Investment Pitches

Pitch Summary:
HDFC Bank returned 17.4% on renewed interest following the Indian election, due to the likelihood of higher government spending and improving liquidity conditions.

BSD Analysis:
The managers view HDFC Bank as benefiting from India's post-election political stability and expected fiscal expansion. The 17.4% quarterly return reflects market optimism about improved operating conditions for Indian banks. With Modi's coalition government likely to increase infrastructure spending to maintain political support, HDFC Bank should benefit from increased lending opportunities and improved credit demand. The managers appear confident in India's economic trajectory, with the fund maintaining a 4% allocation to Indian markets. Enhanced liquidity conditions should support loan growth and potentially improve net interest margins. The investment thesis relies on India's continued economic expansion and HDFC Bank's position as a leading private sector bank to capture this growth.

Pitch Summary:
Taiwan Semiconductor Manufacturing Company (TSMC) returned 22.5%. The world's leading semiconductor manufacturer is seeing its sales and profits grow meaningfully as its clients attempt to meet surging demand for AI chips, while its dominant market position allows it to raise prices, expanding profit margins. Healthy free cashflow (the money left over after all liabilities have been met) can also be reinvested into building capacity for the next generation of semiconductor chips, widening the technological advantage over its competitors.

BSD Analysis:
The managers highlight TSMC's exceptional positioning in the AI-driven semiconductor boom, with the company benefiting from both volume growth and pricing power. The 22.5% quarterly return reflects strong execution as TSMC capitalizes on surging AI chip demand from major clients. The company's dominant market position enables margin expansion through price increases, while robust free cash flow generation supports reinvestment in next-generation capacity. This creates a virtuous cycle where TSMC can maintain and extend its technological leadership over competitors. The investment thesis centers on TSMC's role as the critical enabler of the AI revolution, with sustainable competitive advantages in advanced chip manufacturing. The managers view the company as well-positioned to capture disproportionate value from the ongoing AI infrastructure buildout.

Pitch Summary:
FICO owns the proprietary algorithm used to calculate its patented FICO Score, which thousands of lenders, investors, regulators, and other industry participants use to assess the creditworthiness of consumer borrowers. We believe FICO is likely to achieve attractive shareholder returns because it possesses all the key characteristics we look for in a business. First, it owns a dominant, global protocol network. Because crowded information marketplaces are generally quite inefficient, requiring participants to maintain background knowledge on numerous providers and analytical methodologies, industries such as credit ratings tend to coalesce around one or two standards (i.e. protocols). U.S. consumer credit is no different, with the FICO Score having become the almost universally recognized standard for assessing U.S. consumer credit risk. While there is an alternative to the FICO Score called VantageScore, FICO's network is much more embedded in the credit ratings industry. In fact, 90% of large U.S. lenders use FICO scores. Even more importantly, over 95% of the total dollar volume of U.S. consumer credit securitizations solely cited FICO Scores as their credit risk measure, suggesting the global investor class derives enormous value from FICO and much less from VantageScore and other competitors. Lastly, 300 million consumers have free access to their FICO scores, which helps keep mindshare high and FICO scores relevant. FICO's network is not only unparalleled in size but also in scope. FICO Scores have been used by the three main credit reporting agencies, lenders, regulators, and investors for, in some cases, the entire 35 years since the FICO Score became widely available in 1989. VantageScore, on the other hand, wasn't even created until 2006. This difference in size and scope is hugely important to FICO investors because of the nature of network economics. In networks, value scales exponentially with the size of the network, allowing large networks to deliver far more value for users than smaller networks. This huge differential in user value enables the dominant network to charge a large premium versus competing smaller networks and yet still provide far more customer value than the smaller networks can. This ability to charge a large premium versus identical services yet still provide more value to customers is, in our opinion, the definition of pricing power, and it enables dominant networks to earn high returns on their capital. It also makes it extremely hard for smaller competitors to disrupt their leading market position. Second, FICO possesses an additional check on competing supply that we call institutional risk aversion. Institutional risk aversion is the tendency for corporations, governments, endowments, pension plans, and other institutional investors to make the "safe" choice by hiring or relying on the market leader, even if it costs more. This tendency occurs because these institutions are mostly run by employees, not owners. From the employee's perspective, the risk-reward of the unconventional choice is generally not favorable, with the chance of losing his or her job in a bad outcome often outweighing the chance of a bonus or promotion. As a result, in cases where institutions are lending money or purchasing U.S. asset-backed securities, they overwhelmingly rely on the widely recognized FICO score as the key credit risk metric. For the U.S. government, where the downside of going with the unconventional choice could be a spiraling financial crisis due to investor distrust of a less-well known credit score, this institutional risk aversion is so strong that some regulatory bodies have made it mandatory for lenders to purchase the FICO score. Third, FICO operates in a category, U.S. consumer credit, that we believe is likely to grow at least as fast as GDP over the long term. This characteristic is important because we want the network to maintain or grow its importance to society over time. If it doesn't, as in the case of many local newspapers after the advent of the internet, the network effects work in reverse, causing rapid value declines. In contrast, a growing network creates exponentially more value for each user it adds, enabling the business to take a small percentage of this increased value in the form of price increases and converting current pricing power into enduring pricing power. Fourth, FICO possesses significant untapped pricing power. Despite its rise from relative obscurity in 1989 to arguably the most important metric in U.S. consumer credit lending today, FICO kept prices in its important mortgage division flat for nearly 30 years, until 2018. And while it's raised prices aggressively since, we believe the exponential nature of network effects led to such a huge increase in the FICO Score's value that it's still dramatically underpriced. Despite raising its price per mortgage score by hundreds of percent, FICO still only charges the credit reporting agencies (Equifax, TransUnion, and Experian) $3.50 per score, which FICO calculates using the unique data each credit reporting agency has compiled on each mortgage applicant. This price of $3.50 per score compares very favorably to the $23 or more that the credit reporting agencies charge mortgage lenders per report, the approximately $5,500 of closing costs per mortgage, and the roughly $320,000 average mortgage loan originated. While there's some dispute about how many scores lenders buy during the process of underwriting and originating the average mortgage loan, given the fact that the FICO Score may be the most important metric investors use in assessing the risk of mortgage-backed securities, a price of $10 to $20 (3 to 6 scores) on a $320,000 mortgage is, in our view, insignificant. In percentage terms, it is only 0.3 to 0.6 basis points (a basis point is 1/100 of a percent). In comparison, Moody's charges around 8 basis points per year to rate corporate issuers' debt but likely reduces these issuers' borrowing costs by 30 to 50 basis points per year. After contextualizing FICOs pricing using these various methods, our conclusion is that it still possesses a great deal of untapped pricing power. In fact, we believe FICO could raise its prices by multiples and still provide net value to its customers. Fifth, FICO has a conservative balance sheet. As of March 31, 2024, FICO had a 2.65x consolidated leverage ratio versus a maximum consolidated leverage covenant of 3.5x and an interest coverage ratio of 7.97x versus a minimum interest coverage covenant of 3.0x. Moreover, FICO has few near-term debt maturities with 20% of its debt not coming due until 2026 and an additional 71% not coming due until 2028. Additionally, we believe FICO's strong pricing power enables it to raise prices to offset any cyclical volume weakness, as it has over the last few years as mortgage volumes have fallen by two-thirds since 2021. Sixth, FICO is run by an ownership-minded management team. CEO Will Lansing, who has been on the board of FICO since 2006 and CEO since 2012, has created tremendous value over the last twelve years. During his tenure as CEO, he has renegotiated customer contracts and exercised untapped pricing power in the mortgage division, eschewed acquisitions, bought back shares, and increasingly converted FICO's software business from a lumpy purchase decision to a subscription-based software-as-a-service model. As of June 30, 2024, he owns approximately 350,000 shares of stock worth over $500 million, which keeps him highly incentivized to continue driving FICO's long-term business value. Lastly, we believe investors are underestimating FICO's earnings power not only because of its untapped pricing power but also because of the U.S. mortgage market's almost unprecedented recent weakness. Despite over 30 percent growth in the country's population during the last 30 years, mortgage applications are bumping along at levels not seen since the mid-1990s. Moreover, mortgages originated in 2023 were approximately one-third of the peaks in 2005 and 2021 and a little more than half the average number of mortgages originated over the last 10 years. While we don't know when mortgage volumes will pick up, we believe investors tend to overweight the current macroeconomic backdrop in their analysis and underweight the probability of this climate changing in the future. We call this over-discounting of temporary macroeconomic issues the "market-timing mispricing" and try to take advantage of it when possible. In FICO's case, if mortgage volumes increase to the average levels of the last ten years, we estimate the company could earn over 50% more than current Wall Street estimates. In sum, we believe FICO's network effects and the risk aversion of lenders, regulators, and global investors are likely to constrain competitive supply in the U.S. consumer credit score industry, and we believe demand for credit scores is highly likely to increase along with total U.S. consumer credit, which we believe will grow roughly in-line with GDP. As a result of this constrained supply and rising demand, we believe FICO's pricing and volumes are likely to increase, enabling FICO to act as a toll-taker on U.S. GDP. Moreover, we believe FICO's earnings power is understated because of both its significant untapped pricing power and the U.S. mortgage market's cyclically-depressed volumes. If we adjust FICO's earnings for these two factors, it's much cheaper than it appears, in our opinion. As a result of this difference between current earnings and our estimate of its underlying earnings power, we believe we were able to purchase FICO at a valuation that will enable us to generate attractive long-term risk-adjusted returns.

BSD Analysis:
YCG presents a compelling bull case for FICO based on its dominant network effects in the U.S. consumer credit scoring market. The fund emphasizes FICO's near-monopolistic position with 90% market share among large lenders and 95% of securitization volume using FICO scores exclusively. The investment thesis centers on significant untapped pricing power, noting FICO charges only $3.50 per score compared to $23+ that credit agencies charge lenders, representing just 0.3-0.6 basis points on a $320,000 mortgage. YCG believes FICO could raise prices by multiples while still providing net value to customers. The company benefits from institutional risk aversion, where lenders prefer the established standard over alternatives like VantageScore. FICO operates in a growing market expected to expand with GDP, has a conservative balance sheet (2.65x leverage vs 3.5x covenant), and is led by CEO Will Lansing who owns $500+ million in stock. YCG sees current earnings as understated due to cyclically depressed mortgage volumes, estimating 50%+ upside if volumes normalize to 10-year averages.

Pitch Summary:
London Stock Exchange Group (LSEG) is a leading financial market infrastructure and data analytics platform, with a global reach. It serves over 40,000 organisations in around 190 countries, including various stakeholders such as sell-side and buy-side analysts; investment managers; private equity; asset owners; wealth managers and governments. The company's services span from primary issuance to clearing and settlement, data and analytics—catering to a wide range of financial needs. LSEG has a very rich history. Its origins date back over 300 years. Today, LSEG has evolved into a significant player in the financial services industry. Its journey from Jonathan's Coffee House in the late 1600s; the establishment of the London Stock Exchange in 1801; to its position today, shows how it has evolved and developed through the decades. Its recent transformation into a world-leading financial market infrastructure and data business really started around twenty years ago. Diverse Revenue Streams: LSEG's business encompasses various segments, including Data & Analytics, Risk Intelligence, Capital and Post Trade services. The business model should be seen as an Open, Interoperational Ecosystem, rather than a linear business with separate divisions. As the largest provider, globally, of real time price data and non-real time data, this information feeds into its other divisions. This enhances its competitive advantage by creating a 'winner takes most' network effect. 70% of revenues are also recurring in nature, which helps to support the persistency of the business model. Its Data and Analytics division which is now around 70% of the business is likely to see revenues continue to grow at a mid-single digit rate. To this end, LSEG's recent partnership with Microsoft (Microsoft own a 4.1% stake in LSEG) looks set to revolutionise the way that information is collated and analysed. A recently observed real-time demonstration of Co-pilot, imbedded in LSEG's software, produced a report and presentation in a minute, that would normally have taken days to put together. The Moat or barrier here for LSEG, is its control of the data that is feeding into this new Artificial Intelligence (AI) technology. Returns on incremental capital are attractive and our reverse discounted cashflow valuation model is supportive given LSEG's historic growth and the potential of the business to grow and create greater value for its customers.

BSD Analysis:
The manager presents LSEG as a compelling investment opportunity built on its transformation from a traditional exchange into a global financial data and analytics powerhouse. The investment thesis centers on LSEG's dominant position as the world's largest provider of real-time financial data, serving over 40,000 organizations across 190 countries with 70% recurring revenues providing earnings stability. The company benefits from powerful network effects where its data feeds into multiple divisions, creating a 'winner takes most' dynamic and sustainable competitive moat. The manager is particularly excited about LSEG's partnership with Microsoft, which owns a 4.1% stake, and the integration of AI technology through Co-pilot that can produce complex reports in minutes rather than days. This technological advancement leverages LSEG's core asset - its control of financial data - to create new value propositions for customers. With the Data & Analytics division representing 70% of the business and expected to grow at mid-single digit rates, combined with attractive returns on incremental capital, the manager views LSEG as well-positioned to compound value through its ecosystem approach and AI-enhanced offerings.

Pitch Summary:
One of our investee companies, Compass Group, is a good example of this. They sell around 5.5 billion meals per year, globally. As North America is one of its major markets, through its Foodbuy division there, it is the largest purchaser of food in North America. This scale allows it to offer a superior service to its customers at an attractive price; and is reflected in its sector leading operating profit margin and returns. Such scale economies give us confidence as investors, that excess returns can persist and benefit from the powers of compounding.

BSD Analysis:
The manager highlights Compass Group as a prime example of scale economies creating sustainable competitive advantages in the contract catering industry. With 5.5 billion meals served annually worldwide, Compass has achieved unparalleled scale that translates into significant purchasing power, particularly through its Foodbuy division which is the largest food purchaser in North America. This scale advantage enables the company to negotiate better input costs while offering superior service quality to customers at competitive prices. The manager emphasizes that these purchasing economies are reflected in sector-leading operating margins and returns, suggesting strong operational efficiency and pricing power. The scale-driven moat provides confidence that excess returns can persist over time, benefiting from compounding effects as the business continues to grow. The investment thesis relies on the sustainability of these structural advantages in a fragmented market where scale creates meaningful differentiation. The manager views this as a durable competitive position that should continue generating superior returns for shareholders.

Pitch Summary:
One of our companies, Autozone—the United States' leading auto parts retailer, is an example of this. Autozone, O'Reilly and Advance Auto Parts are the three largest companies in what is considered a mature market. So no major new competition has been attracted into this market over recent years. In stock market terms, its sector is also deemed rather boring. However from a capital allocation perspective this has provided an incredible benefit for Autozone's shareholders. Due to being in a 'boring' sector, the stock valuation hasn't traded on a particularly high valuation rating over the last twenty years. As a result, management have bought back around 90% of their shares in issue—which has increased earnings per share dramatically over this period. All else equal, a 90% reduction in shares effectively produces a 10x increase in earnings per share! Except everything else hasn't remained equal. So, when we add to this the strong underlying profit growth, earnings per share has grown over 20% each year on average for two decades. Boring? That's the kind of boring that we like!

BSD Analysis:
The manager presents AutoZone as a compelling example of how operating in an 'unattractive' market can create significant shareholder value through reduced competition and exceptional capital allocation. The thesis centers on AutoZone's position in a mature, consolidated auto parts retail market with limited new entrants, allowing the company to generate consistent cash flows without significant competitive pressure. Management has executed an aggressive share buyback program, repurchasing approximately 90% of outstanding shares over twenty years, which mechanically increases earnings per share. Combined with underlying business growth, this has resulted in 20% annual EPS growth over two decades. The manager views the 'boring' nature of the sector as a competitive advantage, as it keeps valuations reasonable and competition at bay. This creates a virtuous cycle where low valuations enable accretive buybacks, while market consolidation among three major players (AutoZone, O'Reilly, Advance Auto Parts) maintains pricing discipline and market share stability.

Pitch Summary:
Boyd Group was founded in Winnipeg, MB in 1990 and operates auto body/ collision repair and auto glass services shops across North America. The business services their customers effectively and efficiently, making them a great partner to insurance companies. Historically, the business has grown and achieved density through acquisitions of multi-shop operators (MSOs) which would typically operate anywhere from 10-50 stores in a region. The industry has seen upward pressure on acquisition multiples over time, in part because private equity has deployed capital into the collision repair sector. We have been pleased to see Boyd remaining disciplined on the price they are willing to pay for the shops, choosing to prioritize returns on invested capital instead of growing at any cost. We see this to be a function of management alignment and incentive structure, with the management team and Board collectively owning ~$32M of equity in the business. Like Langdon's structure, management are shareholders of the business and seek to optimize returns on capital. Recently, Boyd has started to open its own stores instead of acquiring these MSOs, which has led to short-term erosion in profitability as the stores take longer to mature when opened organically. As these greenfield stores mature, returns on capital are similar, if not better, than returns that would be expected from acquired stores. Our investment team has followed Boyd for the better part of a decade and the management team is one which we hold in extremely high regard.

BSD Analysis:
Langdon maintains a bullish stance on Boyd Group despite recent underperformance, emphasizing the company's disciplined capital allocation approach. The fund appreciates management's decision to prioritize returns on invested capital over growth at any cost, particularly as private equity competition has inflated acquisition multiples in the collision repair sector. With management and the board owning approximately $32 million in equity, alignment with shareholders appears strong. Boyd's strategic shift toward organic growth through greenfield locations represents a prudent response to elevated acquisition prices. While this transition has temporarily pressured profitability, Langdon expects similar or better returns on capital as these new stores mature. The fund's decade-long relationship with Boyd's management team provides confidence in execution capabilities. Boyd's effective partnerships with insurance companies and operational efficiency create a sustainable competitive advantage in the fragmented collision repair market.

Pitch Summary:
TerraVest Industries is a consolidator of businesses that manufacture products that transport and store various fuels, chemicals, agricultural products, and food & beverage products. We added the company to our Portfolio earlier this year after spending time with senior management across Canada. We built an understanding of the business's operating structure and an appreciation of the improvements made when integrating an acquisition. We see a business with a capable management team that is aligned with shareholders, with insiders owning over 30%. In late-2023, TerraVest announced their largest acquisition to-date, replicating their strategy used to integrate and add-value to a larger business called Highland Tank, which operates in new end markets (chemical, fuel, and water storage, and grease separation). Similarly, another acquisition called Advanced Engineering Products (AEP) operates in the transportation of liquid consumables. We believe these two acquisitions provide a new growth avenue for TerraVest to consolidate. The business has begun to show its true potential this year, with operating margins and free cash flow generation improving as these larger acquisitions have been integrated. We believe the company is still in the early innings of its inorganic growth story and is in a strong position to continue consolidating operations in highly fragmented industries. We attended several trade shows this year to understand TerraVest's customers, acquisition targets, and its competitors, providing additional context to the strong reputation that TerraVest has built as a consolidator in the industry.

BSD Analysis:
Langdon presents a compelling bull case for TerraVest as a serial acquirer in fragmented industrial markets. The fund's thesis centers on management's proven ability to integrate acquisitions and improve operating margins, evidenced by recent performance following the Highland Tank and AEP deals. With insiders owning over 30% of the company, management alignment appears strong, supporting disciplined capital allocation. The manager's extensive due diligence, including trade show visits to understand the competitive landscape, demonstrates thorough research. TerraVest's position as a consolidator in highly fragmented end markets provides a clear runway for continued inorganic growth. The improving free cash flow generation and operating margins following recent integrations validate the acquisition strategy. Langdon views the company as being in the early stages of its consolidation story, suggesting significant upside potential remains.

Pitch Summary:
Caribou Bioscience uses advanced CRISPR technologies to develop new and targeted cancer treatments. These allogenic (i.e. non-individualised) CART therapies use ad­vanced gene editing techniques to improve the immune response and increase anti-tumour activity.

BSD Analysis:
Caribou Biosciences has recently been upgraded to a "Buy" (Zacks Rank #2), reflecting a significant upward trend in earnings estimate revisions that historically precedes a move higher in share price. The company is benefiting from its specialized "chRDNA" genome-editing technology, which provides a competitive edge in developing highly specific and persistent cell therapies. Analysts have steadily raised their estimates for 2025 and 2026, signaling that institutional investors are beginning to recalculate the fair value of the firm's oncology pipeline. For the Buyside Digest, Caribou represents a tactical biotech pick with superior earnings revision features, making it a solid candidate for producing market-beating returns as clinical data matures.

Pitch Summary:
Crispr Therapeutics, whose founders include Nobel Prize laureate Emmanuelle Charpentier, is the leader in genome editing technology and offers ground-breaking treatment options for genetic diseases. At first, the earnings will come from Vertex Pharmaceuticals. CRISPR Therapeutics and Vertex Phar­maceuticals share the costs and profits of CASGEVY at a ratio of 40:60. This treatment aims to cure genetic diseases such as sickle cell anaemia and transfusion-dependent beta thalassemia through gene editing.

BSD Analysis:
CRISPR Therapeutics is riding a wave of investor confidence in early 2026, with the stock surging 11% following the successful market introduction of its gene-editing therapy, Casgevy. Despite short-term earnings volatility, the company maintains a fortress balance sheet and strong institutional support from firms like ARK Investment Management. Collaboration revenues from the Vertex Pharmaceuticals partnership are beginning to provide a more stable financial footing as the firm advances its late-stage immuno-oncology and autoimmune pipelines. Currently viewed as undervalued by several major analysts, CRISPR remains the gold standard for gene-editing investment, offering deep-value optionality across its groundbreaking medicinal platform.

Pitch Summary:
After a long absence, Grenke is back in the fund. We expect that the financing specialist for the mid-size sector will return to profitability: future profits should see good growth as the new business picks up. At this time, the share price trades at a discount to the book value.

BSD Analysis:
Grenke AG has started 2026 on a high note, meeting its annual guidance with €3.3 billion in leasing new business and securing €200 million in government-sponsored funding to support SMEs. The company is experiencing a significant earnings recovery, with Q3 2025 group earnings more than doubling year-over-year to €22.4 million as risk provisions and claim expenses normalize. Management’s focus on digitalization and climate protection infrastructure has driven a 10.6% growth in leasing new business, maintaining a healthy CM2 margin of 16.7%. For value-oriented investors, Grenke offers a stable, high-margin exposure to the essential financing of European small-to-mid-sized enterprises during a period of infrastructure modernization.

Pitch Summary:
The fact that sporting goods giant Nike had to revise its annual forecasts also had a negative effect on other sporting good stocks. Atlanta Sports in particular, the disappointing results in the online business and weak demand in the Chinese market (Anta Sports’ main sales market) created considerable uncertainty among investors. Overall, however, the company still expects strong revenue and profit growth for the year 2024.

BSD Analysis:
ANTA Sports remains the premier "Alpha" play in the global sportswear market, entering 2026 with a disciplined growth strategy that blends its core brand dominance with the strategic acquisition of Jack Wolfskin. The company is forecast to grow annual earnings and revenue by approximately 6.7% and 8.3% respectively, with a target return on equity (ROE) of 20% over the next three years. While trading volume remains robust at over 5.6 million shares daily, the stock offers a reliable yield through its consistent final dividend policy. As the leading sports brand in the world’s largest consumer market, ANTA is successfully capturing the "premiumization" trend in Chinese athletics, making it a cornerstone for portfolios seeking exposure to Asian consumer discretionary growth.

Pitch Summary:
In the last quarter, Fortescue Metals saw less de­mand for iron ore and had to adjust its forecast for the current year. At the same time, the company remains both profitable and attractive with an expected dividend yield of over 8%. Management affirmed its goal of becoming climate-neutral by 2030.

BSD Analysis:
Fortescue is iron ore leverage with a balance sheet and cost curve that let it survive what kills higher-cost peers. Investors treat it as pure China construction beta and ignore its position as a top-tier low-cost producer. When iron ore prices wobble, sentiment collapses faster than fundamentals. Cash generation in strong markets funds dividends that are anything but symbolic. The green energy pivot grabs headlines, but the core mining franchise still drives value. Cost discipline and scale matter more than commodity narratives. This is bulk commodity exposure with operating torque and capital return discipline. When iron ore tightens, Fortescue doesn’t need heroics to print cash.

Pitch Summary:
The company's share price was once again hit by setbacks in clinical research. Our portfolio management team recently visited the labs in Mainz to get a better picture of the company. In our opinion, the well-stocked pipeline is very promising, even if setbacks are part of the business, and the introduction of the first cancer treatments starting in 2026 is also a realistic scenario. Liquidity of around EUR 16 billion with a market cap of less than EUR 18 billion shows the capital market's current lack of interest in BioNTech.

BSD Analysis:
BioNTech has officially designated 2026 as its "Clinical Execution Year," shifting focus from COVID-19 revenue to a massive late-stage oncology and mRNA-based infectious disease pipeline. The company is currently trading near $108, with institutional analysts setting 12-month objectives in the low-$140s as investors await pivotal data readouts from its cancer vaccine programs. With a fortress cash position and an R&D budget targeted at rapid portfolio expansion, BioNTech remains a foundational biotech holding for those seeking exposure to the next decade of genomic medicine. The stock’s rebound from late-2025 lows suggests that the market has finally priced in the post-pandemic reset and is now valuing the company for its robust oncology IP and platform scalability.

Pitch Summary:
In May, the company released a revenue forecast that was below market expectations but still showed positive developments. Despite the challenges due to Apple’s reduced order volume for the next iPhone generation, the manufacturer of radio fre­quency chips was able to make up for the stock market losses in June, as the company is making good progress in aligning its product offering to a wider customer base.

BSD Analysis:
Skyworks Solutions is currently a high-conviction "merger-and-recovery" play in the semiconductor space, following its blockbuster proposed merger with Qorvo aimed at realizing $500 million in annual synergies. For Q1 FY2026, the company surpassed earnings expectations with an EPS of $1.54 on $1.04 billion in revenue, driven by a shortening smartphone replacement cycle and early engagements in Wi-Fi 8 programs. While mobile revenue is expected to see some sequential seasonal decline, the "Broad Markets" segment—specifically automotive and aerospace—is stabilizing the bottom line. The stock offers a defensive 33% free cash flow margin and a strong cash position of $1.6 billion, positioning it to dominate the RF (Radio Frequency) front-end market as AI processing moves closer to the edge in consumer devices.

Pitch Summary:
Palantir continues to expand its activi­ties. In addition to orders from the defence sector, Palantir also an­nounced a significant cooperation in the aerospace sector. Voyager Space, a global leader in aerospace research, announced a strategic partnership with Palantir. Voyager will use Palantir Foundry and the AIP platform for artificial intelligence to improve the company's payload management system for the clients of the International Space Station (ISS) and the future commercial Starlab space station.

BSD Analysis:
Palantir has officially transitioned from a speculative growth story to a dominant S&P 500 powerhouse, entering 2026 with a massive 70% year-over-year surge in Q4 revenue to $1.41 billion. The investment thesis is now firmly anchored in its Commercial AIP (AI Platform) and sustained US government demand, which recently drove quarterly government contract revenue up 66% to roughly $570 million. While the stock has experienced short-term volatility in February 2026, trading near the $145 level, broker sentiment is increasingly bullish, with Citi upgrading the stock to a "Buy" and raising its price target to $235. Management’s 2026 guidance materially exceeded consensus, signaling that Palantir is successfully capturing the lion's share of enterprise-grade AI integration as companies move beyond LLM experimentation into operational reality.

Pitch Summary:
KLX is a service company for the oil and gas sector in the United States. The company suffered greatly during the pandemic years due to the sharp drop in investment during those years. However, in recent years it has seen a very substantial improvement in its business, has consolidated several companies by strengthening its service offering and has managed to significantly reduce its leverage to very reasonable levels. Despite this, the share price has experienced a very substantial drop in recent months to almost historic lows due to a certain slowdown in production activity in the United States in recent months. However, our medium-term outlook remains positive, and we have again strengthened our position in this company.

BSD Analysis:
KLX’s moat is niche oilfield services scale in basins where relationships drive repeat work. It remains hostage to E&P spending cycles. Pricing improves only when capacity tightens. Capital intensity punishes mis-timed expansion. Leverage amplifies commodity swings. Differentiation is operational, not structural. Consolidation helps pricing discipline temporarily. The bull case is sustained drilling activity. KLX is pure cycle leverage.

Pitch Summary:
Headlam is a British flooring products distribution company (mainly carpet) leader in the UK market. The company has been trading in the region of £4 per share for the last ten years yet has recently fallen to current levels of £1.4. It is a very cash generative company with little debt and has temporarily experienced a fall in sales and earnings as falling consumer confidence in the UK is affecting demand for these types of products. However, once this situation of falling demand ends, we are convinced that the company will recover its historical level of results, and this should gradually be reflected in the share price. In the meantime, as there is no balance sheet risk, the outlook is good.

BSD Analysis:
Headlam’s moat is distribution density in UK flooring where logistics scale matters. It’s a volume business tied to housing and refurbishment cycles. Pricing power is thin; cost control defines returns. Consolidation helps, but doesn’t eliminate cyclicality. Inventory management determines survival in downturns. Operating leverage cuts both ways. Customer fragmentation provides resilience but not growth acceleration. The bull case is housing recovery with disciplined cost management. Headlam survives on efficiency.

Pitch Summary:
During the second quarter we made an investment in the UK company Keywords Studios Plc. This is the largest service company for the video games industry. In the video games industry in recent years there has been a strong trend for video game publishers to outsource many of the services required for the launch of new products. These services include game creation, adaptation and localisation services, and marketing and launch activities. Keywords, over the last few years, was experiencing very significant growth, benefiting from the tailwind of this outsourcing process in the industry and complemented by a process of consolidation through acquisitions in a sector that was highly fragmented and without major players. In this sense, although Keywords is the largest player (more than three times larger than the next competitor), its market share is only 6%. All this had allowed it to experience earnings per share growth of 29% per annum in the period from 2017 to 2023. In addition, it is a highly profitable business with strong cash generation that has allowed the company to finance the various acquisitions it has made. However, although we had known and followed this company for several years, we had never decided to invest because the valuation at which it was trading was excessively high (multiples between 25/30x Enterprise Value / EBITDA). However, in recent quarters the company experienced a sharp fall in the share price due to certain temporary problems (the actor strike in the United States and a certain slowdown in business after a very strong year 2022 as a result of the post-Covid recovery) and a certain fear in the market of the structural damage that artificial intelligence could generate in the future on some of the services that the company offers to its customers. In just six months, the share price fell by 40%, leaving the company at a very attractive price level (around 7x Enterprise Value / EBITDA), a moment that we took advantage of to invest in the company at a price of around 11 pounds per share. Fortunately, at the end of May, just two months after we started investing in the company, Keywords announced that it was in talks with the private equity fund EQT for a possible sale at a price of £25.5 per share, which represented a premium of almost 100% over our purchase price (the recently confirmed firm offer has left the final price at £24.5).

BSD Analysis:
Keywords Studios is well-positioned in 2026 to capitalize on the widening gap between AI-enabled and legacy video game development houses. As the global gaming market scales toward $656 billion by 2033, Keywords is successfully integrating AI as a revenue engine to personalize player experiences and accelerate asset creation for its global client base. Market data suggests that studios combining durable IP with Keywords’ advanced AI-driven outsourcing can command valuation premiums 2-3 times higher than traditional peers. While the work-for-hire model faces some disruption from automation, Keywords’ scale and localized expertise in over 60 countries provide a defensive backstop for its high-margin localization and testing services. For investors, the company represents a strategic "bet on the industry" rather than individual titles, offering diversified exposure to the increasing technical complexity of game development.

Pitch Summary:
With the proceeds, we bought more FICO, which declined significantly because of comments made by Federal Housing Finance Agency Director Bill Pulte. He expressed displeasure over FICO’s aggressive price increases and suggested that the administration is exploring options to reduce FICO’s monopoly power. These comments, FICO’s price reaction, and our decision to increase the position size serve as a good opportunity to discuss an important part of our investment process that we don’t believe we’ve made explicit in past letters. First, a quick refresher: As we’ve stated in the past, we believe investors are avaricious, impatient, and overconfident, leading them to, on average, overprice the most speculative stocks and underprice the most high-quality and durable businesses. Furthermore, since competition and innovation eventually drive down the returns of all businesses, investors rationally price these high-quality businesses as though they will experience some long-term erosion to both their inflation-adjusted product pricing and their returns on capital. However, a select few of these businesses can buck this trend and experience constant or rising inflation-adjusted pricing and returns on invested capital over time. We believe the businesses most likely to accomplish this unlikely feat 1) own a dominant network; 2) possess additional checks on competing supply such as not-in-my-backyard zoning restrictions and institutional risk aversion; 3) operate in a category likely to grow at least as fast as GDP; 4) possess untapped pricing power; 5) have a conservative balance sheet; and 6) are run by an ownership-minded management team. The first four characteristics give the businesses enduring pricing power and the last two characteristics increase the probability that we, as minority shareholders, will benefit from the business value growth that this enduring pricing power is likely to create over time. This combination of enduring pricing power and strong shareholder protections against bankruptcy and dilution creates what we believe to be a uniquely favorable risk-adjusted return setup. Since investors expect pricing and returns on capital to deteriorate but we believe these businesses have a much higher-than-average probability of maintaining or increasing their prices and returns on invested capital, we believe they are much more likely to surprise investors to the upside than the downside over the long term. Moreover, we believe the magnitude of these upside surprises is likely to be larger, on average, than the downside surprises. In other words, we believe long-term equity ownership of these businesses is positively convex. However, this analysis makes one key assumption. It assumes that governments will allow our businesses to price for the value they create over time. If they don’t, through mechanisms such as regulation, taxation, or bargaining power, then we believe equity ownership in these businesses is no longer positively convex. Therefore, to own a business, we must believe it’s unlikely governments will cap long-term pricing and returns on capital. The key phrase in this sentence is “long-term.” If history is any guide, we should expect periods of

BSD Analysis:
FICO’s selloff after the FHFA comments was a classic case of investors panicking first and thinking later. The idea that regulators are about to dismantle FICO’s scoring dominance ignores decades of institutional inertia and the reality that lenders, agencies, and secondary markets prefer standardization over experimentation. Even if Washington grumbles about pricing power, the odds of the government engineering a viable alternative at scale are low, especially when the entire mortgage ecosystem is hardwired into FICO’s models. The company still checks every box of a rare pricing-power compounder, from its network effects to the structural barriers that keep rivals from gaining traction. Investors routinely underestimate how durable FICO’s economics are and overestimate how fast political pressure translates into structural change. The balance sheet is clean, the business model is capital light, and management behaves like owners who understand the long game. What the market calls “regulatory risk” often ends up being background noise for firms with embedded adoption and system-level reliance. Adding on weakness makes sense because this is exactly the kind of business that surprises to the upside once the headline dust settles.