Investment Pitches

Pitch Summary:
AppLovin, which operates a software platform for advertisers to enhance the marketing and monetization of their content — particularly within mobile apps — was also a notable detractor, on fears of AI disruption and rising competition from Meta. We see AppLovin as an early adopter and longer-term beneficiary of AI, as greater gaming and application development should increase the need for discovery. We also believe recent competitive concerns are overblown as the company has successfully competed against Meta for years and there are no signs it is being displaced, particularly as it relates to AppLovin's higher-value impressions.

BSD Analysis:
ClearBridge maintains a bullish stance on AppLovin despite recent market concerns about AI disruption and Meta competition. The managers view AppLovin as well-positioned to benefit from AI adoption, arguing that increased gaming and app development will drive greater demand for discovery services. They dismiss competitive threats from Meta as overblown, noting AppLovin's successful track record competing against the social media giant. The fund emphasizes AppLovin's competitive advantage in higher-value ad impressions. While the stock was a detractor during the quarter due to market fears, the managers appear confident in the company's long-term positioning within the mobile advertising ecosystem. Their conviction suggests they view current weakness as a temporary market overreaction rather than fundamental deterioration.

Pitch Summary:
Trilogy Metals Inc. (TMQ): Trilogy Metals is a metal exploration and development company. It holds a 50% interest in Ambler Metals LLC, which owns the Upper Kobuk Mineral Projects in northwestern Alaska's Ambler Mining District, one of the most prospective copper-dominant districts in the world. Trilogy Metals is part of our portfolio's large exposure to metals and mining where we see a combination of strong fundamental outlook and low valuation. Copper is the metal that connects everything in an electrified, Al-driven world, and it runs through every wire, every motor, every data center. The supply of many metals is insufficient to meet future demand, and prices are too low to give an incentive for new development. We believe prices must rise to levels that make development projects economical, and the companies that can deliver supply into that environment will benefit. In Q1 2026, Trilogy's shares declined mainly as a result of a post-spike hangover from the October 2025 catalyst in which the U.S. government announced a $35.6 million strategic investment for approximately a 10% equity stake in the company. A binding letter of intent with the U.S. Department of War was also amended to extend the transaction completion date to May 31, 2026.

BSD Analysis:
Old West positions Trilogy Metals as a strategic play on copper supply constraints in an increasingly electrified, AI-driven economy. The manager emphasizes the company's 50% interest in the Upper Kobuk Mineral Projects located in Alaska's Ambler Mining District, described as one of the world's most prospective copper-dominant regions. The investment thesis centers on copper's critical role as the essential metal connecting all electrical infrastructure, from wires and motors to data centers supporting AI operations. Old West argues that current metal supply is insufficient to meet future demand, with prices too low to incentivize new development projects. The manager believes prices must rise to economically viable levels for development, positioning companies like Trilogy to benefit significantly. Despite Q1 2026 share price decline following the October 2025 catalyst, Old West views the U.S. government's $35.6 million strategic investment for approximately 10% equity stake as validation of the project's strategic importance. The amended binding letter of intent with the U.S. Department of War, extended to May 31, 2026, suggests continued government interest in domestic copper supply security. Old West sees Trilogy as positioned to deliver critical copper supply into a structurally tight market driven by electrification and AI infrastructure demands.

Pitch Summary:
SS&C Technologies Hldgs (SSNC): SS&C is the world's largest hedge fund and private equity administrator, as well as the largest mutual fund transfer agency. They provide software and technology-enabled services to financial services and healthcare companies, covering securities accounting, front-office functions like trading and modeling, middle-office functions like portfolio management and reporting, and back-office functions like accounting, reconciliation, compliance, and tax reporting. In Q1 2026, although the business performed well, the stock was down mainly due to multiple compression. Analysts lowered price targets specifically citing software multiple compression, not deteriorating fundamentals.

BSD Analysis:
Old West presents SS&C Technologies as a dominant player in financial services technology with leading market positions as the world's largest hedge fund and private equity administrator and largest mutual fund transfer agency. The manager emphasizes the company's comprehensive software and technology-enabled services spanning the entire investment management value chain from front-office trading and modeling to back-office accounting and compliance. Despite strong business performance in Q1 2026, the stock declined due to multiple compression affecting the broader software sector rather than company-specific fundamental deterioration. Analysts lowered price targets citing software multiple compression as the primary driver, not operational concerns. Old West views this as a temporary valuation reset in a high-quality business with strong market positions and recurring revenue characteristics. The company's dominant position in critical financial infrastructure provides defensive characteristics and pricing power across economic cycles. SS&C's comprehensive platform serving hedge funds, private equity, and mutual funds creates significant switching costs and customer stickiness. The manager appears to view the current multiple compression as creating an attractive entry point for a market-leading financial technology company with strong competitive moats and recurring revenue streams.

Pitch Summary:
Bruker Biosciences Corp. (BRKR): Bruker makes high-performance scientific instruments and analytical and diagnostic solutions that enable scientists to explore life and materials at molecular, cellular, and microscopic levels. Their product portfolio spans magnetic resonance, mass spectrometry, X-ray, microscopy, molecular spectroscopy, and software solutions, serving life science, biopharma, applied research, microbiology, diagnostics, and nanotechnology. During Q1 2026, Bruker stock declined due to continued headwinds from US academic and government funding cuts, with bookings down in the high teens percentage for the full year, and management guided for a mid-single-digit organic revenue decline in Q1 2026 specifically due to this pressure. Old West's investment thesis is structured on the idea that AI will lead way to a period of scientific advancement comparable to the Renaissance or Industrial Revolution, and we believe that the companies that help bridge AI's intelligence with the physical world's measurable reality are positioned at the next frontier. Bruker's NMR spectrometers, mass spectrometers, and atomic force microscopes are the sensors that translate the physical world into data AI can work with.

BSD Analysis:
Old West maintains a bullish long-term thesis on Bruker despite near-term headwinds from US academic and government funding cuts that pressured Q1 2026 performance. The manager views Bruker's comprehensive portfolio of scientific instruments spanning magnetic resonance, mass spectrometry, X-ray, microscopy, and molecular spectroscopy as critical infrastructure for the AI revolution. The investment thesis centers on Bruker's instruments serving as essential sensors that translate physical world phenomena into data that AI systems can process and analyze. While bookings declined in the high teens percentage and management guided for mid-single-digit organic revenue decline in Q1 2026, Old West believes this represents a temporary cyclical downturn rather than structural deterioration. The manager positions Bruker at the intersection of AI and physical sciences, arguing that the company's instruments will become increasingly valuable as AI drives scientific advancement comparable to the Renaissance or Industrial Revolution. Old West views the current funding pressures as creating an attractive entry point for a company positioned to benefit from the long-term convergence of artificial intelligence and scientific research. The thesis emphasizes Bruker's role in enabling AI to interface with measurable physical reality across life sciences, materials science, and nanotechnology applications.

Pitch Summary:
Suncor Energy Inc. (SU): Suncor is Canada's leading integrated energy company, with operations spanning oil sands mining and in situ production, upgrading offshore production, refining, marketing and trading, and the nationwide Petro-Canada retail and wholesale network. During Q1 2026, SU was driven higher mainly due to the increase in the price of oil. On top of the macro, Suncor management is focused on returning cash to shareholders rather than chasing volume growth, which is exactly the kind of capital discipline the thesis rewards. Suncor committed to returning over CAD $23 billion to shareholders through dividends and buybacks at $65 WTI over the next three years. Annual share repurchases were increased by over 20% to a projected $4 billion for 2026, with management targeting a reduction of outstanding shares by more than 25% between 2023 and 2028.

BSD Analysis:
Old West presents Suncor as Canada's leading integrated energy company with a comprehensive business model spanning oil sands production, refining, marketing, and retail operations through the Petro-Canada network. The manager particularly values management's capital allocation discipline, emphasizing cash returns to shareholders over volume growth, which aligns with Old West's investment philosophy. Suncor's commitment to return over CAD $23 billion to shareholders through dividends and buybacks over three years demonstrates significant capital discipline at $65 WTI oil prices. The company's aggressive share repurchase program, increased by over 20% to $4 billion annually for 2026, targets a substantial reduction of outstanding shares by more than 25% between 2023 and 2028. This shareholder-friendly approach, combined with the integrated business model that provides downstream earnings stability, positions Suncor to generate substantial returns during periods of elevated oil prices. The manager views the company's focus on capital discipline rather than growth capital expenditure as a key differentiator in the energy sector. Suncor's integrated operations provide both upstream leverage to commodity prices and downstream stability through refining and retail operations.

Pitch Summary:
Tidewater Inc. (TDW): Tidewater has the largest fleet of offshore support vessels in the industry and is the oldest and most experienced provider of marine support services to the offshore oil and gas sector. Today over 90% of their fleet works internationally across more than 60 countries. Their core capabilities include towing and anchor handling for mobile offshore drilling units, transporting supplies and personnel, and support services critical to offshore exploration and production activities from initial exploration all the way through field abandonment and site restoration. In Q1 2026, TDW was driven higher mainly due to the increase in the price of oil. When oil surges to $118 a barrel, every oil company in the world accelerates their offshore drilling and production activity, which means more demand for Tidewater's vessels, and more pricing power on day rates. On top of that, the company executed well. Their most recent earnings came in at $4.41 per share against an estimate of just $0.77, a 472% earnings surprise.

BSD Analysis:
Old West highlights Tidewater's dominant market position as the largest offshore support vessel operator globally, with over 90% of their fleet operating internationally across more than 60 countries. The manager emphasizes the company's comprehensive service offering spanning the entire offshore oil and gas lifecycle, from initial exploration through field abandonment. The investment thesis centers on Tidewater's leverage to offshore drilling activity, which accelerates dramatically when oil prices surge to levels like the $118 per barrel reached in Q1 2026. This creates both increased demand for the company's vessels and enhanced pricing power on day rates. The company's operational execution was exceptional, delivering earnings of $4.41 per share versus estimates of $0.77, representing a remarkable 472% earnings surprise. Old West views Tidewater as a pure play on offshore energy activity with significant operating leverage to commodity price cycles. The company's established global presence and comprehensive service capabilities position it to capture outsized returns during periods of elevated offshore drilling activity.

Pitch Summary:
Canadian Natural Resources Limited (CNQ): Canadian Natural Resources is the largest oil and the second-largest natural gas producer in Canada. Their asset mix spans natural gas, light crude, heavy crude, bitumen, and synthetic crude oil, a low-cost, long-life physical asset base producing the energy that the world (and increasingly, AI infrastructure) runs on. During Q1 2026, CNQ was driven higher mainly due to the increase in the price of oil. Brent started the year around $61 a barrel and finished the quarter at $118, the largest quarterly price increase on an inflation-adjusted basis in data going back to 1988. The catalyst was military action in the Middle East on February 28th and the subsequent de facto closure of the Strait of Hormuz. On top of the macro, CNQ executed well. They completed a strategic acquisition in Q1 that lifted their full-year production outlook, and reported record production while beating profit estimates. They extended their dividend growth streak to 26 years, boosted the quarterly dividend, launched a new share buyback program, and tightened their free cash flow return policy, all of which signaled management confidence in the durability of the cash generation story.

BSD Analysis:
Old West presents a compelling bull case for Canadian Natural Resources, emphasizing the company's position as Canada's largest oil producer with a diversified asset base spanning multiple crude types. The manager highlights CNQ's exceptional operational execution during Q1 2026, including a strategic acquisition that boosted production outlook and record production levels that exceeded profit estimates. The company's capital allocation discipline stands out, with management extending their dividend growth streak to 26 years while launching new buyback programs and tightening free cash flow return policies. The geopolitical catalyst that drove oil from $61 to $118 per barrel provided significant tailwinds, but the underlying thesis centers on CNQ's low-cost, long-life asset base positioned to benefit from growing energy demand, particularly from AI infrastructure. The manager views the company's consistent cash generation capabilities and shareholder-friendly capital allocation as key differentiators in the energy sector. CNQ's ability to maintain operational excellence while returning substantial cash to shareholders reinforces the investment thesis during a period of elevated commodity prices.

Pitch Summary:
Gartner is a global leader in research services, with a long history of delivering valuable insights and data to business and technology leaders. In our view, the company has the best brand in IT research, supported by its scale and a compelling customer value proposition. These advantages have driven a long history of strong organic growth and robust free-cash-flow conversion. The stock price has declined meaningfully from recent highs due to investor concerns surrounding AI-related disruption. We believe these concerns are overstated. In our view, Gartner is well-positioned to reaccelerate organic growth due to continued high customer engagement and the large opportunity to sell to new and existing customers. We took advantage of the opportunity to buy shares in this well-managed company at a bargain price.

BSD Analysis:
Harris Associates initiated a position in Gartner, viewing the AI-related stock decline as an attractive entry opportunity. The manager emphasizes Gartner's dominant market position as the leading IT research provider, supported by strong brand recognition and scale advantages. The company's compelling customer value proposition has historically driven strong organic growth and robust free cash flow conversion. High customer engagement levels and significant cross-selling opportunities to existing and new clients support future growth potential. Harris Associates believes AI disruption concerns are overblown, creating a temporary valuation disconnect. The manager views current management as highly capable and sees the recent price decline as offering shares at a bargain valuation. The combination of market leadership, growth potential, and attractive valuation makes Gartner an compelling addition to the portfolio.

Pitch Summary:
Capital One Financial was a detractor during the quarter. The U.S.-headquartered consumer finance company's stock weakness was partially driven by President Trump's call for a 10% cap on credit card interest rates and partially driven by its earnings report. Capital One reported solid revenue but higher-than-expected marketing expenses. While some of this is expected with seasonality, we are tracking growth in spending and returns on those investments carefully in the coming quarters. Regarding the 10% cap, we view this as highly unlikely and note that this would require a law to be passed by Congress. We continue to view Capital One as a disciplined, tech-forward and well-capitalized company with a long runway for future growth.

BSD Analysis:
Harris Associates maintains a bullish stance on Capital One despite recent political and operational headwinds. The manager dismisses concerns about a potential 10% credit card interest rate cap, viewing it as highly unlikely given the legislative requirements. COF reported solid revenue performance, though higher marketing expenses created near-term margin pressure. The manager acknowledges seasonal factors in marketing spend but will monitor returns on these investments closely. Harris Associates emphasizes Capital One's disciplined approach to risk management and strong technology capabilities as key differentiators. The company's well-capitalized position provides financial flexibility for growth investments. The manager sees a long runway for future growth despite current challenges. The combination of technological advantages and disciplined capital allocation supports the long-term investment thesis.

Pitch Summary:
IQVIA Holdings was a detractor during the quarter. The U.S.-headquartered provider of clinical research services, analytics, and solutions saw the price of its stock decline on AI-related fears despite reporting an in-line fourth quarter and 2026 outlook. Management believes the demand environment has stabilized and leading growth indicators, such as bookings and win rates, are encouraging. They expect IQVIA to be a net beneficiary of AI due to proprietary data, domain expertise, and regulatory and compliance barriers, among other factors. We continue to view IQVIA as a stable, long-cycle business that will benefit from a recovery in client spending in the coming quarters.

BSD Analysis:
Harris Associates remains bullish on IQVIA despite recent AI-related concerns, viewing the company as well-positioned to benefit from artificial intelligence adoption. The manager highlights IQVIA's competitive advantages including proprietary data assets, deep domain expertise, and regulatory barriers that create defensive moats. Management's assessment of a stabilized demand environment with improving bookings and win rates suggests business momentum is building. The company reported in-line Q4 results and 2026 guidance, indicating steady execution despite market headwinds. IQVIA's long-cycle business model provides revenue visibility and stability in volatile markets. The manager expects client spending recovery to drive future growth acceleration. Harris Associates views current AI disruption fears as creating an attractive valuation opportunity for a fundamentally strong business.

Pitch Summary:
Salesforce was a detractor during the quarter. The U.S.-headquartered software company's stock price declined as it contended with market fears over AI disruption. Quarterly results have remained strong and margins continue to improve. Management emphasized they expect subscription revenue growth to accelerate in the second half of 2026 as Agentforce becomes a more meaningful part of the business. We applaud management's commitment to share repurchase at recent market prices, including their recently announced $50 billion buyback authorization and $25 billion accelerated share repurchase plan. We believe these capital allocation actions position Salesforce to emerge stronger from today's AI-related stock price drawdown.

BSD Analysis:
Despite recent underperformance, Harris Associates maintains a bullish view on Salesforce, viewing the AI-related stock decline as a temporary setback. The manager emphasizes that quarterly results remain strong with continued margin improvement, indicating solid underlying business fundamentals. Management's expectation for subscription revenue acceleration in H2 2026, driven by Agentforce adoption, provides a clear growth catalyst. The substantial $50 billion share buyback authorization and $25 billion accelerated repurchase program demonstrate management's confidence and commitment to shareholder returns. Harris Associates views the current AI disruption fears as overblown, creating an attractive entry opportunity. The combination of strong operational performance and aggressive capital allocation should position CRM to benefit when market sentiment improves. The manager sees the current valuation as attractive given the company's long-term growth prospects.

Pitch Summary:
Targa Resources was a contributor during the quarter. The U.S.-headquartered midstream company's stock price rose as it benefited from geopolitical tensions and posted strong fourth-quarter 2025 results. Targa's earnings before interest, tax, depreciation, and amortization (EBITDA) grew by 20% compared to 4% year-over-year growth in total Permian oil production. This outperformance was driven by a confluence of factors, including: oil production on the company's acreage outpacing overall Permian growth, superior gas production, and Targa winning a solid share of new contracts. We appreciate management's guidance towards another year of double-digit volume growth and increased EBITDA, which can help the stock sustain strong performance over the long term.

BSD Analysis:
Harris Associates is bullish on Targa Resources, highlighting the midstream company's exceptional operational performance in the Permian Basin. TRGP delivered impressive 20% EBITDA growth, significantly outpacing the 4% growth in total Permian oil production, demonstrating superior execution and market positioning. The company's outperformance stems from multiple factors including above-average production growth on its acreage, superior gas production capabilities, and success in winning new contracts. Management's guidance for continued double-digit volume growth and EBITDA expansion provides visibility into sustained performance. The company has benefited from geopolitical tensions affecting energy markets. Targa's strong Q4 2025 results validate the manager's investment thesis. The combination of operational excellence and favorable market positioning supports long-term value creation potential.

Pitch Summary:
ConocoPhillips was a contributor during the quarter. The U.S.-headquartered oil and gas company's stock price rose as it benefitted from a favorable macroeconomic backdrop and results consistent with our expectations. Rising energy prices due to geopolitical conflict were the most significant driver of the stock performance. We continue to believe Conoco has some of the industry's highest quality assets managed by a team of strong operators and capital allocators.

BSD Analysis:
Harris Associates maintains confidence in ConocoPhillips as a premier independent oil and gas producer. The manager emphasizes the company's high-quality asset base, which provides competitive advantages in the energy sector. Strong operational management and disciplined capital allocation are highlighted as key differentiators for COP. The company has benefited from rising energy prices driven by geopolitical tensions, demonstrating its leverage to commodity price cycles. Results have met the manager's expectations, indicating consistent execution by management. The favorable macroeconomic environment for energy companies has supported performance. Harris Associates views COP's combination of quality assets and management expertise as sustainable competitive advantages in the volatile energy sector.

Pitch Summary:
Phillips 66 was a contributor during the quarter. The U.S.-headquartered downstream energy company's stock price rose as it benefited from higher crack spreads (the difference in price between crude oil and refined petroleum), heightened geopolitical risk and solid fourth-quarter 2025 earnings. Fundamental results have been encouraging, and we believe PSX is set to be a major beneficiary of rising crack spreads. We continue to see PSX as a durably advantaged energy company focused on returning cash flow to shareholders.

BSD Analysis:
Harris Associates maintains a bullish stance on Phillips 66, viewing it as a durably advantaged downstream energy company. The manager highlights PSX's ability to benefit from higher crack spreads, which represent the margin between crude oil costs and refined petroleum prices. The company's solid Q4 2025 earnings and encouraging fundamental results support the investment thesis. The manager emphasizes PSX's focus on returning cash flow to shareholders, indicating strong capital allocation discipline. Rising geopolitical tensions have created a favorable operating environment for the refiner. The investment appears positioned to capitalize on structural advantages in the downstream energy sector. Harris Associates sees PSX as well-positioned to benefit from continued margin expansion in refining operations.

Pitch Summary:
RLI Corp (RLI) is a specialty property and casualty insurer. The company is extremely selective in writing business. Its diversified lines include niche-y areas such as school buses, Hawaii homeowners, and surety. RLI's unique culture, incentive structures and willingness to walk away from unprofitable business have historically led to exceptional financial performance. From 2015 through 2024, the company's combined ratio has averaged 89.3% and its ROE has averaged 16.6% despite being weighed down by excess capital. We have owned RLI since 2011 and the stock usually commands a premium valuation – we were pleased to be able to add to our position at roughly 20x this year's earnings.

BSD Analysis:
The manager presents RLI Corp as a high-quality specialty insurer with exceptional underwriting discipline and long-term performance track record. The investment thesis centers on RLI's unique corporate culture and selective approach to risk, evidenced by consistently superior financial metrics including an 89.3% average combined ratio and 16.6% ROE over the past decade. The company's diversified niche focus (school buses, Hawaii homeowners, surety) provides pricing power and reduces correlation with broader market cycles. As a long-term holding since 2011, the manager demonstrates conviction in RLI's business model and management quality. The recent opportunity to add at 20x earnings represents attractive entry pricing for a typically premium-valued franchise, suggesting the market may be undervaluing the company's consistent profitability and capital efficiency despite excess capital weighing on returns.

Pitch Summary:
Sprouts Farmers Market (SFM) is a supermarket chain focusing on fresh, natural, and organic products. The company has strong operating margins, attractive returns on capital, and excellent new store economics. Through April 2025, SFM's stock performed extremely well in concert with strong revenue growth and rising earnings estimates. As SFM's valuation increased, we trimmed our position in late 2024 and early 2025. Then, when growth slowed in the second half of 2025, SFM's share price collapsed. Today, SFM trades at a low-teens multiple of forward earnings and we are comfortable holding a mid-sized position.

BSD Analysis:
The manager presents a balanced view of Sprouts Farmers Market, acknowledging both the company's strong fundamental characteristics and recent operational challenges. SFM's business model demonstrates quality metrics including strong operating margins, attractive returns on capital, and compelling unit economics for new store expansion. The manager showed disciplined portfolio management by trimming the position during the stock's strong run through April 2025 as valuations became stretched. However, when growth decelerated in the second half of 2025, the stock price collapsed, creating a more attractive entry point. At current low-teens forward earnings multiples, the manager sees reasonable value for a mid-sized position, suggesting cautious optimism about the company's ability to return to growth while maintaining its quality characteristics in the competitive grocery sector.

Pitch Summary:
Littelfuse (LFUS) manufactures niche electrical components including fuses, sensors, passives and semiconductors that are sold into a broad array of end markets. Mid-single digit growth is supplemented by tuck in applications and the company has high teens operating margins and strong returns on capital. We significantly added to our position in April 2025 when the stock sold off on tariff fears. Since then, the LFUS share price has more than doubled as the company demonstrated it could navigate tariffs, sales and orders accelerated out of their post-Covid trough, and the company recorded incremental sales into data centers.

BSD Analysis:
The manager identifies Littelfuse as a high-quality niche components manufacturer with attractive financial metrics including mid-single digit organic growth, high-teens operating margins, and strong returns on capital. The investment thesis was validated when the manager opportunistically added to the position during tariff-related weakness in April 2025, demonstrating value-oriented entry timing. LFUS has since delivered exceptional returns (stock doubled) by successfully navigating trade headwinds and benefiting from cyclical recovery in orders post-COVID normalization. The company's diversified end-market exposure provides stability, while incremental data center sales offer additional growth drivers. The combination of defensive niche positioning, strong profitability metrics, and exposure to secular growth themes like data centers makes this a compelling quality growth story at reasonable valuations.

Pitch Summary:
TD Synnex (SNX) is the largest IT distributor globally. The company has done a good job diversifying away from its historical position in hardware (PCs, peripherals, servers, networking equipment, etc.) and into software, security and services. TD Synnex is modestly levered and uses its cash flow to repurchase shares and pay dividends. The company reported blow-out earnings on Mar 31, which caused the stock price to jump. We think that TD Synnex is exceptionally well run, has scale and scope advantages against smaller competitors and that profits will continue to grow with IT spending at a GDP+ rate. SNX trades at roughly 11x forward earnings and continues to be a top 5 holding for the Fund.

BSD Analysis:
The manager presents TD SYNNEX as a high-quality market leader benefiting from secular IT spending growth and successful business model evolution. The investment thesis emphasizes the company's strategic diversification from traditional hardware distribution into higher-margin software, security, and services segments. SNX's global scale provides competitive advantages through supplier relationships and operational efficiency that smaller competitors cannot match. The manager highlights strong capital allocation through share buybacks and dividends, supported by modest leverage and strong cash generation. Recent blowout earnings demonstrate execution capability, while the attractive 11x forward P/E multiple suggests the market hasn't fully recognized the company's transformation. As a top 5 holding, this represents a core conviction position in a defensive growth compounder with GDP+ earnings growth potential.

Pitch Summary:
Fabinet (FN) is a contract manufacturer specializing in optical networking equipment and modules. This is complex work at small scales, and Fabinet dominates its niche. The company has experienced impressive historical revenue growth and growing operating margins. Fabinet's highest bandwidth products are finding increasing demand in data centers, especially those data centers used to train artificial intelligence models. In 2023, Fabinet disclosed that Nvidia is a 10% customer. FN's stock price has more than doubled since April of last year on rising expectations for data center spending. We believe such spending, as capitalized in FN's stock price, may have gotten ahead of itself and have been trimming. But the need for high bandwidth networking will continue, Fabinet dominates its core telecom and data center markets and has prudently diversified into a handful of other niches that reward precise assembly at small scale. We believe Fabinet will be a "compounder" for many years, and we continue to hold a position.

BSD Analysis:
The manager identifies Fabrinet as a dominant niche player in optical networking manufacturing with significant exposure to the AI infrastructure buildout through its relationship with Nvidia (10% customer). The investment thesis centers on FN's specialized capabilities in complex, small-scale optical component assembly that creates competitive moats and pricing power. While acknowledging the stock's strong performance (doubled since April) and potential overvaluation of near-term AI spending, the manager maintains conviction in the long-term structural demand for high-bandwidth networking. The company's diversification strategy into adjacent precision manufacturing niches provides additional growth vectors. This represents a quality compounder play on the secular digitization and AI infrastructure themes, though the manager is prudently managing position size given valuation concerns.

Pitch Summary:
Dorman Products manufactures and sells aftermarket car parts. The company scores well on our dashboard, having grown historically at a consistent mid-single digit rate, with high returns on capital in a non-cyclical industry. Debt to EBITDA is less than 1x, and DORM uses its cash flow to buy back stock. 2026 earnings will tick down as the company laps an accounting treatment that allowed Dorman to put lower cost, pre-tariff inventory through its cost of goods sold. Dorman is currently trading at a discount to its historical earnings multiple and we believe its shares are attractively priced.

BSD Analysis:
The manager presents Dorman Products as a high-quality defensive play in the automotive aftermarket space, emphasizing the company's consistent mid-single digit growth profile and strong capital efficiency metrics. The investment thesis highlights DORM's non-cyclical business model, conservative balance sheet (sub-1x debt/EBITDA), and shareholder-friendly capital allocation through stock buybacks. The manager acknowledges near-term earnings headwinds from tariff-related inventory accounting adjustments but views this as temporary. The valuation opportunity appears compelling, with shares trading below historical multiples despite the company's quality characteristics. This represents a classic quality-at-a-discount opportunity in a defensive sector with predictable demand drivers from the aging vehicle fleet.