Investment Pitches

Pitch Summary:
Palantir Technologies builds advanced platforms for data integration, management, and security, enabling interactive, AI-assisted analysis for its users. Its core offerings include Palantir Gotham, designed for government clients, and Palantir Foundry, tailored for commercial customers. Originally focused on U.S. intelligence agencies, Palantir has expanded into defense contracts with western governments and entered the commercial market in 2016. During the quarter, the company reported strong fiscal fourth-quarter results, with revenues surpassing analyst estimates due to heightened demand from both U.S. commercial and government clients. Management also raised its fiscal 2025 revenue outlook, citing robust demand in its Artificial Intelligence Platform (AIP), which continues to gain adoption across various industries. Collectively, these developments drove a notable rise in Palantir's share price, positively contributing to performance during the quarter.

BSD Analysis:
Alger's bull case for Palantir is built on the company's successful transition from a government-focused data analytics provider to a diversified AI platform serving both commercial and government markets. The manager emphasizes the strong momentum in Palantir's Artificial Intelligence Platform (AIP), which is gaining traction across multiple industries and driving revenue growth acceleration. The recent fiscal fourth-quarter results exceeded expectations, with revenue beats driven by demand from both commercial and government clients, demonstrating the platform's broad appeal. Management's raised fiscal 2025 revenue guidance signals confidence in sustained demand for AI-powered data analytics solutions. Palantir's dual-market approach provides revenue diversification while leveraging its core competencies in data integration and security. The company's early mover advantage in AI-assisted analysis and its established relationships with government agencies create competitive moats. The expanding commercial adoption of AIP suggests Palantir is successfully monetizing the broader AI trend. The combination of government contract stability and commercial market expansion supports a compelling growth trajectory with multiple revenue drivers.

Pitch Summary:
Spotify is a leading global streaming platform providing users access to an extensive library of music, podcasts, and other audio and video content. The company primarily generates revenue through its Premium subscription service, offering ad-free listening, offline access, and enhanced audio quality, and also from its ad-supported free tier, where advertisers reach Spotify's large user base. By recently integrating AI, Spotify enriches user experiences with personalized features such as AI Playlist and AI DJ, tailoring content specifically to individual preferences. We believe this strategic use of AI, combined with its expansion into various audio formats, positions Spotify for sustained growth in the evolving digital audio market. During the quarter, shares contributed positively after the company reported better-than-expected fiscal fourth-quarter results driven by strong user growth and margin improvement due to favorable trends in audiobooks and music content costs.

BSD Analysis:
Alger's bull thesis on Spotify centers on the company's successful AI integration and diversification beyond traditional music streaming. The manager highlights Spotify's strategic deployment of AI features like AI Playlist and AI DJ, which enhance user personalization and engagement, potentially driving higher retention and premium conversion rates. The recent strong fiscal fourth-quarter results validate this approach, with robust user growth demonstrating the platform's expanding market penetration. Margin improvement driven by favorable content cost trends, particularly in audiobooks and music licensing, suggests operational leverage is materializing. Spotify's dual revenue model of premium subscriptions and advertising provides diversified income streams and multiple growth vectors. The company's expansion into podcasts and audiobooks creates additional monetization opportunities while increasing user stickiness. The manager's confidence in Spotify's positioning within the evolving digital audio landscape reflects the platform's ability to adapt and innovate. The combination of AI-driven personalization, content diversification, and improving unit economics supports a compelling growth trajectory.

Pitch Summary:
Heico is a leading manufacturer of Federal Aviation Administration (FAA) approved jet engine and aircraft component replacement parts. Its Flight Support Group (FSG) provides FAA-approved aircraft and engine replacement parts, while the Electronics Technologies Group (ETG) serves industries such as aerospace, defense, homeland security, space, and medical with specialized electronic components. We believe the company is well-positioned to benefit from the steady aging of the global commercial aerospace fleet, resulting in increased consumption of aftermarket parts. Additionally, ongoing production issues from two major aircraft manufacturers have reduced the projected new plane deliveries, further supporting our view that the average age of the global fleet is likely to remain elevated over the next few years. During the quarter, shares contributed positively to performance after the company reported strong fiscal first-quarter results, driven by continued strength in the FSG segment as commercial flight hours remained robust. Furthermore, management highlighted a recovery within the ETG segment, supported by increased demand from the U.S. Department of Defense.

BSD Analysis:
Alger presents a compelling bull case for HEICO Corporation based on structural tailwinds in the aerospace aftermarket. The manager's thesis centers on the aging global commercial fleet driving increased demand for replacement parts, a trend accelerated by production delays from major aircraft manufacturers. This dynamic creates a favorable supply-demand imbalance that benefits HEICO's core Flight Support Group business. The company's recent strong fiscal first-quarter results validate this thesis, with robust commercial flight hours supporting aftermarket demand. Additionally, the recovery in HEICO's Electronics Technologies Group, driven by increased U.S. Department of Defense spending, provides diversification and growth optionality. The manager's confidence in the structural nature of these trends suggests HEICO is well-positioned for sustained revenue growth and margin expansion. The combination of defensive aftermarket characteristics and exposure to defense spending creates an attractive risk-adjusted return profile. HEICO's specialized manufacturing capabilities and regulatory approvals provide competitive moats that should support pricing power and market share gains.

Pitch Summary:
Analog Devices is a global semiconductor leader dedicated to solving customers' most complex engineering challenges. The company delivers innovations that connect technology to human breakthroughs and play a critical role at the intersection of the physical and digital worlds by providing the building blocks to sense, measure, interpret, connect and power. Analog designs, manufactures, tests and markets a broad portfolio of solutions. These solutions include integrated circuits, software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies. Its comprehensive product portfolio, deep domain expertise and advanced manufacturing span high-performance precision and high-speed mixed-signal, power management and processing technologies, including data converters, amplifiers, power management, radio frequency, integrated circuits, edge processors and other sensors. The company's customers include original equipment manufacturers and customers that build electronic subsystems for integration into larger systems. We see the company's analog products providing exposure to high-growth trends, including automotive electrification and driver assistance systems, factory intelligence and automation, the Intelligent Edge, Internet of Things device proliferation and sustainable energy. We expect the company to return excess free cash flow, benefiting shareholders.

BSD Analysis:
The fund manager presents a bullish thesis on Analog Devices, positioning it as a strategic play on multiple secular growth trends. The investment rationale centers on ADI's comprehensive analog and mixed-signal semiconductor portfolio that serves as critical infrastructure for emerging technologies. The manager highlights the company's exposure to high-growth end markets including automotive electrification, factory automation, IoT proliferation, and sustainable energy solutions. ADI's positioning at the intersection of physical and digital worlds provides diversified revenue streams across multiple secular tailwinds. The emphasis on the company's deep domain expertise and advanced manufacturing capabilities suggests sustainable competitive advantages. The manager's expectation of excess free cash flow returns indicates confidence in ADI's capital allocation discipline and shareholder-friendly approach. This appears to be a quality growth play on the digitization and electrification megatrends.

Pitch Summary:
Founded in 1984 and headquartered in Japan, Fast Retailing is one of the world's largest apparel companies. Best known for its flagship brand UNIQLO (originally Unique Clothing Warehouse), the company has over 3,500 stores worldwide, generating approximately 40% of sales in Japan, 20% in China and the remainder across the U.S., Europe and other Asian markets. UNIQLO accounts for roughly 85% of sales, with the remaining 15% coming from brands such as GU, Theory and others. Fast Retailing is often grouped with fast-fashion competitors such as Zara (owned by Inditex) and H&M. However, Fast Retailing's strategy is fundamentally different. While fast-fashion brands focus on rapidly turning over the latest trends—often at the expense of quality—Fast Retailing emphasizes timeless, high-quality apparel at accessible prices. Its LifeWear philosophy prioritizes functionality, comfort and durability, with innovations such as HeatTech for warmth and AIRism for breathability, making its clothes essential wardrobe staples rather than disposable fashion. This focus on innovation, quality and affordability has helped Fast Retailing build a globally recognized brand with a history of profitable expansion in and outside Japan. While this is our first time investing in Fast Retailing, we have followed the company for over a decade, having previously invested in Toray Industries, which produces many of the proprietary fabrics that underpin UNIQLO's appeal. Given its long-term growth potential and operational strengths, we believe now is the right time to invest. Some of the quality characteristics we have identified for Fast Retailing include: Economies of scale achieved with a strategy that focuses on functionality, quality and value (rather than rapidly changing fashion trends) contribute to above-peer profitability; Globally recognized brand with a history of profitable expansion within Japan and internationally; Technology-driven innovation in materials, inventory, logistics and supply chain management; and Long-tenured management team with unusually high insider ownership. Based on our estimates, shares of the company are attractively valued. We believe continued overseas expansion, as well as other catalysts (see below), will likely lead to higher normalized margins and free cash flow than currently appreciated by the market. Catalysts we have identified for Fast Retailing, which we believe will cause its stock price to appreciate over our three- to five-year investment horizon, include: Continued overseas expansion should drive higher normalized revenue and profitability; Operational improvements in China, including better inventory management and an optimized store footprint, are expected to enhance margins; and Improved performance at GU brand in Asia, as well as expansion into the U.S.

BSD Analysis:
The manager presents a comprehensive bull case for Fast Retailing as a new position, emphasizing its differentiated strategy versus traditional fast-fashion competitors. Unlike Zara or H&M's trend-focused approach, Fast Retailing's LifeWear philosophy prioritizes functional, durable apparel through innovations like HeatTech and AIRism technologies. This positions UNIQLO products as wardrobe essentials rather than disposable fashion, supporting superior profitability and customer loyalty. The company demonstrates strong operational characteristics including economies of scale, global brand recognition, technology-driven supply chain innovation, and experienced management with high insider ownership. The investment thesis centers on multiple growth catalysts: continued international expansion beyond the current 40% Japan/20% China split, operational improvements in China through better inventory management, and GU brand development including U.S. expansion. The manager views current valuation as attractive relative to normalized earnings potential from these expansion initiatives.

Pitch Summary:
Accenture, the global IT services and consulting firm, was one of the largest detractors during the period. The company reported revenue at the top end of its guided range, supported by solid booking, particularly in large-scale transformational projects from major corporate clients. Despite these results, shares declined as investor sentiment was impacted by continued client caution amid heightened global uncertainty, including concerns around tariffs and consumer sentiment, as well as the U.S. administration's initiative to streamline federal operations, which could result in canceled or delayed government contracts. We believe Accenture is well-positioned to support the federal government's efficiency goals through its expertise and proven track record in delivering innovative, cost-effective solutions. Accenture has also continued to see traction in emerging areas such as generative AI, securing $1.4 billion in new bookings and generating approximately $600 million in related revenue during the quarter. Short-term fluctuations in consulting demand are not unusual, and we remain confident that Accenture's global scale and deep expertise make it well-positioned to continue to provide solutions and deepen its partnerships with many of the world's largest companies as they continue to implement increasingly sophisticated technologies.

BSD Analysis:
The manager maintains a bullish view on Accenture despite recent share price weakness, viewing the decline as temporary sentiment-driven rather than fundamental deterioration. The company delivered solid operational results with revenue at the top end of guidance and strong bookings in large transformational projects. Near-term headwinds include client caution amid global uncertainty and potential government contract delays due to federal streamlining initiatives. However, the manager sees Accenture as well-positioned to benefit from government efficiency goals given its proven track record in delivering cost-effective solutions. The generative AI opportunity is gaining significant traction with $1.4 billion in new bookings and $600 million in related revenue, demonstrating Accenture's ability to monetize emerging technologies. The investment thesis rests on Accenture's global scale, deep expertise, and strong client relationships positioning it to capitalize on ongoing digital transformation trends and sophisticated technology implementations across enterprise clients.

Pitch Summary:
Cameco, one of the world's largest uranium producers, was a primary detractor during the quarter. Shares of the Canada-based company declined following President Trump's 10% tariff on Canadian energy exports to the U.S., where Cameco is a major uranium supplier. However, we believe these tariff concerns are overstated given the inelastic nature of uranium demand and the lack of substitutes. Any incremental costs would be absorbed by utilities under existing contract structures. While the company's stock price may have followed the decline in uranium spot prices during the period, Cameco's business is largely insulated from short-term price swings due to its extensive use of long-term contracts rather than spot-market sales. Moreover, the company's tier-one assets in politically stable jurisdictions, operational track record and ability to flex production—particularly at its MacArthur River and Key Lake mines—further strengthen its competitive advantage. We believe Cameco remains exceptionally well-positioned to benefit as governments around the world increasingly turn to nuclear power as a clean, secure and scalable source of energy.

BSD Analysis:
Despite short-term headwinds from tariff concerns and uranium price volatility, the manager maintains strong conviction in Cameco's long-term prospects. The 10% Canadian energy tariff created temporary pressure, but the manager views these concerns as overblown given uranium's inelastic demand characteristics and lack of viable substitutes. Cameco's business model provides significant downside protection through extensive long-term contract structures that insulate revenues from spot price fluctuations. The company's competitive advantages include tier-one assets in politically stable jurisdictions, proven operational capabilities, and production flexibility at key facilities like MacArthur River and Key Lake. The investment thesis is anchored on the global nuclear renaissance as governments prioritize clean, secure, and scalable energy sources. This structural demand tailwind, combined with Cameco's market-leading position and operational excellence, supports the manager's bullish long-term outlook despite near-term noise.

Pitch Summary:
Sony, the global leader in video games, image sensors, music and movies, was a top contributor for the period. The company delivered strong quarterly results, driven primarily by its gaming and music businesses, and announced a new executive leadership structure. In gaming, Sony reported a record-high 129 million monthly active users, a 20% year-over-year increase in PlayStation Plus revenue and an expanding user base, as 40% of new PS5 console buyers were new to the platform. The Music segment also continued to benefit from global streaming tailwinds, delivering double-digit profit growth. In a significant leadership transition, Sony announced that effective April 1, 2025, Hiroki Totoki, currently COO and CFO, would succeed Kenichiro Yoshida as CEO. Our original investment in Sony was grounded in the strategic transformation led by Yoshida, where Totoki was an instrumental partner in driving Sony's pivot away from commoditized businesses while spearheading investments in content IP and semiconductors. Looking ahead, we continue to see an opportunity for Sony to capitalize on its unique position as both a content creator and platform owner. The company's ability to integrate gaming, music, anime and film and leverage IP across platforms (e.g., Crunchyroll and its recent partnership with Kadokawa) should position it well for long-term value creation.

BSD Analysis:
The manager maintains a bullish stance on Sony based on strong operational momentum and strategic positioning across entertainment verticals. Gaming performance was particularly impressive with record 129 million monthly active users and 20% PlayStation Plus revenue growth, while 40% of new PS5 buyers represent platform expansion. The music segment continues benefiting from streaming tailwinds with double-digit profit growth. The upcoming CEO transition from Yoshida to Totoki represents continuity rather than disruption, as Totoki was instrumental in Sony's strategic transformation away from commoditized businesses toward high-margin content IP and semiconductors. The investment thesis centers on Sony's unique dual role as both content creator and platform owner, enabling cross-platform IP monetization through gaming, music, anime, and film integration. Recent partnerships like Crunchyroll and Kadokawa further strengthen this content ecosystem approach for sustained value creation.

Pitch Summary:
Munich Re, the world's largest reinsurance company, was a leading contributor for the quarter. The company delivered strong results despite absorbing €1.2 billion in claims from January's California wildfires, a testament to the reinsurer's prudent risk management. Demonstrating confidence in its ongoing profitability and robust capital position, Munich Re also raised its dividend by more than 30% and announced an expanded €2 billion share buyback program. Favorable market pricing and disciplined underwriting have continued to support profitability, even amid elevated volatility in capital markets and global catastrophe losses. Additionally, Munich Re's experienced leadership team has placed an unusual emphasis on innovation for a reinsurer of its size, investing meaningfully in R&D and technology. For example, the company has identified, launched or already implemented over 300 AI use cases that aim to increase efficiency and enhance its competitive edge. We expect these initiatives to further support Munich Re's continued market-share gains across specialty lines, including cybersecurity, and in rapidly growing Asian markets where insurance penetration remains relatively low.

BSD Analysis:
The manager presents a compelling bull case for Munich Re based on operational resilience and strategic innovation. Despite absorbing €1.2 billion in California wildfire claims, the company demonstrated strong risk management capabilities while simultaneously returning significant capital to shareholders through a 30%+ dividend increase and €2 billion buyback program. The thesis centers on Munich Re's disciplined underwriting approach and favorable pricing environment supporting sustained profitability. Particularly noteworthy is management's technology-forward strategy, with over 300 AI use cases already implemented to drive operational efficiency and competitive advantage. The manager sees significant growth opportunities in specialty lines like cybersecurity and underpenetrated Asian markets. This combination of defensive characteristics, capital allocation discipline, and growth-oriented innovation positions Munich Re as an attractive long-term holding in the reinsurance sector.

Pitch Summary:
Founded in 1924 and headquartered in Japan, Daikin Industries is the world's largest manufacturer of commercial and residential air conditioner systems. The company produces air conditioning systems, heat pumps, air purifiers and refrigeration equipment (which accounts for over 90% of revenue). Daikin has long been an industry leader in developing energy-efficient products, leadership that was molded by its roots in Japan, a region with limited natural resources and high energy costs. Its R&D organization includes a global Technology Innovation Center and 39 other regional development facilities that customize offerings to local markets. Today, Daikin's products are sold in over 170 countries, with leading market positions in Japan, China and the U.S. residential market. Air-conditioning products often require professional installation, making distribution a critical factor in Daikin's success. Its 2012 acquisition of Goodman expanded its reach in the U.S., adding hundreds of distribution points and a platform from which to expand. In China, Daikin sells high-end, multi-unit systems through its specialty ProShop retail stores, earning higher margins by selling directly to homeowners rather than through developers or contractors. Some of the quality characteristics we have identified for Daikin include: • Strong brand recognition and a large global distribution network provide competitive advantages and serve as high barriers to entry; • History of technological innovation, particularly in energy-saving inverters and variable refrigerant flow systems; and • Ability to tailor products to different local preferences across geographies and varied levels of HVAC regulations, thanks to Daikin's network of global production bases and development facilities. Based on our estimates, shares of the company are significantly undervalued. We believe greater global adoption of air conditioning, as well as higher priced and more profitable technologies (e.g., heat pumps and inverters), will lead to higher normalized free cash flow than currently appreciated by the market. Catalysts we have identified for Daikin, which we believe will cause its stock price to appreciate over our three- to five-year investment horizon, include: • As the largest global supplier and a leader in energy efficiency, Daikin is uniquely positioned to benefit from the increase in worldwide air conditioning adoption rates (projected to triple by 2050) while leveraging its intellectual property in inverters and heat pumps; • Market share gains in the U.S. as Daikin further leverages its technology in premium residential air conditioning, supported by Goodman's distribution network; • Ongoing adoption of heat pumps in Europe and a recovery in China's property market; and • Entering the final year of its Fusion 25 strategic plan with room for improvements in advancing technological development, strengthening sales and service networks, promoting digital transformation, and more.

BSD Analysis:
The manager presents a compelling bull case for Daikin based on structural growth drivers and competitive positioning in the global HVAC market. As the world's largest air conditioning manufacturer with over 90% revenue from HVAC equipment, Daikin benefits from strong brand recognition and extensive global distribution across 170 countries. The company's technological leadership in energy-efficient products, developed from Japan's resource constraints, provides competitive advantages through proprietary inverter and variable refrigerant flow systems. The investment thesis centers on massive structural demand growth, with global air conditioning adoption projected to triple by 2050, positioning Daikin to capture disproportionate value through its scale and IP portfolio. Key catalysts include U.S. market share gains leveraging Goodman's distribution network, European heat pump adoption, China property market recovery, and execution of the Fusion 25 strategic plan. The manager views shares as significantly undervalued relative to normalized free cash flow potential from higher-margin technologies and global adoption trends.

Pitch Summary:
Alphabet, Inc. Headquartered in Mountain View, California and founded by Larry Page and Sergey Brin, Alphabet is one of the world's most dominant and innovative technology companies. Best known as the parent company of Google, Alphabet generates most of its revenue from digital advertising, particularly search. Google currently holds an estimated 87% market share in U.S. search and nearly 90% globally, underpinning a highly profitable ad business that accounts for roughly 75% of Alphabet's total revenue. While Google was founded in 1998 and became public in 2004, Alphabet was created in 2015 to provide greater transparency and operational independence across its varied business lines. Beyond its core, the company has increasingly diversified into accelerating products, including Google Cloud and YouTube's suite of subscription services (YouTube Premium, YouTube TV and YouTube Music). Today, Google Services (Search, YouTube, Chrome, Android and the Play Store) makes up about 87% of total revenue, while Google Cloud represents about 13%. Alphabet also invests in longer-term innovation through its Other Bets segment, which includes autonomous driving (Waymo), life sciences (Verily) and advanced AI research (DeepMind). Some of the quality characteristics we have identified for Alphabet include: • Unrivaled scale in global search and digital advertising, protected by powerful network effects and vast proprietary data; • An integrated ecosystem—across Search, YouTube, Android, Chrome and Gmail—that supports user retention and ad targeting efficiency; • Category leadership in digital media, with YouTube generating over $45 billion in revenue in 2024 and expanding rapidly through ad-supported and subscription models; • Emerging strength in cloud computing, with Google Cloud now profitable and scaling meaningfully; and • A culture of innovation, supported by its Other Bets incubator, which allows Alphabet to invest in moonshot ideas while maintaining financial discipline. We believe shares of Alphabet are significantly undervalued at less than 12x our estimate of normalized earnings. The company continues to scale high-margin businesses such as Google Cloud and YouTube's subscription offerings while maintaining robust free cash flow generation from its dominant advertising segment. Catalysts we have identified for Alphabet, which we believe will cause its stock price to appreciate over our three- to five-year investment horizon, include: • Sustained leadership in search and digital advertising, reinforced by Google's unmatched first-party data and adtech platform; • Improving profitability, margin expansion and market share gains for Google Cloud as it effectively competes at scale with AWS and Microsoft Azure; and • Continued growth in YouTube subscription revenues as YouTube TV—which is on track to become the largest U.S. pay-TV provider by 2026—captures share from traditional cable providers and premium, ad-free content attracts a broader audience. Potential Future Catalyst: Alphabet's deep expertise and resources in AI, particularly through the Gemini model family (the company's flagship large language model), could enhance monetization across Ads, Search and Cloud. Though this is not explicitly included in our valuation estimates, we view the possibility as a free option.

BSD Analysis:
The manager presents a comprehensive bull case for Alphabet based on dominant market positions, diversification opportunities, and attractive valuation. With 87% U.S. search market share and nearly 90% globally, Google's advertising business provides a highly profitable foundation generating 75% of total revenue. The investment thesis emphasizes Alphabet's integrated ecosystem across Search, YouTube, Android, Chrome, and Gmail, creating powerful network effects and user retention. YouTube's $45 billion revenue run-rate and Google Cloud's emerging profitability demonstrate successful diversification beyond core search. At less than 12x normalized earnings, the manager views shares as significantly undervalued. Key catalysts include sustained search dominance, Google Cloud margin expansion and market share gains versus AWS and Azure, and YouTube TV's trajectory to become the largest U.S. pay-TV provider by 2026. The manager also highlights AI capabilities through Gemini as a potential future catalyst for enhanced monetization across the platform, viewing this as a valuable free option not reflected in current valuation.

Pitch Summary:
Adobe, the leading provider of content creation and publishing software, was a notable detractor during the quarter. This came despite the company reporting record revenue of over $5.7 billion in the first quarter—a 10% year-over-year increase, with double-digit increases across both its Digital Media and Digital Experience segments. The disconnect between strong fundamentals and share price weakness reflects ongoing market concerns around intensifying competitive threats from generative AI and lower-cost design platforms. Market sentiment has remained cautious around the perceived disruption risk posed by new AI-driven entrants, including OpenAI's Sora for video generation and platforms like Canva, which cater to the broader prosumer and small- and medium-sized business segment. However, we continue to view these as largely non-overlapping with Adobe's core base of creative professionals, enterprises and agencies—audiences that demand precision, control and integration within larger workflows. Canva, while expanding its feature set, remains limited in its enterprise readiness and depth. Sora, meanwhile, remains early-stage and experimental, with limited commercial application at this point. Crucially, Adobe is not standing still. The company is actively embedding generative AI across its ecosystem through Firefly, which is commercially safe (i.e., free of copyrighted sources to train its models) and integrated natively into Creative Cloud applications such as Photoshop and Illustrator. Firefly has shown strong early traction, generating $125 million in annualized recurring revenue, with management expecting that figure to double by year-end. While modest in size relative to Adobe's total revenue, Firefly's monetization strategy is still in its early innings, with further potential through upselling, usage-based pricing and expanded use cases. Beyond monetization, AI integration enhances Adobe's long-term competitive moat through product functionality, stronger customer engagement and increased switching costs. Adobe's unique access to proprietary data, content workflows and creative content allows it to fine-tune models that serve the high-end needs of professionals—capabilities that generic AI models lack. Strategic partnerships with Microsoft (e.g., Firefly in Microsoft 365 Copilot) and ongoing momentum in Adobe Express further extend its reach into new user segments. Ultimately, we believe Adobe has a durable competitive advantage, underpinned by a large installed base, subscription-led business model, strong brand equity and a long track record of innovation. While short-term concerns over AI disruption have weighed on the stock price, we believe Adobe is well-positioned to harness AI as a driver of value rather than being displaced by it.

BSD Analysis:
The manager maintains a bullish stance on Adobe despite recent underperformance, viewing AI disruption concerns as overblown. Despite record $5.7 billion quarterly revenue with 10% growth and double-digit increases across Digital Media and Digital Experience segments, shares declined on competitive fears from AI tools like Sora and Canva. The manager argues these competitors largely serve non-overlapping markets, with Canva lacking enterprise depth and Sora remaining experimental. Adobe's response through Firefly AI integration is viewed as strategically sound, generating $125 million in annualized recurring revenue with expectations to double by year-end. The competitive moat thesis centers on Adobe's unique access to proprietary data and content workflows, enabling fine-tuned professional-grade AI capabilities that generic models cannot replicate. Strategic partnerships with Microsoft and expansion into new segments through Adobe Express further strengthen the platform. The manager believes Adobe's subscription model, installed base, and innovation track record position it to harness AI as a value driver rather than face displacement.

Pitch Summary:
Cameco, one of the world's largest uranium producers, was a primary detractor during the quarter. Shares of the Canada-based company declined following President Trump's 10% tariff on Canadian energy exports to the U.S., where Cameco is a major uranium supplier. However, we believe these tariff concerns are overstated given the inelastic nature of uranium demand and the lack of substitutes. Any incremental costs would be absorbed by utilities under existing contract structures. While the company's stock price may have followed the decline in uranium spot prices during the period, Cameco's business is largely insulated from short-term price swings due to its extensive use of long-term contracts rather than spot-market sales. Moreover, the company's tier-one assets in politically stable jurisdictions, operational track record and ability to flex production—particularly at its MacArthur River and Key Lake mines—further strengthen its competitive advantage. We believe Cameco remains exceptionally well-positioned to benefit as governments around the world increasingly turn to nuclear power as a clean, secure and scalable source of energy.

BSD Analysis:
Despite recent underperformance due to tariff concerns, the manager maintains a strong bullish view on Cameco based on structural uranium demand drivers and the company's competitive positioning. The manager dismisses tariff worries as overstated, citing uranium's inelastic demand characteristics and lack of substitutes, with any cost increases absorbed by utilities under existing contracts. Cameco's business model provides significant downside protection through extensive long-term contracting rather than spot market exposure. The company's competitive advantages include tier-one assets in politically stable jurisdictions, proven operational capabilities, and production flexibility at key facilities like MacArthur River and Key Lake. The long-term thesis centers on the global shift toward nuclear power as a clean, secure, and scalable energy source, positioning Cameco to benefit from structural demand growth. The manager views current weakness as temporary noise rather than fundamental deterioration.

Pitch Summary:
Sony, the global leader in video games, image sensors, music and movies, was a top contributor for the period. The company delivered strong quarterly results, driven primarily by its gaming and music businesses, and announced a new executive leadership structure. In gaming, Sony reported a record-high 129 million monthly active users, a 20% year-over-year increase in PlayStation Plus revenue and an expanding user base, as 40% of new PS5 console buyers were new to the platform. The Music segment also continued to benefit from global streaming tailwinds, delivering double-digit profit growth. In a significant leadership transition, Sony announced that effective April 1, 2025, Hiroki Totoki, currently COO and CFO, would succeed Kenichiro Yoshida as CEO. Our original investment in Sony was grounded in the strategic transformation led by Yoshida, where Totoki was an instrumental partner in driving Sony's pivot away from commoditized businesses while spearheading investments in content IP and semiconductors. Looking ahead, we continue to see an opportunity for Sony to capitalize on its unique position as both a content creator and platform owner. The company's ability to integrate gaming, music, anime and film and leverage IP across platforms (e.g., Crunchyroll and its recent partnership with Kadokawa) should position it well for long-term value creation.

BSD Analysis:
The manager maintains a bullish stance on Sony based on strong operational momentum and strategic positioning as an integrated content and platform company. Gaming performance was particularly impressive with record 129 million monthly active users and 20% PlayStation Plus revenue growth, while 40% of new PS5 buyers represent platform expansion. The music segment benefited from streaming tailwinds with double-digit profit growth. The leadership transition to Hiroki Totoki is viewed positively given his instrumental role in Sony's strategic transformation away from commoditized businesses toward content IP and semiconductors. The investment thesis centers on Sony's unique dual role as both content creator and platform owner, enabling cross-platform IP leverage through properties like Crunchyroll and the Kadokawa partnership. This integrated ecosystem approach positions Sony to capture value across the entire entertainment value chain, from content creation to distribution and monetization.

Pitch Summary:
Munich Re, the world's largest reinsurance company, was the leading contributor for the quarter. The company delivered strong results despite absorbing €1.2 billion in claims from January's California wildfires, a testament to the reinsurer's prudent risk management. Demonstrating confidence in its ongoing profitability and robust capital position, Munich Re also raised its dividend by more than 30% and announced an expanded €2 billion share buyback program. Favorable market pricing and disciplined underwriting have continued to support profitability, even amid elevated volatility in capital markets and global catastrophe losses. Additionally, Munich Re's experienced leadership team has placed an unusual emphasis on innovation for a reinsurer of its size, investing meaningfully in R&D and technology. For example, the company has identified, launched or already implemented over 300 AI use cases that aim to increase efficiency and enhance its competitive edge. We expect these initiatives to further support Munich Re's continued market-share gains across specialty lines, including cybersecurity, and in rapidly growing Asian markets where insurance penetration remains relatively low.

BSD Analysis:
The manager presents a compelling bull case for Munich Re based on operational resilience and strategic innovation. Despite absorbing €1.2 billion in California wildfire claims, the company demonstrated strong risk management capabilities while simultaneously returning significant capital to shareholders through a 30%+ dividend increase and €2 billion buyback program. The thesis centers on Munich Re's disciplined underwriting approach and favorable pricing environment supporting sustained profitability. Particularly noteworthy is management's emphasis on technological innovation, with over 300 AI use cases already implemented to drive operational efficiency and competitive advantage. The manager expects these initiatives to accelerate market share gains in high-growth specialty lines like cybersecurity and underpenetrated Asian markets. The combination of prudent capital allocation, technological leadership, and exposure to structural growth markets positions Munich Re favorably for continued outperformance.

Pitch Summary:
Pernod Ricard is one of the world's largest premium spirits companies, boasting a strong brand portfolio that includes 18 of the top 100 brands, such as Martell, Jameson, Absolut, and Chivas. The company has significant exposure to emerging markets, which account for nearly half of its sales. Recently, Pernod's shares have been under pressure primarily due to demand weakness in the U.S. and China, which together make up nearly 30% of Pernod's sales. In 2023, the U.S. spirits market experienced a downturn both in volume and value terms for the first time in over a decade. In China, growth expectations for the market remain uncertain due to weak macro environment and downtrading in spirits. Despite these headwinds, we regard Pernod Ricard as a high-quality business with defensive characteristics. We like the company's margin expansion potential from operating leverage and its long-term growth prospects given its end-market exposure. Trading at a low-teen multiple of earnings, Pernod offers a compelling risk/reward tradeoff, in our opinion.

BSD Analysis:
Brandes initiated a position in Pernod Ricard, viewing the premium spirits leader as an attractive defensive play trading at compelling valuations amid temporary headwinds. The company boasts exceptional brand strength with 18 of the top 100 global spirits brands including Martell, Jameson, Absolut, and Chivas, providing pricing power and market leadership. Significant emerging market exposure (nearly 50% of sales) offers long-term growth potential despite current weakness. Near-term pressure stems from demand softness in key markets - the U.S. (first volume/value decline in over a decade) and China (macro weakness and downtrading) which together represent 30% of sales. Brandes views these challenges as cyclical rather than structural, appreciating Pernod's defensive business characteristics and margin expansion potential through operating leverage. Trading at low-teen earnings multiples, the fund sees compelling risk-adjusted returns for a high-quality spirits company with premium brands and emerging market growth exposure.

Pitch Summary:
Capgemini is a global IT services and consulting company based in France and is a well-regarded partner for many leading software providers such as SAP and Microsoft. Capgemini has enhanced its product mix over time by increasing its exposure to higher value-added offerings with secular growth potential (e.g., digital transformation, cloud, outsourced engineering, research and development, and AI), while reducing its exposure to the low-growth outsourcing segment. The IT services industry saw significant gains during 2020−2022 as corporations sought to better digitize their capabilities during the pandemic. However, the industry has struggled in the past couple of years as corporate discretionary technology budgets (excluding AI and cybersecurity) declined. While some of its peers are starting to show signs of recovery, Capgemini has lagged in terms of revenue growth. Sentiment soured after the company delivered lower-than-expected revenue guidance, suggesting its potential rebound may take longer than anticipated. Capgemini currently trades at a marked discount relative to its peers. Although this is partially warranted because of its greater exposure to Europe (approximately 60% of revenues versus most competitors at 20−35%) and to manufacturing (particularly to the cyclically depressed auto industry), we believe the current discount provides a compelling opportunity to own a structurally growing business that has historically generated high returns on capital.

BSD Analysis:
Brandes added Capgemini as a new position, viewing the French IT services giant as an attractive value play trading at a significant discount to peers. The investment thesis recognizes Capgemini's strategic transformation toward higher-value services including digital transformation, cloud, AI, and R&D while reducing exposure to low-growth outsourcing. Despite this positive mix shift and strong partnerships with SAP and Microsoft, the company has lagged peers in revenue recovery from the post-pandemic IT spending slowdown. Management's conservative revenue guidance further pressured sentiment and valuation. Brandes acknowledges the discount is partially justified by greater European exposure (60% vs. peers at 20-35%) and cyclical manufacturing exposure, particularly automotive. However, the fund views the current valuation as compelling for a structurally growing business with historically high returns on capital, positioned to benefit from secular digitization trends once corporate IT spending normalizes.

Pitch Summary:
Wal-Mart de Mexico (Walmex) became Walmart's first international business through a 1991 joint venture with Mexico's leading retailer, CIFRA. In 1997, Walmart acquired a majority stake in the company. Today, Walmex operates more than 3,000 stores in Mexico and over 900 in Central America, establishing itself as a dominant retailer in Mexico with a market share that is three times that of the #2 and #3 players. A number of macroeconomic challenges, driven by national elections in Mexico and the United States last year, have pressured Walmex's valuation to its lowest levels in more than a decade. Moreover, late last year, COFECE (commission responsible for anti-competitive regulations in Mexico) initiated an investigation into Walmex's market dominance in the wholesale supply and distribution of consumer goods, which further hurt market sentiment. After we determined that this ruling would not have significant impact on the company's operations, growth, and profitability potential, we decided to invest in Walmex. We appreciate that Walmex's operating margin has been stable, its free-cash-flow generation and returns on invested capital have been robust, and that the company has a net-cash balance sheet (excluding leases). Trading at a mid-teen multiple of earnings compared to its historic average of mid-twenties, Walmex represents an appealing investment opportunity to us.

BSD Analysis:
Brandes initiated a position in Walmex, viewing the dominant Mexican retailer as an attractive value opportunity trading at historically depressed levels. The fund manager highlights Walmex's commanding market position with three times the market share of its nearest competitors, operating over 3,000 stores in Mexico and 900+ in Central America. The investment thesis centers on temporary valuation compression driven by macroeconomic uncertainty from recent elections and regulatory concerns from COFECE's antitrust investigation. Brandes determined the regulatory risk would not materially impact operations or profitability. The company demonstrates strong fundamental characteristics including stable operating margins, robust free cash flow generation, high returns on invested capital, and a net cash balance sheet. Trading at mid-teen earnings multiples versus historical mid-twenties averages, Walmex offers compelling value for a market-leading retailer with defensive characteristics.

Pitch Summary:
Papa John's, which began operating in 1984, is one of the largest players in the global quick-service restaurant (QSR) pizza market, boasting more than 6,000 restaurants across 50 countries. The company operates a primarily franchise-based system, owning ~9% of its restaurants. It generates revenue from franchise royalties, sales of pizza and related products at its company-owned stores, and sales from its supply chain, which supplies its franchises with consistent quality pizza dough and sauce. Papa John's is the fourth-largest limited-service pizza chain both in the U.S. and globally, with the significant majority of its products contributed from North America. Papa John's share price declined almost 50% over the past year, largely due to concerns about its weak same-store sales performance, a challenging operating environment for consumption and the impact from third-party aggregators for food delivery, as well as the departure of its CEO in March 2024. In August 2024, the company announced Todd Penegor, former CEO of Wendy's, as its new CEO. We view Penegor's appointment as a positive step, but it will take time for his vision to materialize. Under his leadership, Papa John's is working to improve its value perception with customers, better leverage its information technology, and improve the performance of its international business. We find the risk/reward tradeoff of the investment opportunity compelling at current levels. The company is trading at an undemanding valuation that does not seem to reflect credit for restoring fundamental performance and margin improvement.

BSD Analysis:
Brandes initiated a position in Papa John's following a significant 50% share price decline driven by weak same-store sales, challenging consumer environment, and CEO departure. The fund views the appointment of former Wendy's CEO Todd Penegor as a positive catalyst for operational improvements. The investment thesis centers on the company's franchise-heavy business model generating revenue from royalties, company-owned stores, and supply chain operations across 6,000+ restaurants globally. Management is focused on improving value perception, leveraging technology, and enhancing international performance. The fund believes the current valuation is undemanding and doesn't reflect potential for fundamental performance restoration and margin expansion. This represents a classic value opportunity where temporary operational challenges have created an attractive entry point for a market-leading QSR franchise operator.

Pitch Summary:
TransDigm Group: TransDigm sells proprietary, custom engineered parts that are used in nearly all commercial and military aircraft. Roughly 80% of sales are from products for which TransDigm is the sole source provider. This provides the company with substantial pricing power, particularly in its aftermarket business. Sales into new aircraft are fine, but TransDigm makes roughly 75% of its EBITDA in aftermarket sales as customers are effectively locked in to purchasing replacement parts from the certified incumbent providers. TransDigm is unique in that it employs a levered equity strategy that management characterizes as private equity style returns with public market style liquidity. The company targets a debt/EBITDA ratio of 5x-6x and is an active participant in the market for bolt-on acquisitions that fit the desired profile of being a sole source provider of valued-added custom parts. Demand is fundamentally driven by miles flown, particularly in the commercial business and this is a structurally attractive industry with mid-single digit growth on average per year. To the extent Boeing is once again able to deliver safe airplanes on a timely schedule, TransDigm will benefit as more of the existing commercial fleet will be able to be taken out of service and refurbished. Further, we think there are plenty of opportunities for accretive bolt-on acquisitions going forward. Overall, we believe that between the structural attractiveness of the aerospace industry, the ample opportunities for accretive acquisitions and its unique levered equity strategy that TransDigm can deliver long-term profit growth in the low-to-mid teens.

BSD Analysis:
Burke initiated a new position in TransDigm, attracted by the company's dominant market position as sole-source provider for 80% of its aircraft parts. The manager emphasizes the powerful aftermarket economics, where TransDigm generates 75% of EBITDA from replacement parts with customers locked into purchasing from certified providers. He views the levered equity strategy as compelling, targeting 5x-6x debt/EBITDA while pursuing accretive bolt-on acquisitions of sole-source providers. Burke sees structural industry tailwinds from miles flown growth and potential Boeing recovery enabling fleet refurbishment cycles. The manager believes the combination of aerospace industry attractiveness, acquisition opportunities, and unique capital allocation strategy positions TransDigm for low-to-mid teens profit growth. This represents a classic Burke 'non-traditional growth' holding that offers stability and consistent compounding through economic moats and disciplined capital deployment.