Investment Pitches

Pitch Summary:
Leon's Furniture is the largest furniture retailer in Canada and was founded over 100 years ago. Despite being the market leader and generating strong earnings and FCF nearly every year since 2002, Leon's only trades at about 11x 2024e earnings. This by itself probably warrants a closer look, especially in light of Fairfax's recent acquisition of Sleep Country at almost 17x fwd earnings. But the real catalyst is Leon's plan to spin out its vast real estate holdings into a REIT. Importantly, Leon's real estate is all held on the books at cost, with much of it purchased many decades ago. Some basic number crunching reveals substantial value in their 5.6M sq ft of real estate, which is a mix of retail and industrial space all across Canada. With conservative assumptions, it's easy to arrive at a total value of their owned and unencumbered store footprint of $1B+. This strategy to unlock hidden real estate value has been followed before by two other large Canadian retailers, Canadian Tire and Loblaws, whose public REITs trade at cap rates of roughly 5-6%. Leon's also has one more substantial source of real estate value. Leon's owns 40 acres of land near downtown Toronto which they recently had rezoned and they intend to develop a master-planned community of 4,000 residential units along with retail and other mixed-use space. Importantly, construction is likely at least a couple years away and secondary approvals from the City will be needed to finalize total buildable square footage. But the proposed 4.6M buildable sq ft would likely value the land from $400M to potentially close to $1B based on the sale of a similar master planned development property in Langstaff. The company itself describes it as part of a "massive opportunity to unlock value" in their real estate portfolio. Incredibly, at current prices investors are getting the leading Canadian furniture retailer at 11x fwd earnings and real estate worth somewhere near the entire market cap for free. And not only this but there are clear catalysts to unlocking the value of this real estate with the REIT IPO and development of the 40 acres. One important consideration is the impact of the additional lease payments of the business to the newly formed REIT. While these lease payments would be material, since the corporation plans to maintain majority ownership in the REIT, it would also receive dividends from the REIT to offset those lease payments. And most importantly, earnings in the REIT would receive a much higher earnings multiple than they're currently receiving embedded in the company financials. So all in all, while it may reduce earnings of the business by 10-20%, it's a small figure in relation to the value created by the REIT. Another interesting aspect of Leon's is the background of the current CEO, Michael Walsh. He's the first non-family member to be appointed CEO in the company's history (became CEO in July 2021), and he worked for Canadian Tire from 2012-2015. Canadian Tire formed their REIT in late 2013. When considering these circumstances along with the CEO's obvious focus on Leon's real estate value based on his public comments, it seems clear he was brought in specifically to lead the charge on unlocking Leon's real estate value. Putting this all together yields total value well in excess of the current stock price, with total equity value of $40 with conservative assumptions and of almost $60 per share on more aggressive assumptions, or 65-150% higher than the current share price. Downside is very well protected as well given the company has no net debt and has three separate sources of value (the operating business, the retail/industrial real estate, and the 40 acre Toronto development).

BSD Analysis:
The manager presents a compelling value unlock thesis for Leon's Furniture, Canada's dominant furniture retailer trading at an attractive 11x forward earnings multiple. The core investment thesis centers on the company's substantial undervalued real estate portfolio, held at historical cost on the balance sheet, which includes 5.6 million square feet of retail and industrial space valued conservatively at over $1 billion. The key catalyst is management's plan to spin out these real estate holdings into a REIT, following successful precedents set by Canadian Tire and Loblaws whose REITs trade at 5-6% cap rates. Additionally, Leon's owns 40 acres of prime Toronto-area land recently rezoned for a 4,000-unit residential development, potentially worth $400 million to $1 billion based on comparable transactions. The appointment of CEO Michael Walsh, a former Canadian Tire executive with REIT formation experience, signals clear strategic intent to unlock this hidden value. The manager calculates total equity value of $40-60 per share versus current prices, representing 65-150% upside potential with downside protection from the debt-free balance sheet and multiple value sources.

Pitch Summary:
FILA is likely known to most investors in the TGV Partners Fund as an Italian clothing brand, particularly renowned in the tennis world during the 'golden years' of the 1980s. However, this does not fully capture the current nature of the company and, above all, the background of this investment. At the end of the 1980s, the enterprising South Korean Yoon Soo (Gene) Yoon convinced FILA to move its shoe production to South Korea. Following some success, Gene Yoon was tasked by FILA with building FILA's business in South Korea. In the following years, Gene Yoon's efforts proved extremely successful, making Korea one of FILA's strongest markets and Gene Yoon the highest-paid employee in the company. While business in Korea flourished, FILA's parent company almost faced bankruptcy in 2003. In response, Gene Yoon first organised a management buyout of the Korean business in 2005, followed by a management buyout of the entire FILA group in 2007 – a major deal valued at an estimated USD 400 million at the time. This buyout made Gene Yoon one of the largest shareholders. FILA Holdings was subsequently listed on the South Korean stock exchange after the financial crisis in 2010. Even after the IPO, Gene Yoon remained actively involved in expanding the company: In 2010, the US conglomerate Fortune Brands announced its intention to focus on a few core areas and divest most of its business segments. In 2011, FILA Holdings, in partnership with Korean Mirae Asset Private Equity, acquired the golf ball, golf club, and golf clothing businesses from Fortune Brands in a carve-out transaction worth approximately USD 1.2 billion. This acquisition included well-known golf brands such as Titleist, FootJoy, and Scotty Cameron. Titleist is unquestionably the crown jewel of the company. Its brand and market position make it indisputably the best golf ball business on the planet. And as often as balls are lost, one can certainly speak of a business model with recurring revenues. Following a revitalisation, the company was listed on the stock exchange in 2016 as Acushnet Holdings. Named after the birthplace of Titleist in Massachusetts, Acushnet is now developing independently and is still listed on the stock exchange in the USA. FILA Holdings owns 53% of the shares and thus just over half of the company, which is valued at around USD 4 billion. This substantial holding worth USD 2 billion is a significant value for FILA shareholders. In the years following its IPO in 2010, the FILA brand has seen significant growth in Asia, especially in China. For example, FILA is now one of the largest Western brands in China, following Nike and Adidas. Gene Yoon has successfully expanded FILA's presence in Asia through strategic partnerships and licensing agreements. In recent years, the company has regularly achieved sales exceeding USD 1 billion and has had excellent profitability, at times surpassing USD 200 million per year. 2023 was a clear exception, with a small operating loss due to a restructuring of the company's stores in the USA. Despite this growth, the share price of FILA Holdings, listed in Seoul, does not reflect the company's achievements. With a market capitalisation of around USD 1.7 billion (after currency conversion), FILA Holdings is trading at a discount to the value of its stake in Acushnet alone, which is valued at USD 2 billion. This undervaluation does not account for FILA's operating income, suggesting that the holding company is being significantly undervalued. This situation is not uncommon for holding companies and is often referred to as a "holding discount" or "value trap", implying a permanent destruction of value. However, both Acushnet and FILA Holdings have been actively conducting share buybacks, which is a positive move considering the substantial discount to intrinsic value. Additionally, the Yoon family has taken advantage of the low prices of FILA Holding and increased its stake in the company from 20% in December 2021 to around 36% in 2024. Unlike many other Korean companies, FILA Holdings provides appropriate English-language reporting and engages with its shareholders transparently and collaboratively, and the company headquarters in Seoul is open to visitors. All this reinforces my confidence in Gene Yoon's ability to execute value-creating, complex, and large financial transactions throughout his career. His ability to maintain partnerships across different cultural areas assures me that we, as shareholders of FILA Holdings, are in good hands. Given this context, I recommended the purchase of shares of FILA Holding by the TGV Partners Fund.

BSD Analysis:
The manager identifies a compelling sum-of-the-parts value opportunity in FILA Holdings, trading at a significant discount to its underlying assets. The investment thesis hinges on a classic holding company discount where FILA's $1.7 billion market cap trades below the $2 billion value of its 53% Acushnet stake alone, essentially getting the profitable FILA sportswear business for free. Gene Yoon's track record as an entrepreneur and capital allocator appears exceptional, having orchestrated multiple successful buyouts and the strategic Acushnet acquisition that created substantial value. The FILA brand has achieved remarkable success in Asia, particularly China where it ranks among the top Western brands behind Nike and Adidas, generating over $1 billion in annual sales with historically strong profitability exceeding $200 million. Management's commitment to value creation is evidenced through active share buybacks by both entities and the Yoon family increasing their stake from 20% to 36% during the discount period. The manager emphasizes Gene Yoon's proven ability to execute complex cross-cultural transactions and transparent shareholder communication, distinguishing FILA from typical Korean holding companies. This represents a classic value play where patient capital can benefit from eventual discount closure.

Pitch Summary:
In my ongoing evaluation of companies in the portfolio, I frequently explore competitors, suppliers, or customers, and sometimes, I happen across companies that are interesting investment candidates, as in the case of Midwich Group, which initially caught my attention through its association with the existing DCC position. In the "DCC Technology" segment, DCC operates in the market under the brand Exertis and competes directly in that space. Midwich, founded in 1979 in Diss, Great Britain, has had a storied history. Originally founded as a dealer for computer parts and printers, the company became a subsidiary of the German builder's merchant Raab-Karcher in the early 1990s and was later taken over by a large US electronics distributor. In 2001, the then-management bought out the company. The current CEO, Stephen Fenby, joined in 2004 and is still the driving force behind the company today. In 2010, another management buyout took place under the leadership of Stephen Fenby. Over the past 20 years, Stephen has had a decisive influence on the company. Despite the IPO, he is still the company's largest shareholder. He and parts of the management control around a quarter of all shares. While Midwich had a turnover of around 120 million GBP in 2004, with a large proportion of printers, printer accessories, and TV screens, the business was fundamentally restructured in the following years. Sales were increased to 370 million GBP through numerous acquisitions leading up to the IPO in 2016. Today, eight years after the IPO, the company has continued to grow both organically and through acquisitions and has a turnover of around 1.3 billion GBP. It has established itself as one of the larger top dogs in the industry and has been able to increase its operating profit almost tenfold over the past ten years. As an AV (audio and video) distributor, Midwich specialises in the distribution of products such as displays, projectors, speakers, cameras, LCD walls, and a wide range of other audio-visual equipment from various manufacturers. These products are sold and rented to specialist dealers or installation companies. In a world where the number of screens and digital players is constantly increasing, the need for advice on feasibility and possibilities is also growing. Midwich's scale has become a distinct advantage. The company operates multiple showrooms where integrators can test various products with their clients. The greater the selection and number of manufacturers, the better the outcomes. I witnessed this firsthand during my visit to the 'Innovation House' in Bracknell near London, where project developers and customers regularly seek ideas and inspiration from Midwich specialists. The COVID-19 pandemic, in particular, had a significant impact on Midwich's business. While live events, concerts, and trade fairs—major markets for display technology and loudspeakers—came to a halt, there was a surge in demand for conference, telephone, and transmission technology. Additionally, the global supply chain disruptions from 2021 onwards presented challenges. Despite these hurdles, the company remained profitable throughout those times. Although the business has performed excellently in recent years, the share price has remained sluggish. The share price is roughly at the same level as in 2017 and close to the low point of the Corona crisis. However, the key difference is that Midwich now generates three times the sales and twice the profit compared to that period. Today, the shares are valued at less than ten times the sustainable profit and free cash flow and are, therefore, in my opinion, significantly too cheap. The combination of factors such as being an owner-managed, customer-centric company with excellent structural earnings growth and today's low valuation is a rare find. This is why I have been recommending buying shares in the Midwich Group for the TGV Partners Fund in recent months.

BSD Analysis:
The manager presents a compelling value opportunity in Midwich Group, an AV distributor that has transformed from a small computer parts dealer into a £1.3 billion revenue powerhouse. The investment thesis centers on exceptional operational performance masked by market neglect - the company has tripled sales and doubled profits since 2017 while the share price remains flat. Management quality appears strong with CEO Stephen Fenby leading for 20 years and maintaining significant ownership alongside management controlling 25% of shares. The business benefits from structural growth drivers as digital screen proliferation increases demand for AV integration services, while Midwich's scale advantages through multiple showrooms and manufacturer relationships create competitive moats. Despite navigating COVID-19 challenges successfully and maintaining profitability through supply chain disruptions, the stock trades at less than 10x sustainable earnings and free cash flow. The manager's firsthand visit to their Innovation House facility reinforces confidence in the business model and growth prospects. This appears to be a classic value play where operational excellence has yet to be recognized by the market.

Pitch Summary:
Now for LandBridge Company. This company, stock ticker LB, created in 2021, is a landowner in the Permian Basin. Its IPO occurred on June 28th. For easy orientation, most of what there is to describe about it is exceedingly similar to TPL, but with a different and important orientation. Starting with about 70,000 acres it has, through a series of transactions, amassed 220,000 surface acres and 8,000 gross mineral acres in Sector 8 and a few counties in New Mexico that are contiguous with or proximate to the Texas border. Just as for TPL, LandBridge receives a mix of oil and gas royalties, resource sale revenues (like sand and brackish well water), surface use leases, and royalties from third party land use. All these properties—in both senses of the term—derive from their primary asset, the land. Land is the most enduring and, possibly, continually productive investable asset one can own. It can develop new higher use cases over time. On a per capita basis, the supply of land has been shrinking since the dawn of civilization (according to some, that would be Mesopotamia 6,000 years ago). The primary difference between the LandBridge and TPL land—and which was a strategic choice that creates a different asset exposure and growth profile—is LandBridge created as large a set of contiguous-acreage footprints as it could. There's a two-fold purpose. The primary one is for growth through water management services. The private equity firm that sponsored this venture, Five Point Energy, controls one of the largest water infrastructure businesses in the Permian Basin, called WaterBridge. Permian wells generate water cuts (the water-to-oil ratio) of 3:1 to 5:1, which continue through the end of well life, which could be 30 years. This means that, whatever oil and gas is produced, water will require three to five times the infrastructure to handle three to five times that volume. That is a limiting-factor class of challenge for drilling in the Permian, and a significant per-barrel cost for the oil companies. That cost has been rising sharply, because the alternatives are limited. Trucking water away is expensive because water is so heavy and the volumes are enormous, and pipeline systems are expensive. The most effective solution is local, via underground storage and recycling, both of which require extensive…land. Accordingly, LandBridge sited its properties in and around the most active drilling and richest reserve portions of the Permian, which means in and around the largest drillers. A strategic complement to this land position is Five Point's WaterBridge subsidiary, which has approximately 174 produced water handling facilities and 4 million barrels/day of total capacity. These pipelines are strategic because they encircle and crisscross the area. The weight of water necessitates disposal in close proximity to oil wells, and hence their contiguous land acreage is as close to a legitimate monopoly as one might get. The combination of rising volumes and rising prices, delivered through a royalty structure, wherein the capital costs are borne by arm's length third party operators, should be extremely profitable. The anticipated scale of expansion is easily large enough to qualify LandBridge as a growth company. At present, oil and gas royalties are less than a quarter of total revenues, and will be crowded downward further by the expansion of the Resource Sales & Royalties and Surface Sales & Royalties segments. Surface Sales & Royalties will also benefit from the extensive physical infrastructure that must accompany higher water storage and processing volumes. That is a decidedly different earnings and growth profile, at least for the foreseeable future, than TPL's. As to the glamourous side of the Surface Sales & Royalty segment, this is where IT and AI meet the Permian Basin. This locale has unique and cheap land, plentiful and cheap gas, the possibility of cheap liquid cooling (via water treatment, like desalination, which can turn excess well water from a liability into an asset), and an unregulated power grid for connection with wind and solar power installations. Each of these developments—the datacenter itself, related roads, power lines, wind and solar, carbon capture, water cooling—has a potential recurring, royalty type revenue stream back to LandBridge. To this end, LandBridge has delineated a half-dozen suitable locations for a future hyperscale datacenters. If you build it, will they come? A favorable experience by early data center projects could, in the most positive scenario, make this central portion of Section 8 the growth platform that the AI/Big Data Set/Data Center industry desires and requires. This is a general introduction to the character and the raison d'etre of LandBridge. You can see why it is a flavor of quintessential hard asset that has, as of yet, extremely limited investor awareness, much less index inclusion. It is much like TPL, which has found its way into many more indexes since our last review.

BSD Analysis:
Horizon Kinetics presents LandBridge Company as a compelling hard asset play positioned at the intersection of traditional energy and emerging AI infrastructure needs. The manager's thesis centers on LandBridge's strategic land ownership in the Permian Basin, where the company has assembled 220,000 contiguous surface acres specifically positioned around the most active drilling areas. Unlike Texas Pacific Land's checkerboard pattern, LandBridge's contiguous footprint creates a near-monopolistic advantage in water management services, addressing a critical bottleneck in Permian operations where wells generate 3-5 times more water than oil throughout their 30-year lifespan. The investment case strengthens with the company's connection to WaterBridge's extensive pipeline infrastructure and the emerging opportunity to serve AI data centers requiring massive amounts of uninterrupted power, land, and cooling water. The manager views this as a growth company with diversified revenue streams from royalties, resource sales, and surface leases, positioning it to benefit from both traditional energy expansion and the AI revolution's infrastructure demands. The timing appears strategic given the recent IPO and limited investor awareness, potentially offering early access to a unique asset class bridging old economy resources with new economy technology infrastructure needs.

Pitch Summary:
WOSG is a retailer of luxury jewellery and high-end watches. It has relationships stretching back over 100 years with some of the top watch brands in the world and is seen as an important guardian of their brand equity. It is the leading retailer of Rolex watches in both the UK and is rapidly growing its presence in the US market. WOSG has one of the strongest competitive positions I have ever seen and a terrific and motivated management team, led by CEO Brian Duffy. We purchased shares in WOSG earlier this year after a collapse in sentiment triggered by a combination of: Rolex's purchase of Swiss distributor Bucherer in August 2023, which has been seen by some (incorrectly in my opinion) as a signal that Rolex intends to take distribution in house; and a trading update revealing that sales in the UK had been soft over the 2023 Christmas trading period, driven in part by the mix of steel to precious metal Rolexes that WOSG had been allocated. From its IPO in 2019 to today, WOSG has compounded revenues at c.20% and profits at 37% without issuing new shares or significantly increasing debt yet is currently trading at a valuation of 8x my estimate of FY25 earnings. What's more, they have ambitious plans to double sales and more than double EBIT by FY28. I have had numerous conversations with management, former employees and industry insiders (including at Rolex) to test how realistic these plans are and came away with the following conclusions: 1. It is clear to me that Rolex are tying their US plans to WOSG's. Rolex are fully supportive of WOSG's US growth plans, which necessitate making numerous acquisitions of existing authorised dealerships. WOSG recently pulled out of Europe, where Bucherer predominantly operate. I believe this was part of the deal to secure Rolex's unequivocal support for WOSG's US expansion plans. 2. To some extent the timing of achieving these ambitions is out of WOSG's control, so it may well be FY29 rather than FY28 when they meet their milestones. Our purchase price means that we will do very well if WOSG execute their plan regardless of whether they do so over 4 or 5 years. 3. Management are excited and confident about the long-term expectations that they have put into the market, indicating that despite difficult current trading, the foundations of their growth plan remain intact.

BSD Analysis:
The manager presents a strong bull case for WOSG based on its dominant market position and attractive valuation following sentiment-driven weakness. He acquired shares after concerns about Rolex's Bucherer acquisition and soft UK trading created buying opportunities. The investment thesis rests on WOSG's century-long relationships with luxury watch brands and its role as the leading Rolex retailer in the UK with expanding US presence. The manager highlights impressive historical growth metrics (20% revenue CAGR, 37% profit CAGR) and current attractive valuation of 8x FY25 earnings despite ambitious growth targets. His due diligence with industry insiders confirms Rolex's support for WOSG's US expansion plans. The manager views the Bucherer acquisition as strategic rather than a threat to WOSG's partnership, believing it actually strengthens WOSG's position in key markets.

Pitch Summary:
I have followed ATG since its IPO in February 2021. For most of that time I considered it to be fully priced (or even richly so in late 2021). That changed in December 2023 when volatile trading in its underlying markets led to significant volatility in ATG's share price and we were able to purchase shares at what I consider to be an extremely attractive valuation for a business of this quality. ATG operates several leading auction platforms across two main verticals: art and antiques (A&A); and industrial and commercial (I&C). It is not an auctioneer but a marketplace, allowing auction houses to connect with bidders globally by running auctions online, either through white labelled solutions (in the auction house's name and on their website) or on one of the market leading platforms that ATG have acquired. As with similar businesses, the key to ATG's competitive position (and therefore to the success of our investment!) is the ability to aggregate the most bidders for a particular auction, meaning the seller realises the highest possible price for a sale. That attracts more auction houses to a platform, which in turn attracts even more bidders. Scale enhances the network effects present on both the demand (bidder) and supply (auction house) sides of the model. Auctions also have a few quirks that further favour a dominant platform. For example, auction houses need to know that the bidders they are receiving prices and commitments from are real and can settle the transaction. Whichever platform can supply the largest pool of verified bidders should therefore win out in the long term. ATG fulfils this role in several of the key markets around the world across each of its verticals. While circular economy trends may or may not lead to an organic increase in interest in auctions, ATG are focused on pulling in new bidders by transforming a reasonably complex and unfamiliar purchasing journey into one that is more akin to an ecommerce experience, with ATG Ship and ATG Pay both smoothing out particularly gnarly pain points. These value-added services will benefit ATG's take rate over time while improving the offering to auction houses, a powerful combination. Students of the US tech behemoths will recognise this as the 'Marketplace Playbook' or as an example of 'Aggregation Theory'. Whisper it, but I think we have an aggregator lurking on the LSE, far away from the West Coast and its natural constituency of investors. CEO John Paul Savant joined the business in 2016 specifically to execute this playbook. He is surrounded by a very capable and experienced team, and they have a singular understanding of what success looks like. This includes continuing to make acquisitions of dominant platforms in near adjacencies to their existing offerings, which would normally raise flags with anti-trust regulators. Management tell me that so far they have met little resistance from regulators in Europe or the US; maybe the physical auction business is so disparate and 'Old Economy' that it can fly under the radar for a while yet. Let's hope so, because even a couple of additional astute acquisitions coupled with ongoing execution of their operational plan could turn a very powerful competitive position into a near unassailable one.

BSD Analysis:
The manager presents a compelling bull case for ATG based on network effects and marketplace dynamics. He acquired shares at attractive valuations following market volatility in December 2023, viewing the company as a dominant auction platform aggregator. The investment thesis centers on ATG's ability to create powerful network effects by aggregating bidders and auction houses across art/antiques and industrial/commercial verticals. The manager emphasizes the competitive moat created by verified bidder pools and the platform's role in price discovery. Value-added services like ATG Ship and ATG Pay should improve take rates while enhancing the customer experience. The manager sees parallels to successful US tech aggregators and believes CEO John Paul Savant has the right strategy and team to execute further acquisitions and operational improvements.

Pitch Summary:
In late 2023 and early 2024, we purchased a stake in International Petroleum ("IPCO"). IPCO is an oil and gas company with production in Canada, France, and Malaysia. It is based in Vancouver, Canada, and has a dual stock market listing in Canada and Sweden. Its market value is around US$1.5 billion. IPCO produces approximately 46'000 to 48'000 barrels of oil equivalent per day ("boepd"). For context, the world consumes around 100 million boepd, so it is a minnow in an enormous market. Approximately 85% of its production is in Canada. It is currently developing the Blackrod project there, which, when completed, will bring a further 30K boepd online. Its 2P reserves, i.e. reserves that are proven and probable, are 468 million boe, equivalent to 27 years of production. IPCO began life in April 2017 when it was spun out of Lundin Energy onto the First North Nasdaq. Lundin Energy wanted to focus on its Norwegian assets and thought its international assets would benefit from the additional focus of a separate listing. IPCO's roots go further back than 2017 though. In the 1980s, Adolf Lundin, started a company that was also called International Petroleum. That company disappeared as part of a series of transactions that ultimately led to the formation of Lundin Energy. As a nod to the past, the name was revived for the spin-off. IPCO's Bertam oil field in Malaysia also came out of the original International Petroleum, providing a further link to the past. IPCO's track record since its inception has been spectacular. It started out with little production or reserves, but had the advantage of owning some producing assets and a debt-free balance sheet. Today, its reserves have increased by 16x, and its share price has quadrupled. Despite the massive increase in reserves, IPCO has minimal net debt and, at the current rate of share buybacks, will soon have reduced the share count to the same level as when it was listed. IPCO achieved such prodigious growth through smart M&A and improving the assets it owns. It has made five acquisitions since its inception, but two were particularly significant. In 2017, it bought Suffield in a debt and cash transaction, and in 2018, it bought BlackPearl Resources in a stock-based transaction. Both companies operate in Canada and were bought for a song when Canadian oil and gas were deeply out of favour. In the case of Suffield, Cenovus (the seller) was effectively a forced seller as it had bought heavy oil assets from Conoco and had to offload its conventional oil assets to finance the deal. IPCO was the only credible buyer with cash on hand and cherry-picked the best assets. IPCO fits well into the paradigm of an industry roll-up, but this does not give it sufficient credit for its operational expertise. In the earlier years, it grew primarily through M&A, but more recently, it has pivoted to organic growth and opted to develop the enormous Blackrod resource that came along with the BlackPearl acquisition. The company feels equally comfortable growing intrinsic value by investing organically, doing M&A, or simply buying back its own stock. IPCO's major shareholder with a 34% stake is the Lundin Family, a Swedish family with extensive holdings in the mining, oil and gas, and renewable energy sectors. It is a fascinating family that I have enjoyed learning about as part of the research into IPCO. The family business was started over 50 years ago by Adolf Lundin. The book "No Guts No Glory" documents his many adventures and his highly enjoyable. As it relates to the energy sector, the family's most significant investment was Lundin Petroleum (later renamed Lundin Energy) developed by the second generation. Lundin Petroleum was listed in 2001 when it raised $70 million at a share price of SEK 3. It never raised capital again and was sold to Aker BP in 2022 for SEK 400 per share, leaving the original shareholders with a 175x return. The family continues to hold a 14% stake in Aker BP. Today, the family's holdings are managed by four brothers in the third generation. I met three of the four brothers. The fourth missed lunch as he was closing the US$ 3 billion acquisition of Filo for Lundin Mining with BHP, so I guess he gets a pass. IPCO is run by Will Lundin, one of the four brothers. At 31 years old, Will is a young CEO. However, he does not lack experience. He told me he grew up listening to discussions about the commodities business around the family dinner table. After studying Mineral Resource Engineering in Canada, he worked as a field engineer at BlackPearl Resources (yes, the one IPCO later bought) before taking up a position at International Petroleum in 2018. In 2020, he became the Company's COO, and earlier this year, he became the CEO after the retirement of his predecessor, Mike Nicholson. I have gotten to know Will over the last couple of years and am incredibly impressed. He is humble and hardworking, which is even more impressive given his privileged background. I spoke with his former boss at BlackPearl, who told me that Will kept his head down and got things done. What has particularly impressed me is the people he surrounds himself with. I have gotten to know several of IPCO's senior executives and board members, as well as senior executives of the family's other investee companies. They are all cut from the same cloth. They are the kind of people who cannot stand the BS of big companies, love what they do, draw small salaries, and have a big upside when projects work out, as they invariably do. It is the kind of place where people can get rich together and generally do not leave. Corporate types would not last five minutes there. Commodity markets do not lend themselves to wide moats. By definition, the price of a commodity is defined by the market rather than by differentiation between producers. This leaves cost as the main way to compete. The lower down the cost curve a company is, the greater its profits at any given oil price and the lower its breakeven point. IPCO has a mixture of conventional assets that are lower down the cost curve and heavy oil assets that are higher up the cost curve. Increasingly, heavy oil will dominate the mix, given the large investment in Blackrod. They are less moaty than older, conventional wells. However, the world developed the easiest-to-reach oil first, so any new development will, almost by definition, either be higher up the cost curve or in a geographically unstable region. Importantly, though, it has a lower cost than North American shale, which is the marginal capacity in the industry. Where IPCO clearly has a moat is in its culture. It is rational and entrepreneurial, as its stellar track record demonstrates. It should also endure over time. Good people are attracted to the company and stay. This is a big advantage in an industry dominated by corporate behemoths and not known for its rationality across boom and bust cycles. The biggest challenge when valuing a company such as IPCO is the oil price. It will have a huge impact on revenues but in the future is neither known nor knowable. I have no ambition to be able to predict it. My observation as an outsider is that the price has swung wildly in the past and will likely do so in the future. Oil consumption should decline, in particular, as the electrification of transportation gathers pace. So, too, should supply. There is a natural decline rate in existing fields; there is increasing societal resistance to new supply; and our need for many oil derivatives such as fertiliser, petrochemicals, and aviation fuel are not going away any time soon. There will likely be no shortage of material for market commentators to justify the inevitable boom and bust cycles. The volatility should provide a fertile hunting ground for a rational capital allocator like IPCO. What can be known is the company's net asset value ("NAV") and how much cash it is likely to produce under different oil price scenarios. At its capital markets day in February, IPCO outlined its NAV calculation for 2029 under two different scenarios. In the first scenarion, it assumes the Brent oil price is $75, and it can repurchase its stock at SEK 115. In the second scenario, it assumes an oil price of $95 and a stock price of SEK 215. This results in NAVs of SEK 757 and SEK 1'228. Both imply substantial upside over a five-year holding period. Opportunistic M&A represents an additional source of upside. Oil companies are notoriously overly optimistic in their NAV calculations, but I am confident that IPCO's assumptions are realistic. The Lundin family has no intentions to sell, and IPCO is enthusiastic about repurchasing its own stock. With overly optimistic projections, it would do itself no favours. What is also knowable is how much cash the company will produce in the coming years under different oil price scenarios. From 2024 to 2028, under oil price assumptions of $75 and $90, IPCO expects to generate $900 m and $1'800 m of free cash flow, respectively, or 65% and 131% of its current market capitalisation. Even including the large investment in Blackrod, it will return most of its market cap in cash in the coming years, giving us a cheap or free option on what it earns after 2028.

BSD Analysis:
The manager presents a compelling bull case for International Petroleum Corporation, emphasizing the company's exceptional track record since its 2017 spinoff from Lundin Energy. IPCO has achieved remarkable growth, increasing reserves by 16x while quadrupling its share price, all while maintaining minimal debt and aggressive share buybacks. The investment thesis centers on three key pillars: superior management under the Lundin family ownership (34% stake), attractive valuation metrics, and a sustainable competitive moat through operational culture and cost positioning. The manager highlights CEO Will Lundin's operational expertise and the company's entrepreneurial culture that attracts and retains top talent, contrasting favorably with industry behemoths. From a valuation perspective, IPCO trades at compelling metrics with projected free cash flow generation of 65-131% of current market cap over the next four years under conservative oil price assumptions. The company's NAV calculations suggest substantial upside potential, with scenarios pointing to SEK 757-1,228 per share by 2029 versus current levels. The manager acknowledges oil price volatility as the primary risk but views IPCO's rational capital allocation approach as well-positioned to capitalize on industry cycles through opportunistic M&A and disciplined organic growth via the Blackrod development project.

Pitch Summary:
We began accumulating shares of GE Aerospace in April of last year, with our current position established at an average cost of approximately $149 per share. Like Boeing, GE stands to benefit from powerful macro trends including reshoring, increased defense spending, and the global rebound in air travel. But unlike Boeing, GE is not a turnaround story. The company has already successfully repositioned itself as a focused aerospace leader. It's investing heavily in U.S. factories and suppliers to expand production capacity, improve supply chain resilience, and support reshoring initiatives. GE also plays a critical role in defense. On the commercial side, it powers the majority of widebody aircraft in North America and holds a dominant position in the narrow-body segment through its joint venture with Safran Aircraft Engines, CFM International. GE's high-margin engine MRO business is another bright spot, poised for growth as airlines extend the life of existing aircraft. In effect, GE benefits both from Boeing's recovery and from broader structural demand in aviation. We also see GE as an innovation leader—applying AI and digital tools to improve predictive maintenance, streamline inspections, and enhance manufacturing processes. Altogether, our investment in GE reflects confidence in a stable, future-focused company that's positioned at the center of global aerospace and industrial growth.

BSD Analysis:
WestEnd positions GE Aerospace as a premium aerospace play, acquired at $149 per share with a thesis built on market dominance and operational excellence rather than turnaround potential. The manager emphasizes GE's successful transformation into a focused aerospace leader with dominant market positions in both widebody and narrow-body aircraft engines through its CFM International joint venture with Safran. Key competitive advantages include the high-margin MRO business benefiting from airlines extending aircraft lifecycles and substantial investments in U.S. manufacturing capacity supporting reshoring initiatives. The investment captures multiple growth vectors including commercial aviation recovery, increased defense spending, and structural demand expansion. GE's innovation leadership in AI and digital tools for predictive maintenance and manufacturing optimization provides additional differentiation. The manager views GE as strategically positioned at the intersection of aerospace growth trends while maintaining operational stability and strong cash generation. This represents a quality growth investment with defensive characteristics and multiple expansion catalysts.

Pitch Summary:
Rockwell Automation is another "picks and shovels" investment in the Industrials sector—an established company well-positioned to benefit from reshoring trends, increased defense spending, and the broader adoption of automation and AI in manufacturing. As the economy grows, we expect more industries to invest in faster, smarter, and more reliable production systems, which directly supports demand for Rockwell's offerings. Its portfolio of automation technologies—including sensors, software, and control systems—helps make domestic manufacturing more efficient and cost-effective. In the defense space, Rockwell also supplies critical systems used in military production facilities. Unlike Boeing, Rockwell is not a turnaround story. It is already a key enabler of advanced manufacturing and a leader in industrial AI, offering solutions for predictive maintenance, quality control, and digital twins that optimize factory operations with leaner workforces. We saw compelling demonstrations of Rockwell's technology at Nvidia's GTC conference in March, which reinforced our investment thesis. We began accumulating shares of Rockwell in early March at an average price of approximately $271 per share.

BSD Analysis:
WestEnd presents Rockwell Automation as a high-quality industrial automation leader, acquired at $271 per share in March following compelling technology demonstrations at Nvidia's GTC conference. Unlike their turnaround plays, the manager emphasizes Rockwell's established market position and current leadership in industrial AI and advanced manufacturing solutions. The investment thesis centers on multiple structural tailwinds including reshoring trends, increased defense spending, and accelerating automation adoption across industries. Key value drivers include Rockwell's comprehensive technology portfolio spanning sensors, software, and control systems that enhance manufacturing efficiency and cost-effectiveness. The manager highlights Rockwell's advanced AI capabilities in predictive maintenance, quality control, and digital twin technologies that enable optimized factory operations with reduced workforce requirements. The defense exposure provides additional growth potential through critical systems supplied to military production facilities. This represents a quality growth play positioned to benefit from long-term industrial transformation trends.

Pitch Summary:
Given our conviction in Boeing's recovery, we also sought out complementary opportunities—"picks and shovels" plays—that could benefit from Boeing's resurgence. Howmet Aerospace stood out. Beyond its direct connection to Boeing, Howmet is well positioned to benefit from broader sector tailwinds, including rising demand in aerospace and defense and the growing emphasis on building resilient domestic supply chains. As a key supplier of critical components for both commercial and military aircraft, Howmet plays an essential role in supporting next-generation manufacturing. Its expertise in advanced materials and precision engineering makes it a go-to partner for aerospace companies raising quality standards and adopting new technologies. We began building a position in Howmet in early March at an average cost of $130 per share.

BSD Analysis:
WestEnd positions Howmet Aerospace as a strategic "picks and shovels" play to complement their Boeing investment, acquired at $130 per share in March. The manager views Howmet as a critical supplier benefiting from both Boeing's recovery and broader aerospace sector expansion. The investment thesis emphasizes Howmet's specialized expertise in advanced materials and precision engineering, positioning it as an essential partner for aerospace companies upgrading quality standards and implementing new technologies. Key growth drivers include rising aerospace and defense demand, domestic supply chain resilience initiatives, and the company's dual exposure to commercial and military aircraft markets. The manager highlights Howmet's role in next-generation manufacturing as aerospace companies prioritize quality and technological advancement. This represents a diversified approach to aerospace exposure, capturing supplier-level benefits from industry-wide growth trends while maintaining direct exposure through Boeing.

Pitch Summary:
Long-time clients may recall our liquidation of Boeing in early January 2024 following the Alaska Airlines door plug incident. We exited at around $227.62. Following a management shakeup, however, with new leadership under former engineer Kelly Ortberg, we noticed the firm was working to bounce back from safety issues, production problems, and financial losses. The company focus had decisively shifted to quality, stabilizing aircraft output, and rebuilding trust. We viewed Boeing's commercial side as a turnaround story, accommodated by the steady income provided by the firm's defense business. WestEnd began accumulating shares in December 2024 at an average price of $175.47. With strong demand for air travel and a huge backlog of plane orders, delivering aircraft on time is crucial, in which Boeing has demonstrated significant improvement this year. While the latest tragic Air India crash slightly hit the stock, it has recovered as it became apparent that pilot error was the most likely cause. We remain confident that Boeing can further improve execution and take advantage of industry trends like reshoring and increased defense spending, while capitalizing on high demand from China after the country lifted its ban Boeing deliveries due to the temporary tariff truce.

BSD Analysis:
WestEnd presents Boeing as a compelling turnaround opportunity under new leadership, having re-entered the position at $175.47 after previously exiting at $227.62 following safety concerns. The manager emphasizes Boeing's strategic pivot toward quality and operational stability under CEO Kelly Ortberg, positioning the company to benefit from robust commercial aviation demand and a substantial order backlog. The investment thesis centers on Boeing's dual revenue streams from commercial aircraft and defense contracts, providing stability during the turnaround phase. Key catalysts include improved on-time delivery performance, the resumption of Chinese deliveries following tariff de-escalation, and broader industry tailwinds from reshoring initiatives and increased defense spending. The manager demonstrates confidence in Boeing's execution capabilities and views current operational improvements as sustainable. The position reflects a calculated bet on Boeing's ability to capitalize on structural aviation growth while successfully navigating its operational recovery.

Pitch Summary:
We began accumulating shares of GE Aerospace in April of last year, with our current position established at an average cost of approximately $149 per share. Like Boeing, GE stands to benefit from powerful macro trends including reshoring, increased defense spending, and the global rebound in air travel. But unlike Boeing, GE is not a turnaround story. The company has already successfully repositioned itself as a focused aerospace leader. It's investing heavily in U.S. factories and suppliers to expand production capacity, improve supply chain resilience, and support reshoring initiatives. GE also plays a critical role in defense. On the commercial side, it powers the majority of widebody aircraft in North America and holds a dominant position in the narrow-body segment through its joint venture with Safran Aircraft Engines, CFM International. GE's high-margin engine MRO business is another bright spot, poised for growth as airlines extend the life of existing aircraft. In effect, GE benefits both from Boeing's recovery and from broader structural demand in aviation. We also see GE as an innovation leader—applying AI and digital tools to improve predictive maintenance, streamline inspections, and enhance manufacturing processes. Altogether, our investment in GE reflects confidence in a stable, future-focused company that's positioned at the center of global aerospace and industrial growth.

BSD Analysis:
WestEnd positions GE Aerospace as a high-quality aerospace leader, established at $149 per share since April of the previous year, emphasizing its successful transformation into a focused aerospace company. Unlike their Boeing turnaround thesis, the manager views GE as an already-established market leader benefiting from the same macro trends—reshoring, defense spending increases, and air travel recovery. The investment case centers on GE's dominant market positions, powering the majority of North American widebody aircraft and holding strong narrow-body exposure through the CFM International joint venture with Safran. WestEnd highlights the high-margin MRO business as a key growth driver, particularly as airlines extend aircraft lifecycles. The manager emphasizes GE's substantial U.S. manufacturing investments to expand capacity and improve supply chain resilience. Additionally, WestEnd sees GE as an innovation leader in applying AI and digital tools for predictive maintenance and manufacturing optimization. The pitch reflects confidence in GE's strategic positioning at the center of global aerospace growth, combining market leadership with technological innovation.

Pitch Summary:
Rockwell Automation is another "picks and shovels" investment in the Industrials sector—an established company well-positioned to benefit from reshoring trends, increased defense spending, and the broader adoption of automation and AI in manufacturing. As the economy grows, we expect more industries to invest in faster, smarter, and more reliable production systems, which directly supports demand for Rockwell's offerings. Its portfolio of automation technologies—including sensors, software, and control systems—helps make domestic manufacturing more efficient and cost-effective. In the defense space, Rockwell also supplies critical systems used in military production facilities. Unlike Boeing, Rockwell is not a turnaround story. It is already a key enabler of advanced manufacturing and a leader in industrial AI, offering solutions for predictive maintenance, quality control, and digital twins that optimize factory operations with leaner workforces. We saw compelling demonstrations of Rockwell's technology at Nvidia's GTC conference in March, which reinforced our investment thesis. We began accumulating shares of Rockwell in early March at an average price of approximately $271 per share.

BSD Analysis:
WestEnd presents Rockwell Automation as a high-quality industrial automation leader, acquired at $271 per share in March following compelling technology demonstrations at Nvidia's GTC conference. Unlike their turnaround plays, the manager emphasizes Rockwell as an established market leader already positioned at the forefront of industrial AI and advanced manufacturing. The investment thesis centers on Rockwell's comprehensive automation portfolio—sensors, software, and control systems—that enables more efficient and cost-effective domestic manufacturing. WestEnd highlights the company's leadership in predictive maintenance, quality control, and digital twin technologies that optimize factory operations with reduced workforce requirements. The manager sees multiple growth drivers including reshoring trends, increased defense spending, and broader AI adoption in manufacturing. Rockwell's defense exposure through military production facility systems adds another dimension to the growth story. The pitch reflects confidence in Rockwell's technological leadership and its positioning to benefit from structural shifts toward automated, AI-driven manufacturing processes.

Pitch Summary:
Given our conviction in Boeing's recovery, we also sought out complementary opportunities—"picks and shovels" plays—that could benefit from Boeing's resurgence. Howmet Aerospace stood out. Beyond its direct connection to Boeing, Howmet is well positioned to benefit from broader sector tailwinds, including rising demand in aerospace and defense and the growing emphasis on building resilient domestic supply chains. As a key supplier of critical components for both commercial and military aircraft, Howmet plays an essential role in supporting next-generation manufacturing. Its expertise in advanced materials and precision engineering makes it a go-to partner for aerospace companies raising quality standards and adopting new technologies. We began building a position in Howmet in early March at an average cost of $130 per share.

BSD Analysis:
WestEnd positions Howmet Aerospace as a strategic "picks and shovels" play to complement their Boeing investment, acquired at $130 per share in March. The manager views Howmet as a critical supplier benefiting from both Boeing's recovery and broader aerospace industry tailwinds. The investment thesis emphasizes Howmet's essential role in next-generation manufacturing through its advanced materials expertise and precision engineering capabilities. WestEnd highlights the company's positioning to benefit from rising aerospace and defense demand, while also capitalizing on the growing emphasis on domestic supply chain resilience. The manager sees Howmet as a preferred partner for aerospace companies implementing higher quality standards and new technologies. This represents a diversified approach to aerospace exposure, capturing both the direct recovery story in Boeing and the broader supply chain beneficiaries. The pitch reflects confidence in Howmet's technical capabilities and strategic positioning within the evolving aerospace ecosystem.

Pitch Summary:
Long-time clients may recall our liquidation of Boeing in early January 2024 following the Alaska Airlines door plug incident. We exited at around $227.62. Following a management shakeup, however, with new leadership under former engineer Kelly Ortberg, we noticed the firm was working to bounce back from safety issues, production problems, and financial losses. The company focus had decisively shifted to quality, stabilizing aircraft output, and rebuilding trust. We viewed Boeing's commercial side as a turnaround story, accommodated by the steady income provided by the firm's defense business. WestEnd began accumulating shares in December 2024 at an average price of $175.47. With strong demand for air travel and a huge backlog of plane orders, delivering aircraft on time is crucial, in which Boeing has demonstrated significant improvement this year. While the latest tragic Air India crash slightly hit the stock, it has recovered as it became apparent that pilot error was the most likely cause. We remain confident that Boeing can further improve execution and take advantage of industry trends like reshoring and increased defense spending, while capitalizing on high demand from China after the country lifted its ban Boeing deliveries due to the temporary tariff truce.

BSD Analysis:
WestEnd presents Boeing as a compelling turnaround opportunity under new leadership, having re-entered the position at $175.47 after previously exiting at $227.62 following safety concerns. The manager emphasizes Boeing's strategic pivot toward quality and operational stability under CEO Kelly Ortberg, viewing this as a fundamental shift from previous management issues. The investment thesis centers on Boeing's dual revenue streams—a recovering commercial aviation business supported by strong travel demand and order backlogs, complemented by steady defense revenues. WestEnd highlights Boeing's improved on-time delivery performance and positions the company to benefit from macro trends including reshoring initiatives and increased defense spending. The manager also notes the potential upside from resumed Chinese deliveries following tariff de-escalation. The pitch reflects confidence in Boeing's operational improvements and its ability to capitalize on structural aerospace industry growth while navigating through its turnaround phase.

Pitch Summary:
Sumco is introduced as the most significant portfolio addition of the period, and Citadel details several structural advantages underpinning its long-term economics. The company holds roughly 25% global share in silicon wafers overall and close to 50% in high-end wafers used for logic processors (including AI chips) and high-speed memory, positioning it as one of the most important suppliers to advanced semiconductor fabs. Sumco has the highest number of technology patents in the wafer industry and is focused on technically demanding segments that offer above-average growth and reduced cyclicality relative to commodity wafers. Demand visibility is unusually strong: customers typically commit to 5-year supply agreements that include annual price increases, enhancing revenue durability and pricing power. Management maintains a solid balance sheet, and Citadel reports initiating its position at a highly attractive valuation, with normalized free-cash-flow yield estimated at 14%.

BSD Analysis:
Sumco is one of the most strategically important suppliers in the semiconductor value chain, holding roughly a quarter of global silicon wafer share and close to half of the high-end wafers required for advanced logic processors and high-speed memory. These premium segments are directly tied to AI acceleration, leading-edge compute, and next-generation memory, giving Sumco exposure to some of the fastest-growing categories in the industry. The company’s enormous patent portfolio reflects decades of technical leadership and allows it to operate in the most demanding parts of the market, where fewer competitors and higher barriers to entry translate into stronger margins and less cyclicality. A key differentiator is Sumco’s long-term supply contracts: customers typically commit to five-year agreements with embedded annual price increases, providing rare visibility and pricing durability in what is otherwise a cyclical sector. With demand for AI chips and dense memory climbing sharply, these contracts give Sumco a stable base from which to benefit as capacity tightens. The company maintains a strong balance sheet, enabling ongoing investment in advanced processes and capacity without overextending. Citadel’s entry valuation implied a normalized free-cash-flow yield around fourteen percent, an unusually attractive level for a business this strategically essential.

Pitch Summary:
Financial misstatement which resulted in the SEC issuing a comment (inflated revenue and margins), debt is understated by $488 mil; the business challenges are not cyclical, but structural; up to 60% downside;

BSD Analysis:
Floor & Decor is a specialty retailer focused on hard-surface flooring and accessories. The BSD short thesis highlights dependence on U.S. housing turnover, discretionary renovation spending, and expansion risks tied to capital-intensive store growth. With mortgage rates still high, housing activity has slowed, pressuring key demand drivers. Competition from Home Depot, Lowe’s, and regional flooring chains makes pricing power limited. Bears also argue that new store openings risk cannibalization and lower marginal returns. For sophisticated investors, monitoring same-store sales, cash-on-cash returns on new stores, and competitive pricing dynamics is critical.

Pitch Summary:
The share price benefited from temporary factors; competitive environment; the key margin product patent is to expire in early 2026; 50% downside;

BSD Analysis:
Amphastar focuses on generic and specialty injectable, inhalation, and intranasal products. The BSD short thesis highlights patent cliffs, concentration in a limited number of marketed products, and pricing pressure in generics. Recent acquisitions have expanded the pipeline, but integration risk and rising R&D expenses weigh on cash flows. Bears argue that Amphastar has benefited from opportunistic supply shortages in generics, inflating profitability in a non-repeatable fashion. Sophisticated investors should focus on ANDA approval cadence, gross margin sustainability, and regulatory risks around product recalls.

Pitch Summary:
We see examples today of low P/E companies radically altering investments to fund share repurchases. Oakmark's second-largest holding, General Motors (GM), for years traded around $40 and earned about $6. Then GM announced the repurchase of 20% of its outstanding shares and followed that last month with another 11%. The result is consensus 2025 EPS for GM has risen 25% while the auto industry average declined nearly 10%. Not coincidentally, GM has been one of our best performing stocks this year.

BSD Analysis:
General Motors represents Oakmark's second-largest holding and serves as a prime example of the fund's value-oriented capital allocation thesis. The company has historically traded around $40 per share while generating approximately $6 in earnings, representing an attractive valuation multiple. GM's aggressive share repurchase program, including a 20% buyback followed by an additional 11% reduction, demonstrates management's commitment to returning capital to shareholders. This capital allocation strategy has driven consensus 2025 EPS estimates 25% higher, significantly outpacing the broader auto industry which saw earnings decline nearly 10%. The share reduction program has been a key catalyst for the stock's strong performance within Oakmark's portfolio this year. GM exemplifies the manager's strategy of investing in undervalued companies that can accelerate value creation through disciplined capital allocation. The position benefits from both attractive valuation metrics and proactive management actions that enhance per-share value creation.

Pitch Summary:
The Oakmark Fund owns two giant cap stocks (Alphabet and Bank of America), and they account for only 6% of the Fund's assets. Alphabet is Oakmark's largest holding, making up 3.6% of our portfolio. However, Alphabet makes up even more of the S&P 500, so, the stock's 30% return ironically hurt our relative performance. It ended the quarter with only 6% of its assets in companies solely in the Russell 1000 Growth Index (Alphabet and Charter Communications).

BSD Analysis:
Oakmark maintains Alphabet as their largest individual holding at 3.6% of portfolio assets, demonstrating conviction in the technology giant despite its classification as an expensive giant-cap stock. The manager acknowledges Alphabet's strong 30% return during the period, though this actually hurt relative performance since the fund's weighting was lower than the S&P 500's allocation. The position represents one of only two giant-cap holdings in the portfolio, reflecting Oakmark's general avoidance of mega-cap stocks due to pricing efficiency concerns. Alphabet is categorized within the Russell 1000 Growth Index, making it an outlier in Oakmark's predominantly value-oriented strategy. The fund's underweight position relative to the index suggests disciplined position sizing despite the stock's strong momentum. The holding appears to be maintained based on fundamental value considerations rather than momentum factors. This positioning reflects the manager's selective approach to growth stocks when they trade at reasonable valuations relative to their growth prospects.