 5 holdings at 9.5% of NAV, Galliford Try represents a significant conviction position in their portfolio. The strong financial performance validates their investment thesis in the UK construction sector. The company's ability to deliver consistent growth and meet earnings expectations positions it well within Kernow's strategy of focusing on businesses with visibility and cash flow generation. This performance contrasts favorably with macro-sensitive positions like Burberry, highlighting the manager's preference for operationally robust companies during uncertain times.

Pitch Summary:
The impact on our portfolio last month came through a drawdown in Burberry, which erased gains generated by our other positions. Given its reliance on cross-border luxury demand, it was directly exposed to both tariff risk and rising recession fears.

BSD Analysis:
Kernow's commentary on Burberry reflects the luxury retailer's vulnerability to macro headwinds rather than company-specific issues. The position experienced significant drawdowns in March 2025 due to escalating trade war concerns and recession fears, which directly impact cross-border luxury consumption patterns. Burberry's business model, heavily dependent on international luxury demand, makes it particularly sensitive to tariff risks and economic uncertainty. The manager's neutral stance suggests they view the decline as macro-driven rather than fundamental deterioration. While the position detracted from portfolio performance, the brief commentary indicates this may be viewed as temporary volatility rather than a structural problem. The lack of detailed fundamental analysis or exit discussion suggests Kernow maintains conviction in the underlying investment thesis. However, the exposure to trade tensions highlights the inherent risks in luxury goods companies with significant cross-border exposure during periods of geopolitical uncertainty.

Pitch Summary:
After reviewing its latest results, we exited the remainder of our small position in Hunting. The company reported a pre-tax loss of US$34m, compared to a profit of US$41m in the prior year. Following a direct conversation with management, it became clear that the catalyst had finished. The strategy has faltered, and under current leadership, the business shows no path to achieving a 15% return on invested capital. Operational discipline is lacking, and there is no sign that will change. While we generated a return of slightly more than 100% (including dividends) since initiating the position, Hunting is now a value trap. The situation is straightforward. The company has the capacity to return nearly 30% of its market capitalisation to shareholders through a buyback with no execution risk. Instead, the CEO has made it explicit that capital will be directed toward acquisitions that dilute value and expand footprint rather than returns. That tells us everything we need to know. When management chooses scale over shareholder value, we step aside.

BSD Analysis:
Kernow Asset Management exited their position in Hunting PLC after the company's deteriorating fundamentals and poor capital allocation decisions. The oil services company swung from a $41m profit to a $34m pre-tax loss year-over-year, signaling operational challenges. Despite generating over 100% returns during their holding period, the manager identified Hunting as a value trap with management prioritizing growth over shareholder returns. The company possesses the financial capacity to return nearly 30% of its market cap through buybacks but instead plans value-dilutive acquisitions. Management's explicit rejection of shareholder-friendly capital allocation in favor of empire building represents a fundamental misalignment with investor interests. The lack of operational discipline and absence of a clear path to achieving their 15% ROIC hurdle rate prompted the exit. This decision exemplifies disciplined portfolio management when investment thesis deteriorates despite past success.

Pitch Summary:
We also initiated positions in ASML Holding N.V. (ASML) and Lam Research Corporation (LRCX), companies that manufacture capital equipment for the semiconductor industry. You may be wondering if I have been "red-pilled" by A.I. after being so iconoclastic to the trend just a year ago. Not quite. Despite all of the attention being given to Artificial Intelligence, the rest of the semiconductor industry, like memory and trailing-edge nodes, has been recovering out of a cyclical trough. Semiconductor foundries have additionally announced large increases to their capital expenditure budgets, which flow directly into the backlogs of companies like ASML and Lam. After a long period of consolidation, both operate in a highly consolidated industry structure with little to no competition. Both companies have smart and disciplined capital allocation, returning most of their cash flows to shareholders through large repurchase programs. While not thought of as traditional value stocks (despite having healthy free cash flow yields), I have a very favorable view of the industry broadly. In order to understand what these companies do, and why it is so difficult to compete with them, a quick look into a semiconductor fabrication facility (a "fab") is necessary. Fabs vary in size, but most modern facilities will be at least 250,000 square feet in production space, or around 6 acres. According to Intel, their fabs have 1,200 different tools laid out across the facility, each having a size that ranges from that of a small car to a school bus. These tools print, deposit, etch, clean, and inspect features that are only nanometers in size on a small disk of crystalline silicon, called a wafer. These silicon wafers travel from tool to tool in a sterilized container on an interconnected highway system of rails, intentionally and algorithmically laid out for maximum efficiency. A wafer will be transferred from machine-to-machine thousands of times over a period of three to four months before being completed; any interruption in the process significantly reduces the throughput of the fab and risks contaminating the highly delicate chip-structure with dust and other microscopic debris. The fabs themselves take three to five years to build and are designed around the dimensions of the tools being purchased. All of this is to say that once a tool is in the specifications of the facility, there is no replacing it with a competitor. After decades of consolidation in the industry and high switching costs, it's no wonder that the equipment manufacturers (ASML, Lam, Applied Materials, KLA, and Tokyo Electron) have growing parts & service businesses. At the lower end of the spectrum, one of these tools may cost a few million dollars, while at the higher end of the scale, a single High-NA EUV Lithography tool from ASML can cost $380 million. Keeping them in great condition is paramount to having a well-functioning fab. In some ways, the industry is similar to the elevator industry. It has a growing, difficult-to-remove installation base with a limited number of manufacturers and recurring service needs. Unlike elevators, however, the differences between a lithography tool made by ASML and a plasma etch tool from Lam are much greater than the different elevator models made by Otis, Thyssenkrupp, or Kone. Each tool performs a narrow and specific step in the fabrication process. For each of these tools, a fab is choosing between two or three competitors – save for ASML, who has no competition in EUV. These tools are highly complex, and the underpinning technology is a closely held secret. Lam itself has tens of thousands of patents underlying its product portfolio. This is to say that semiconductor capital equipment manufacturers also benefit from the sheer complexity of their products. So, why do we have the opportunity to buy these companies today? There is no getting around the fact that their revenues are tied to capacity expansion in the very cyclical semiconductor industry. I believe that the difficulty in handicapping the cycle and the noise that comes with it often presents opportunities for long-term investors. Lam Research has a great deal of exposure to the memory market in particular, which has had exceptionally weak demand over the last couple of years. Lam's NAND-related sales are still less than half of what they were at their peak in 2021 and 2022. Any prospective recovery in these markets makes Lam very interesting today. The present may look unassuming, but the future is bright. Recent changes in transistor architecture have had a negative impact on investor attitudes regarding lithography's share of the manufacturing process. Lithography is the process of using highly focused beams of light to print patterns onto a wafer. These patterns serve as a guide for the rest of the process as materials are removed and added to make the transistor structures on each layer. Historically, transistors have been designed to be placed onto relatively flat layers, but today new designs are allowing them to be stacked on top of one another. This stacked design requires more time spent in etch and deposition tools, made by Lam, but potentially not as much incremental time in the lithography tools, made by ASML. Still, ASML is the only provider of EUV lithography tools and has considerable pricing power because of it. While volumes could decline in older lithography product lines, ASML's newest tools continue to minimize feature sizes, which drives demand from new fabs producing leading-edge chips. Price and new tools should continue to drive growth.

BSD Analysis:
The manager presents a compelling bull case for Lam Research, emphasizing the company's dominant position in plasma etch and deposition equipment within a highly consolidated semiconductor capital equipment industry. The thesis highlights Lam's significant exposure to the memory market, where NAND-related sales remain less than half of 2021-2022 peaks, creating substantial recovery potential. The manager argues that new 3D transistor architectures actually benefit Lam by requiring more time in etch and deposition processes compared to traditional lithography. With tens of thousands of patents protecting its technology and high switching costs due to fab design constraints, Lam enjoys strong competitive moats. The cyclical trough in memory demand is viewed as creating an attractive entry point, with semiconductor foundries announcing major capex increases that flow directly to equipment backlogs. The manager emphasizes Lam's disciplined capital allocation through large share repurchase programs and healthy free cash flow yields, positioning it as an undervalued play on semiconductor recovery.

Pitch Summary:
We also initiated positions in ASML Holding N.V. (ASML) and Lam Research Corporation (LRCX), companies that manufacture capital equipment for the semiconductor industry. You may be wondering if I have been "red-pilled" by A.I. after being so iconoclastic to the trend just a year ago. Not quite. Despite all of the attention being given to Artificial Intelligence, the rest of the semiconductor industry, like memory and trailing-edge nodes, has been recovering out of a cyclical trough. Semiconductor foundries have additionally announced large increases to their capital expenditure budgets, which flow directly into the backlogs of companies like ASML and Lam. After a long period of consolidation, both operate in a highly consolidated industry structure with little to no competition. Both companies have smart and disciplined capital allocation, returning most of their cash flows to shareholders through large repurchase programs. While not thought of as traditional value stocks (despite having healthy free cash flow yields), I have a very favorable view of the industry broadly. In order to understand what these companies do, and why it is so difficult to compete with them, a quick look into a semiconductor fabrication facility (a "fab") is necessary. Fabs vary in size, but most modern facilities will be at least 250,000 square feet in production space, or around 6 acres. According to Intel, their fabs have 1,200 different tools laid out across the facility, each having a size that ranges from that of a small car to a school bus. These tools print, deposit, etch, clean, and inspect features that are only nanometers in size on a small disk of crystalline silicon, called a wafer. These silicon wafers travel from tool to tool in a sterilized container on an interconnected highway system of rails, intentionally and algorithmically laid out for maximum efficiency. A wafer will be transferred from machine-to-machine thousands of times over a period of three to four months before being completed; any interruption in the process significantly reduces the throughput of the fab and risks contaminating the highly delicate chip-structure with dust and other microscopic debris. The fabs themselves take three to five years to build and are designed around the dimensions of the tools being purchased. All of this is to say that once a tool is in the specifications of the facility, there is no replacing it with a competitor. After decades of consolidation in the industry and high switching costs, it's no wonder that the equipment manufacturers (ASML, Lam, Applied Materials, KLA, and Tokyo Electron) have growing parts & service businesses. At the lower end of the spectrum, one of these tools may cost a few million dollars, while at the higher end of the scale, a single High-NA EUV Lithography tool from ASML can cost $380 million. Keeping them in great condition is paramount to having a well-functioning fab. In some ways, the industry is similar to the elevator industry. It has a growing, difficult-to-remove installation base with a limited number of manufacturers and recurring service needs. Unlike elevators, however, the differences between a lithography tool made by ASML and a plasma etch tool from Lam are much greater than the different elevator models made by Otis, Thyssenkrupp, or Kone. Each tool performs a narrow and specific step in the fabrication process. For each of these tools, a fab is choosing between two or three competitors – save for ASML, who has no competition in EUV. These tools are highly complex, and the underpinning technology is a closely held secret. Lam itself has tens of thousands of patents underlying its product portfolio. This is to say that semiconductor capital equipment manufacturers also benefit from the sheer complexity of their products. So, why do we have the opportunity to buy these companies today? There is no getting around the fact that their revenues are tied to capacity expansion in the very cyclical semiconductor industry. I believe that the difficulty in handicapping the cycle and the noise that comes with it often presents opportunities for long-term investors. Lam Research has a great deal of exposure to the memory market in particular, which has had exceptionally weak demand over the last couple of years. Lam's NAND-related sales are still less than half of what they were at their peak in 2021 and 2022. Any prospective recovery in these markets makes Lam very interesting today. The present may look unassuming, but the future is bright. Recent changes in transistor architecture have had a negative impact on investor attitudes regarding lithography's share of the manufacturing process. Lithography is the process of using highly focused beams of light to print patterns onto a wafer. These patterns serve as a guide for the rest of the process as materials are removed and added to make the transistor structures on each layer. Historically, transistors have been designed to be placed onto relatively flat layers, but today new designs are allowing them to be stacked on top of one another. This stacked design requires more time spent in etch and deposition tools, made by Lam, but potentially not as much incremental time in the lithography tools, made by ASML. Still, ASML is the only provider of EUV lithography tools and has considerable pricing power because of it. While volumes could decline in older lithography product lines, ASML's newest tools continue to minimize feature sizes, which drives demand from new fabs producing leading-edge chips. Price and new tools should continue to drive growth.

BSD Analysis:
The manager presents a compelling bull case for ASML based on its monopolistic position in EUV lithography and the structural advantages of semiconductor capital equipment. The thesis emphasizes ASML's complete dominance in EUV technology, with no competition and pricing power that allows individual tools to cost up to $380 million. The manager highlights the high switching costs and sticky customer relationships inherent in fab design, where facilities are built around specific tool dimensions over 3-5 year construction periods. The cyclical nature of semiconductor capex is viewed as creating opportunity rather than risk, with foundries announcing significant capex increases that flow directly to equipment makers' backlogs. While acknowledging concerns about lithography's share declining due to 3D transistor architectures, the manager argues ASML's newest tools driving leading-edge chip production will sustain growth. The pitch demonstrates deep technical understanding of semiconductor manufacturing and positions ASML as benefiting from both monopoly economics and secular technology advancement.