Investment Pitches

Pitch Summary:
AppLovin is an advertising technology company offering a digital platform that helps mobile app developers market, monetize, and analyze their apps. We believe the company is experiencing a positive lifecycle change, driven by its AI-powered software engine. While currently focused on mobile gaming, AppLovin is expanding into other market segments. Its Demand Side Platform (DSP) supports ad placements, user acquisition, inventory matching, and performance analytics. Further, we believe AI is central to AppLovin's growth, driving a large majority of the company's revenue through its recommendation and targeting engine. In our view, AppLovin gains a competitive advantage, delivering higher-value app installs by leveraging data from its game portfolio and developer partners. We believe this scale and data advantage enhances its network effect, improving its technology and boosting market share in mobile gaming. As developers use the platform, the company collects data that continuously refines its algorithms, creating more value and attracting more developers to the ecosystem. During the quarter, shares contributed to performance following better-than-expected fiscal third quarter results, reporting a 39% year-over-year (yoy) revenue growth, along with a substantial 182% yoy growth in free cash flow. The company has also been proactive in shareholder returns, authorizing $2.30 billion for share repurchases.

BSD Analysis:
Alger presents a compelling bull case for AppLovin centered on the company's AI-driven transformation and network effects. The manager emphasizes AppLovin's competitive moat through its data advantage from gaming partnerships, which continuously improves its recommendation algorithms and attracts more developers. The AI-powered software engine is positioned as the key driver of revenue growth, with the platform expanding beyond mobile gaming into broader market segments. Strong fundamental performance supports the thesis, with 39% year-over-year revenue growth and an impressive 182% increase in free cash flow demonstrating operational excellence. The company's capital allocation strategy appears shareholder-friendly with $2.30 billion authorized for share repurchases. Alger views the virtuous cycle of data collection, algorithm improvement, and developer attraction as creating sustainable competitive advantages. The manager sees AppLovin at an inflection point where AI capabilities are translating into market share gains and superior monetization.

Pitch Summary:
ServiceTitan, Inc. is the leading business management software platform for various "trades" that support the repair, maintenance, and installation of systems within residential and commercial buildings. Key end markets include plumbing, electrical, and landscaping. The platform serves as a system of record offering clients nearly everything necessary to run their business, including customer relationship management (sales enablement, marketing automation, and customer service), field service management (scheduling/dispatching), enterprise resource planning (inventory), human capital management (compensation and payroll), and fintech (payments and consumer financing). ServiceTitan operates in a large market. In just the U.S. and Canada, the trades are a roughly $1.5 trillion annual industry, and ServiceTitan's current product offerings serve about $650 billion of this spend. We believe this equates to a $30 billion addressable market for the company's software, of which around $13 billion is serviceable today. We believe this industry is resilient, given that over 75% of the jobs being addressed by U.S. residential trades are non-discretionary in nature. Relative to its competition, ServiceTitan has several notable advantages, including: 1) its market position as the leading end-to-end software platform built specifically for the trades, offering a one-stop-shop for all of a trade's business technology needs; 2) it provides a strong ROI to clients, which is confirmed by its over 95% gross revenue retention; 3) the company's scale provides a big data advantage, enabling ServiceTitan to use its industry-leading data to make continuous improvements to its product offerings and connect previously disparate processes for customers. We believe ServiceTitan is well positioned to drive at least high teens to 20%-plus organic revenue growth for many years driven by a combination of natural growth by its existing client base, driving increased adoption of add-on products for these existing customers, ongoing new product rollouts (today the company captures about 1% of customer transaction volume with the opportunity to reach approximately 2% if a customer adopts the full suite of solutions), new customer acquisition in existing trades (the platform is currently less than 10% penetrated), and expanding into new trades. The company has started to increase its margin profile, but we see a long runway left for additional margin expansion from roughly breakeven levels today up to 25%-plus operating margins over time. As the margin ramps, we expect strong free cash flow conversion, bolstering the company's balance sheet and providing flexibility around capital allocation. We believe that ServiceTitan is a high-quality business that should solidly compound its earnings, leading to attractive stock price returns over a multi-year period.

BSD Analysis:
Baron Asset Fund initiated a position in ServiceTitan, viewing it as the dominant software platform serving the trades industry with a massive $30 billion addressable market opportunity. The manager highlights ServiceTitan's competitive moats including its comprehensive end-to-end platform, exceptional 95%+ gross revenue retention, and big data advantages from scale. The investment thesis centers on multiple growth drivers: organic expansion from existing clients, cross-selling additional products, new customer acquisition in a <10% penetrated market, and expansion into new trade verticals. The company currently captures only 1% of customer transaction volume with potential to reach 2% with full suite adoption. Baron expects high-teens to 20%+ organic revenue growth sustainability over multiple years. The margin expansion opportunity is compelling, with the company transitioning from breakeven to a target of 25%+ operating margins as scale benefits materialize and free cash flow conversion strengthens.

Pitch Summary:
Olin Corp. (OLN) is one of the largest producers of chlor alkali chemicals and chlorine derivatives. The stock price fell during the quarter after posting weak Q3 results due to the significant impact from Hurricane Beryl and weaker-than-expected Q4 guidance. Despite trough operating conditions, longer-term dynamics in the business appear promising. Olin's balance sheet is strong, and capital allocation has been shareholder friendly. The company continues to provide diversification benefits to our existing commodity exposure.

BSD Analysis:
The manager presents Olin as a contrarian opportunity in the chemicals sector, viewing current weakness as cyclical rather than structural. As one of the largest chlor alkali producers, the company benefits from scale advantages and market positioning. Recent underperformance due to Hurricane Beryl impact and weak guidance appears to be temporary operational disruption. Despite trough operating conditions, longer-term industry dynamics remain favorable for chemical producers. Strong balance sheet provides financial flexibility to navigate cyclical downturns and invest in growth opportunities. Shareholder-friendly capital allocation demonstrates management's commitment to value creation. The company offers valuable diversification within the portfolio's commodity exposure while maintaining attractive risk-adjusted returns. Current valuation likely reflects overly pessimistic assumptions about the business cycle and recovery prospects.

Pitch Summary:
CVS Health Corp. (CVS) is a diversified healthcare company operating a Pharmacy Benefits Manager, health insurer, and retail stores and pharmacies. CVS underperformed inQ4 largely because of underperformance in the Aetna business due to unexpectedly higher costs, as well as the aforementioned decline in valuations across the peer group. Health insurance is a business that reprices yearly, so CVS should be able to recover its higher costs and restore margins within a year or two.

BSD Analysis:
The manager views CVS Health's recent underperformance as a temporary setback rather than a fundamental deterioration. The company's diversified healthcare model spanning PBM, insurance, and retail provides multiple revenue streams and defensive characteristics. Underperformance in the Aetna business due to higher costs appears to be a cyclical issue rather than structural. The annual repricing mechanism in health insurance allows companies to adjust for cost inflation and restore margins over time. This built-in pricing flexibility provides confidence in margin recovery within one to two years. The broader sector valuation decline creates additional opportunity for patient investors. CVS's integrated model should benefit from long-term healthcare trends and aging demographics. Current weakness presents an attractive entry point for a diversified healthcare leader.

Pitch Summary:
Elevance Health (ELV) is a large health insurer, and one of the largest commercial insurers. The company's shares came under pressure in the quarter following disappointing earnings and guidance as well as a broader negative turn in investor sentiment towards the group. Our overall thesis remains unchanged. We believe the company is undervalued due to skepticism around margins and growth. Higher medical spending is a long-term positive for the company.

BSD Analysis:
The manager maintains conviction in Elevance Health despite recent underperformance, viewing current weakness as a valuation opportunity. As one of the largest commercial insurers, the company benefits from scale advantages and market positioning. Recent share price pressure following disappointing earnings creates an attractive entry point for patient investors. Market skepticism around margins and growth appears overdone relative to the company's fundamental strengths. Higher medical spending trends, while pressuring near-term margins, actually represent long-term revenue growth opportunities for managed care companies. The manager's unchanged thesis suggests confidence in the company's ability to navigate current challenges and benefit from structural healthcare trends. Current undervaluation provides asymmetric risk-reward characteristics for disciplined value investors.

Pitch Summary:
Wells Fargo & Co. (WFC) is one of the nation's largest depositories and banks by assets. In addition to having a very high market share of deposits, they also enjoy high market share within the geographies they operate in such as western and southeastern US. In our opinion, WFC is one of the best franchises in banking with a history of very high returns on assets and equity. Performance over the quarter was strong due to potential deregulation with the onboarding of a new presidential regime and speculation that the company's asset cap could be lifted as early as 1H25.

BSD Analysis:
The manager presents Wells Fargo as a premier banking franchise with significant competitive advantages and regulatory tailwinds. The bank's substantial scale as one of the nation's largest depositories provides funding cost advantages and operational leverage. High market share in key geographic regions, particularly western and southeastern US, creates defensive moats and pricing power. Historical track record of very high returns on assets and equity demonstrates management's ability to generate superior profitability. The potential for regulatory relief under a new administration could unlock significant value, particularly if the asset cap is lifted. Deregulation would allow the bank to resume growth initiatives and optimize capital allocation. The combination of franchise quality, geographic dominance, and regulatory catalysts creates a compelling investment opportunity with multiple value drivers.

Pitch Summary:
General Motors Co. (GM) reported strong Q3 earnings results and improved free cash flow guidance. We like GM for many reasons. First, we believe GM has leading market positions in its main business segments. Second, the valuation is extremely attractive. Finally, we believe it is a strong free cash flow generator, and the management team is committed to repurchasing their undervalued shares.

BSD Analysis:
The manager outlines a compelling value proposition for General Motors based on multiple investment merits. Strong Q3 earnings and improved free cash flow guidance demonstrate operational execution and financial discipline. The company's leading market positions across key segments provide competitive advantages and pricing power. Extremely attractive valuation suggests significant upside potential relative to intrinsic value. Robust free cash flow generation supports sustainable capital returns and financial flexibility. Management's commitment to share repurchases at current undervalued levels should drive shareholder value creation. The combination of market leadership, attractive valuation, and shareholder-friendly capital allocation creates a strong risk-adjusted investment opportunity. Recent operational improvements validate the investment thesis and support continued outperformance.

Pitch Summary:
F5 (FFIV) sells application networking and security software, as well as data center appliances. The company's stock price rebounded sharply in the second half of the year after reporting a growing pipeline and better close rates in subscription software sales. F5 has no debt, trades at an attractive valuation, and is benefiting from an improving gross margin and lower operating expenses.

BSD Analysis:
The manager presents a bullish case for F5 based on operational improvements and financial strength. The company has demonstrated momentum in its subscription software transition with growing pipeline and improved close rates, indicating successful business model evolution. The debt-free balance sheet provides financial flexibility and reduces risk. Attractive valuation combined with margin expansion and operating leverage creates a compelling risk-adjusted opportunity. The shift toward subscription revenue should provide more predictable cash flows and higher recurring revenue quality. Management's focus on cost optimization is driving operational efficiency improvements. The rebound in stock price reflects improving fundamentals and market recognition of the company's strategic progress.

Pitch Summary:
Kosmos Energy Ltd. (KOS) is an independent exploration and production company focused offshore. In addition to its existing production, KOS has liquefied natural gas assets that are set to begin production in 2024 and a platform to acquire and operate additional offshore resources. Performance was negatively impacted by a report stating the company was interested in acquiring competitor Tullow Oil. The report was subsequently dismissed and shares rebounded modestly, though not enough to fully recover. We continue to believe Kosmos enjoys a competitive advantage due to the expertise required to explore, discover, and operate assets offshore. We also view the stock as being significantly undervalued as the stock doesn't fully reflect the value of the company's existing production.

BSD Analysis:
The manager maintains strong conviction in Kosmos Energy despite recent share price volatility driven by acquisition speculation around Tullow Oil. The investment thesis is built on Kosmos' specialized offshore exploration and production capabilities, which create a significant competitive moat due to the technical expertise and capital requirements needed for deepwater operations. The company is positioned for near-term production growth with new LNG assets coming online in 2024, providing both production diversification and exposure to higher-value natural gas markets. The manager views the current valuation as compelling, arguing that the market fails to properly value the company's existing production assets. Kosmos' offshore focus differentiates it from onshore shale producers and provides access to longer-duration, higher-margin reserves. The company's acquisition platform also offers potential for accretive growth through consolidation of offshore assets. This contrarian positioning reflects confidence in management's technical capabilities and the underlying asset quality despite recent market skepticism.

Pitch Summary:
Olin Corp. (OLN) is one of the largest producers of chlor alkali chemicals and chlorine derivatives. The stock price fell during the quarter after posting weak Q3 results due to the significant impact from Hurricane Beryl and weaker-than-expected Q4 guidance. Despite trough operating conditions, longer-term dynamics in the business appear promising. Olin's balance sheet is strong, and capital allocation has been shareholder friendly. The company continues to provide diversification benefits to our existing commodity exposure.

BSD Analysis:
The manager maintains a constructive view on Olin despite recent operational headwinds from Hurricane Beryl and weak quarterly guidance that pressured the stock. The investment case rests on the belief that current operating conditions represent a cyclical trough rather than structural deterioration, with longer-term business dynamics remaining favorable. The manager highlights Olin's strong balance sheet as a key defensive attribute, providing financial flexibility during challenging periods and supporting the company's shareholder-friendly capital allocation strategy. As one of the largest chlor alkali chemical producers, Olin benefits from scale advantages in a consolidated industry serving essential end markets. The manager also values Olin's role as a portfolio diversifier within their existing commodity exposure, suggesting it provides uncorrelated returns relative to other cyclical holdings. This contrarian positioning reflects confidence in the company's ability to generate strong cash flows once operating conditions normalize.

Pitch Summary:
Adient PLC (ADNT), domiciled in England (with corporate offices in Plymouth, MI; Milwaukee, WI; Burscheid, Germany; and Shanghai, China), is one of the world's largest suppliers of seating systems and a leading components supplier for automotive interiors. The company's shares came under pressure in the quarter following the most recent quarter's earnings report, which pointed to lower-than-expected sales guidance. We believe Adient is an attractive company with a leading global position in automotive seating, a market segment that fairs well as the auto industry incorporates more advanced technologies. Adient's business is highly defensible, due to long product cycles, its global just-in-time infrastructure, and well-established customer relationships.

BSD Analysis:
The manager maintains a bullish stance on Adient despite recent share price weakness following disappointing sales guidance. The investment thesis centers on Adient's dominant market position as one of the world's largest automotive seating suppliers, which the manager views as strategically advantageous as the industry evolves toward advanced technologies. The company's competitive moat is built on several defensive characteristics including long product development cycles that create switching costs, a global just-in-time manufacturing infrastructure that's difficult to replicate, and deeply entrenched customer relationships with major automakers. The manager appears to view the recent earnings-driven selloff as a temporary setback rather than a fundamental deterioration of the business model. This contrarian positioning suggests confidence in the company's ability to navigate near-term headwinds while benefiting from longer-term automotive industry trends. The global footprint and established market leadership provide operational leverage as automotive production recovers and new technology adoption accelerates.

Pitch Summary:
General Motors Co. (GM) reported strong Q3 earnings results and improved free cash flow guidance. We like GM for many reasons. First, we believe GM has leading market positions in its main business segments. Second, the valuation is extremely attractive. Finally, we believe it is a strong free cash flow generator, and the management team is committed to repurchasing their undervalued shares.

BSD Analysis:
The fund presents a compelling bull case for General Motors based on strong recent fundamentals and attractive valuation metrics. The investment thesis rests on three key pillars: market leadership, valuation, and capital allocation. GM's leading positions in key segments, particularly trucks and SUVs in North America, provide pricing power and sustainable competitive advantages. The manager emphasizes 'extremely attractive' valuation levels, suggesting the stock trades at a significant discount to intrinsic value despite improving operational performance. Strong free cash flow generation capability provides financial flexibility and supports sustainable shareholder returns through share repurchases. Management's commitment to buying back undervalued shares demonstrates capital allocation discipline and confidence in the business outlook. The improved free cash flow guidance following Q3 earnings indicates management's confidence in sustained cash generation ability. GM's focus on electric vehicle transition while maintaining strength in traditional segments positions the company well for industry evolution. The combination of market leadership, compelling valuation, strong cash flows, and shareholder-friendly capital allocation creates an attractive risk-adjusted return profile in the automotive sector.

Pitch Summary:
F5 (FFIV) sells application networking and security software, as well as data center appliances. The company's stock price rebounded sharply in the second half of the year after reporting a growing pipeline and better close rates in subscription software sales. F5 has no debt, trades at an attractive valuation, and is benefiting from an improving gross margin and lower operating expenses.

BSD Analysis:
The fund highlights F5's strong operational momentum following a sharp stock price recovery in the second half of 2024. The investment thesis is supported by improving fundamentals including a growing sales pipeline and better conversion rates in subscription software sales, indicating successful execution of the company's software transition strategy. F5's debt-free balance sheet provides financial flexibility and reduces execution risk during this business model transformation. The manager emphasizes attractive valuation levels despite the recent recovery, suggesting the stock remains undervalued relative to its improving prospects. Expanding gross margins and declining operating expenses demonstrate operational leverage as the company scales its software business. The shift toward subscription-based revenue should provide more predictable cash flows and higher recurring revenue visibility. F5's positioning in application networking and security software aligns with growing enterprise demand for multi-cloud application delivery and cybersecurity solutions. The combination of improving fundamentals, strong balance sheet, and attractive valuation creates a compelling risk-adjusted return profile.

Pitch Summary:
Samsung (005930 KS) is a diversified technology company manufacturing semiconductors, display panels, random-access, consumer electronics, and appliances. Samsung's stock price declined in Q4 due to several factors, including weakening demand for consumer electronics, continued challenges in the semiconductor industry, and supply chain disruptions. As the largest company in the three-player DRAM (dynamic random-access memory) oligopoly with 43% market share, we believe Samsung is well positioned as DRAM demand is expected to grow high-single-digits over time, driven by growth in AI, cloud computing, and internet connected devices.

BSD Analysis:
The fund maintains a bullish outlook on Samsung despite recent headwinds from weakening consumer electronics demand and semiconductor industry challenges. The investment thesis centers on Samsung's dominant position in the DRAM oligopoly, where it controls 43% market share in a three-player market structure. This oligopolistic positioning provides significant pricing power and barriers to entry that should drive long-term profitability. The manager expects DRAM demand to grow at high-single-digit rates driven by secular trends in artificial intelligence, cloud computing expansion, and proliferation of internet-connected devices. These technology megatrends should create sustained demand for memory products, benefiting Samsung's core semiconductor business. The fund appears to view current weakness as cyclical rather than structural, presenting an attractive entry point into a market leader. Samsung's diversified technology portfolio spanning semiconductors, displays, and consumer electronics provides multiple growth vectors. The company's scale advantages in manufacturing and R&D investment should help maintain its competitive moat in memory semiconductors.

Pitch Summary:
CVS Health Corp. (CVS) is a diversified healthcare company operating a Pharmacy Benefits Manager, health insurer, and retail stores and pharmacies. CVS underperformed inQ4 largely because of underperformance in the Aetna business due to unexpectedly higher costs, as well as the random-access in valuations across the peer group. Health insurance is a business that reprices yearly, so CVS should be able to recover its higher costs and restore margins within a year or two.

BSD Analysis:
The fund maintains a constructive view on CVS Health despite recent underperformance attributed to higher-than-expected costs in the Aetna insurance segment and broader sector valuation compression. The manager's thesis relies on the cyclical nature of health insurance pricing, emphasizing that annual repricing mechanisms should allow CVS to recover elevated medical costs and restore margin profiles within 1-2 years. This reflects confidence in management's ability to adjust pricing to reflect underlying cost trends. The diversified business model spanning pharmacy benefits management, health insurance, and retail pharmacy operations provides multiple revenue streams and cross-selling opportunities. The fund appears to view current weakness as temporary margin pressure rather than structural deterioration. CVS's integrated healthcare platform positions it well to benefit from the shift toward value-based care and population health management. The manager's timeline expectation of margin recovery within two years suggests they view this as a near-term catalyst for outperformance.

Pitch Summary:
Elevance Health (ELV) is a large health insurer, and one of the largest commercial insurers. The company's shares came under pressure in the quarter following disappointing earnings and guidance as well as a broader negative turn in investor sentiment towards the group. Our overall thesis remains unchanged. We believe the company is undervalued due to skepticism around margins and growth. Higher medical spending is a long-term positive for the company.

BSD Analysis:
The fund maintains a bullish stance on Elevance Health despite recent underperformance driven by disappointing earnings and negative sector sentiment. The manager views the current weakness as a temporary setback rather than a fundamental deterioration in the investment thesis. The core argument centers on the company being undervalued due to market skepticism around margin sustainability and growth prospects. Importantly, the fund sees higher medical spending as a structural tailwind rather than a headwind, suggesting they believe ELV can effectively price for increased utilization. As one of the largest commercial insurers, ELV benefits from scale advantages and pricing power in contract negotiations. The manager's conviction appears intact despite near-term volatility, indicating they view current levels as an attractive entry point. This contrarian positioning reflects confidence in the company's ability to navigate cyclical pressures while benefiting from long-term healthcare demand growth.

Pitch Summary:
This quarter, we initiated a position in CyberArk Software Ltd., an identity security platform that focuses primarily on privileged access management (PAM). CyberArk's technology prevents bad actors from stealing and exploiting the credentials of "superuser" accounts like IT administrators, cybersecurity managers, and network administrators. CyberArk detects, stores, and manages all the privileged credentials in an organization, monitors the critical IT systems, and helps contain the damage a hacker can cause if they breach a corporate network. The increasing frequency and severity of ransomware attacks, heightening geopolitical tension, and stricter regulatory disclosure requirements for public companies that experience breaches have all made PAM a higher priority IT spend category. CyberArk is the market leader in the PAM sector, with over 25% share. The company also recently closed its acquisition of Venafi, an identity security vendor that helps companies secure machine identities, such as digital certificates and SSH keys, that facilitate computer-to-computer communication. The deal, which is accretive to CyberArk's already healthy margins, makes CyberArk the most comprehensive identity solution in the market and expands the cross-sell opportunity. We see a long runway for organic growth, cross-sell synergy, and margin expansion, all of which should enable free cash flow per share to compound at an attractive rate and bode well for the stock.

BSD Analysis:
The manager presents a compelling bull case for CyberArk based on the critical importance of privileged access management in today's threat environment. CyberArk's market leadership position with over 25% share in PAM provides competitive advantages and pricing power. The increasing frequency of ransomware attacks, geopolitical tensions, and regulatory requirements create sustained demand tailwinds for cybersecurity solutions. The recent Venafi acquisition enhances CyberArk's comprehensive identity security platform while being accretive to margins and expanding cross-selling opportunities. The company's technology addresses the most critical security vulnerabilities by protecting superuser credentials that represent the highest-value targets for cybercriminals. CyberArk's ability to detect, store, manage, and monitor privileged credentials while containing breach damage creates significant customer value and switching costs. The combination of organic growth, cross-sell synergies, and margin expansion supports attractive free cash flow per share compounding.

Pitch Summary:
In the most recent quarter, we initiated a position in LPL Financial Holdings Inc. LPL is the largest independent broker-dealer (IBD) in the U.S. and supports independent financial advisors who run their own practices. LPL is a beneficiary of secular growth in the demand for financial advice, and a shift among financial advisors away from large banks (also known as wirehouses) towards independent models. As the largest IBD, LPL is well placed to continue taking share in this market, as it can offer advisors high-quality technology, a range of business models, and best-in-class incentives. Additionally, LPL is a beneficiary of higher interest rates because it earns a yield on the uninvested cash balances held in client accounts, although it runs a capital-light business. LPL's turnkey platform helps independent financial advisors run their practices more efficiently and serve their clients more effectively. Traditionally, most financial advisors worked as employees of wirehouses but over time, advisors have begun to favor independent models in which they become the owner-operator of their own advisory practice. Advisors are favoring this independence as it allows them to both retain far more of the revenue they generate and affords them greater flexibility over how to run their business. LPL is also winning with independent advisors at other IBDs, which are smaller and less able to invest in the capabilities that LPL is developing. LPL invests more than its competitors in developing the technology and capabilities that allow advisors to run their practices efficiently. This technology helps simplify and consolidate mission-critical functions such as account opening, client relationship management, trading and portfolio rebalancing, and reporting. Beyond technology, LPL has innovated a range of different advisor models that allow the advisor to outsource as much of their practice operations as they choose. This provides advisors with a high degree of flexibility as they make the transition to independence and means that LPL can position itself as an attractive IBD to a wide range of advisors. The combination of these benefits enables LPL to continue taking share and recruiting more assets onto its platform. Over time, the company has improved its organic growth rate of Net New Assets from 2% to 5% to 7% to 10%. Besides asset recruitment, LPL is also a beneficiary of rising asset prices, which grow its base of assets under management. We believe that low teens asset growth can generate similar growth in gross profit, while improving margins and significant share repurchases contribute to earnings per share growth at a mid-high teens rate for an extended period.

BSD Analysis:
The manager presents a strong bull case for LPL Financial based on secular trends favoring independent financial advisory models over traditional wirehouses. LPL's market leadership position as the largest independent broker-dealer provides competitive advantages through superior technology investment and comprehensive advisor support platforms. The structural shift from employee-advisor models to owner-operator independence creates a sustained tailwind for LPL's business model. The company's accelerating organic growth trajectory from 2% to 10% Net New Assets demonstrates effective market share capture. LPL's technology platform consolidates critical advisor functions while offering flexible outsourcing options, creating switching costs and advisor loyalty. Higher interest rate environments provide additional revenue from uninvested cash balances while maintaining capital-light operations. The combination of low-teens asset growth, margin expansion, and aggressive share repurchases supports mid-to-high teens earnings per share growth expectations.

Pitch Summary:
This quarter, we initiated a position in Arista Networks, Inc., a leading provider of high-performance networking solutions for data centers, cloud providers, and enterprises. Arista's advanced switching and routing platforms, powered by its proprietary software, offer enhanced scalability, automation, and flexibility. The company generates revenue through hardware sales bundled with software and post-contract support services, serving major cloud players like Microsoft and Meta, along with a growing range of enterprise customers. The buildout of AI infrastructure is significantly more network-intensive than conventional data centers, as large numbers of compute systems need to interact with each other via backend networking switches. Additionally, these systems must connect to end users, similar to traditional data centers, creating a front-end networking opportunity. This dual requirement – backend for compute communication and frontend for user connectivity – creates a massive opportunity for networking solutions. Historically, the industry relied on InfiniBand networking exclusively provided by NVIDIA until 2024. However, a shift toward Ethernet-based networking is now underway. Arista, as the leading systems provider for complex networking workloads in traditional data centers at Microsoft and Meta, is well positioned to capitalize on this transition. Furthermore, as AI clusters expand, the complexity and dollar intensity of networking grows non-linearly, implying faster growth than compute components. The key debate surrounding Arista is its AI-driven revenue potential in 2025. Our proprietary bottom-up analysis – factoring in AI chip shipments, backend networking for model training, and frontend infrastructure for user connectivity – suggests significant upside to current guidance and Street expectations. Beyond AI, Arista is poised to gain market share in the broader enterprise segment, taking business from larger incumbents. With its leadership in Ethernet switching and best-in-class software, Arista is well positioned to benefit from secular growth trends and long-term tailwinds, offering a compelling runway for revenue expansion and healthy stock returns.

BSD Analysis:
The manager presents a compelling bull case for Arista Networks based on the structural shift in AI infrastructure networking requirements. Arista's competitive advantage stems from its proprietary software-driven platforms and established relationships with major cloud providers like Microsoft and Meta. The transition from NVIDIA's InfiniBand to Ethernet-based networking creates a significant market opportunity that Arista is uniquely positioned to capture. The manager's proprietary analysis suggests AI-driven revenue potential exceeds current Street expectations for 2025. The non-linear growth in networking complexity and dollar intensity as AI clusters expand provides a favorable operating leverage dynamic. Beyond AI, Arista's market share gains in enterprise networking from larger incumbents offer additional growth vectors. The combination of best-in-class software capabilities and Ethernet switching leadership positions the company for sustained outperformance.

Pitch Summary:
NVIDIA Corporation is a semiconductor and systems company specializing in compute and networking systems for accelerated computing. Its unmatched leadership in AI infrastructure, spanning GPUs, systems, software and networking solutions, continues to drive robust performance. During the quarter, NVIDIA delivered solid results, with record data center revenues amid ongoing demand for its last generation Hopper products, while maintaining a high-confidence outlook for sustained growth in AI infrastructure. Though there are growing debates around the continued buildout of training infrastructure, the advent of reasoning models, which employ chain-of-thought architectures requiring multiple passes through the model, is expected to significantly increase compute intensity in both training and inference. This reinforces our confidence in sustained demand for NVIDIA's compute infrastructure over the medium term, as both training and inference scaling will require high-performance systems. In multiple public appearances, NVIDIA's management has reiterated the faster-than-expected ramp of its Blackwell next generation products, despite rumors to the contrary. Moreover, management has confirmed that gross margins should stabilize round the 75% level once Blackwell products are fully scaled, and that future generations (e.g., Rubin) will not face similar margin pressure during ramp-up. NVIDIA's growing traction in AI networking through Ethernet switches adds another strong pillar to its growth story. The ongoing transition from a chip-only model to a systems and software-driven business further strengthens NVIDIA's long-term profitability. Given its leadership in AI compute, networking, and systems, combined with a clear line of sight to sustained AI infrastructure demand, we remain confident in holding our position as NVIDIA continues to shape the future of accelerated computing.

BSD Analysis:
The manager maintains a strong bull thesis on NVIDIA based on its dominant position across the entire AI infrastructure stack. NVIDIA's competitive moat extends beyond GPUs to encompass systems, software, and networking solutions, creating multiple revenue streams. Record data center revenues demonstrate sustained demand for current-generation Hopper products while next-generation Blackwell products are ramping faster than expected. The emergence of reasoning models requiring multiple computational passes significantly increases compute intensity, supporting long-term demand visibility. Management's guidance on 75% gross margin stabilization and reduced margin pressure for future generations indicates strong profitability sustainability. The transition from chip-only to systems and software business model enhances long-term value creation. NVIDIA's expansion into AI networking through Ethernet switches provides additional growth vectors beyond traditional compute.