Investment Pitches

Pitch Summary:
Another underperformer was Booz Allen Hamilton (BAH). For the most part, defense-related stocks reacted negatively after the Wall Street Journal reported the new Department of Government Efficiency (DOGE), headed by Elon Musk and Vivek Ramaswamy, will look at unnecessary and wasteful spending in the U.S. Department of Defense's budget, which could have a negative impact on overall Defense spending. However, we believe that Booz Allen Hamilton is an essential government service provider. The company is focused on upgrading the Defense Department's technology infrastructure, protecting against cybersecurity threats, and building a platform to ultimately utilize artificial intelligence applications.

BSD Analysis:
Renaissance maintains confidence in Booz Allen Hamilton despite near-term headwinds from government efficiency initiatives, viewing the company as an essential rather than discretionary defense contractor. The fund emphasizes BAH's focus on critical technology infrastructure upgrades, cybersecurity protection, and AI platform development for the Defense Department. These capabilities appear to be viewed as mission-critical rather than wasteful spending that would be targeted by efficiency efforts. Renaissance likely sees BAH's specialized expertise in emerging technologies as creating defensive moats against budget cuts. The company's positioning in cybersecurity and AI applications aligns with national security priorities that should receive continued funding regardless of broader efficiency initiatives. The manager appears to view current weakness as a sentiment-driven overreaction rather than a fundamental threat to BAH's business model. Renaissance's conviction suggests they believe the company's essential services will prove resilient to political budget pressures.

Pitch Summary:
On the negative side, HCA Healthcare (HCA) was our worst contributor in the quarter. Hospital stocks, in general, underperformed following the U.S. Presidential election, as hospitals benefited immensely from the decades-long growth in government money for Medicaid and Affordable Care Act (ACA) subsidies which are set to expire after 2025. In addition, President-elect Trump previously indicated that government healthcare spending is an area where he wants to cut spending. At this point, we believe that the perceived risk to ACA subsidies is overblown, as the thought of 10 million people losing health insurance ahead of mid-term elections would not be politically practical. From a fundamental viewpoint, health care utilization remains strong, while inflationary costs remain stable, which suggests that HCA should continue to provide positive earnings leverage.

BSD Analysis:
Despite recent underperformance, Renaissance maintains a constructive view on HCA Healthcare, arguing that political concerns over ACA subsidies are overblown and unlikely to materialize. The fund's analysis suggests that removing health insurance from 10 million Americans would be politically untenable, particularly ahead of midterm elections. Renaissance emphasizes strong fundamental trends, including robust healthcare utilization patterns and stable cost inflation, which should drive positive operating leverage. The manager appears to view the current weakness as a temporary sentiment-driven dislocation rather than a fundamental deterioration. HCA's scale and market position should enable the company to navigate potential policy changes while maintaining strong cash flow generation. The fund likely sees the current valuation as attractive given the disconnect between political rhetoric and practical implementation challenges. Renaissance's conviction suggests they view this as a buying opportunity in a high-quality healthcare provider.

Pitch Summary:
Broadcom (AVGO) was another large contributor in the quarter after reporting solid operating results. The company presented an optimistic outlook, driven by its dominant position in artificial intelligence application-specific chipsets. In addition, the company should continue to benefit from its leading position in several end markets including data centers and cloud infrastructure, which have favorable secular growth trends. Broadcom is also seeing margin expansion and improved visibility, as the mix of software revenues increases, following the acquisition of VMWare.

BSD Analysis:
Renaissance expresses strong confidence in Broadcom's multi-faceted growth strategy, particularly emphasizing the company's dominant position in AI-specific semiconductor solutions. The fund views Broadcom's exposure to data centers and cloud infrastructure as providing sustainable secular growth tailwinds driven by digital transformation trends. The VMware acquisition appears to be delivering on expected synergies, with increasing software revenue mix driving margin expansion and improved earnings visibility. This diversification into higher-margin software revenues should reduce cyclicality and enhance valuation multiples over time. The manager appreciates Broadcom's ability to maintain leadership positions across multiple end markets, suggesting strong competitive moats and pricing power. The combination of AI chipset dominance and software integration creates a compelling investment thesis for sustained outperformance. Renaissance views the company as well-positioned to capitalize on the ongoing AI infrastructure buildout cycle.

Pitch Summary:
AppLovin (APP) was our strongest performing stock in the fourth quarter. Early indications from third-party advertising agencies are further confirming that AppLovin's e-commerce platform is producing solid returns on targeted advertising spending. Momentum in growing its software advertising platform signals the company's ability to diversify into e-commerce, opening up much larger revenue opportunities in web advertising. We also see the company's data-driven improvements generating an exponential increase in data accumulation that is integral to both the development and refinement of its AI models.

BSD Analysis:
Renaissance maintains a bullish stance on AppLovin, highlighting the company's successful transition into e-commerce advertising as a key growth driver. The fund emphasizes third-party validation of the platform's effectiveness in generating solid returns for advertisers, which supports sustainable demand growth. The diversification into e-commerce represents a significant total addressable market expansion beyond traditional mobile gaming advertising. The manager particularly values AppLovin's data accumulation capabilities, which create a compounding advantage for AI model development and refinement. This data moat should enhance targeting precision and drive higher monetization rates over time. The exponential growth in data collection suggests strong network effects that could create sustainable competitive advantages. Renaissance views the company as well-positioned to capitalize on the convergence of AI, e-commerce, and digital advertising trends.

Pitch Summary:
Stolt-Nielsen is another company we have owned for some time and talked about many times. As a reminder, Stolt-Nielsen is a global leader in the transportation and storage of chemicals, liquids and specialty products through its fleet of highly specialized tankers, containers and terminals. Like many of our companies, Stolt had strong early gains throughout 2023 which continued in the first half of 2024, followed by a pullback. The stock's valuation remains compelling at just 3.5x earnings, with a 20% return of equity and less than 1x book value. When coupled with a strong track record of profitability and a disciplined capital allocation strategy, the company continues to generate solid returns at an increasingly discounted valuation. We believe Stolt-Nielsen may be at an inflection point after being stuck in a vicious cycle driven by a chronic lack of investor interest and persistent undervaluation. As a result, investors have overlooked just how complicated it is to engineer vessels capable of segregating and transporting highly volatile chemicals across the ocean and ignored the company's improved position within the industry landscape. This is a barrier to entry and therefore presents the ability to extract strong returns. We have high expectations for the company going forward.

BSD Analysis:
Robotti presents a compelling value thesis for Stolt-Nielsen, emphasizing the company's specialized chemical transportation capabilities as a significant competitive moat. Trading at just 3.5x earnings and below book value with a 20% ROE, the valuation metrics are exceptionally attractive for a profitable, cash-generating business. The manager highlights the technical complexity of engineering vessels for volatile chemical transport as a substantial barrier to entry that the market underappreciates. Despite strong operational performance and disciplined capital allocation, chronic undervaluation has created a vicious cycle of investor disinterest. Robotti believes the company is at an inflection point where its improved industry position will finally be recognized. The specialized nature of chemical tanker operations provides pricing power and recurring revenue streams. This appears to be a classic overlooked industrial with strong fundamentals trading at distressed valuations due to market neglect rather than business deterioration.

Pitch Summary:
We discussed Tidewater in our last letter and have highlighted it several times over the years. Once again, it serves as an example of broader trends we have observed. The stock experienced a sharp rise, reaching highs of approximately $110 per share before retracing to around $50 by year-end. While we sold a significant portion of our holdings in the first half of the year above $80, we continue to hold Tidewater as one of our largest positions due to our strong conviction in its fundamentals and future opportunity. Importantly, while the stock price has declined, the business itself has not deteriorated. As a result, it is now valued at a sharp discount to the company's asset value and free cash flows. In the short-term, Tidewater may have fallen victim to its own success as its strong performance, both operationally and in the stock market, attracted trend-following capital with shorter holding periods, who are more prone to panic selling as their purchasers were not the result of financial analysis. Despite the price volatility, we remain focused on the company's valuation, which we find increasingly compelling.

BSD Analysis:
Robotti maintains a bullish stance on Tidewater despite significant price volatility, viewing the recent decline from $110 to $50 as a compelling buying opportunity rather than fundamental deterioration. The manager demonstrates conviction by maintaining it as one of their largest positions while opportunistically trimming at higher prices above $80. The thesis centers on a valuation disconnect where the stock trades at a sharp discount to asset value and free cash flows despite strong operational performance. Robotti attributes the price weakness to trend-following capital with short holding periods rather than fundamental analysis, creating temporary dislocation. The offshore service vessel operator appears well-positioned in a recovering energy services market. The manager's focus on normalized cash flows and asset-based valuation suggests significant upside potential. This represents a classic value opportunity where temporary market dynamics have created an attractive entry point for patient capital.

Pitch Summary:
Michelin: In the most recent quarter, Michelin reported worse-than-expected volume weakness which catalysed a downgrade to FY24 earnings guidance. Away from the tactical aspect of the change in guidance, there is growing concern that the significant volume de-growth in the business (approximately 18% since 2019) is emblematic of changing competitive dynamics in its end markets (particularly with respect to the inflow of cheaper, low-end tyres from Asia). For such a well-established company, this could be seen to mask Michelin's industry leading price-mix contribution to earnings and hence limits through-cycle earnings growth vs our earlier expectations. Consequently, we have reduced our exposure for now.

BSD Analysis:
Lansdowne has adopted a more cautious stance on Michelin following disappointing volume performance and guidance downgrades that reflect deeper structural challenges beyond cyclical weakness. The fund is concerned about significant volume decline of approximately 18% since 2019, which appears to signal changing competitive dynamics rather than temporary market conditions. The influx of cheaper, low-end tires from Asia represents a structural threat to Michelin's market position and pricing power in key segments. While Michelin maintains industry-leading price-mix contribution to earnings, the persistent volume pressure may limit the company's ability to achieve previously expected through-cycle earnings growth. The fund recognizes that for such a well-established company, the sustained volume decline masks underlying competitive pressures that could constrain long-term performance. As a result, Lansdowne has reduced their exposure, suggesting a shift from bullish to more neutral or bearish positioning based on structural rather than cyclical concerns about the tire industry's evolving competitive landscape.

Pitch Summary:
Linde: Linde suffered modest earnings downgrades driven by persistent demand weakness in its key end markets as US manufacturing remained in recession throughout 2024. For context, Linde started the year with guidance for +8-11% EPS growth in constant FX, which has since been refined to +9-10%, a minimal downgrade compared to the top-end of the guidance range from the beginning of 2024. However, for a name where the market has become accustomed to consistent "beats-and-raises", it could be seen that this modest downgrade has been enough to cause disappointment for share underperformance, especially in the fourth quarter. At a higher level, Linde remains a business generating double-digit EPS growth at a time when its end markets are in a prolonged and quite severe recession, this could indicate operating model. With shares now de-rated to just 25x PE, the shares under-valued for defensive, consistent, low-risk low double-digit TSR on offer through-cycle. We have used this temporary relative weakness in shares to add to our holding modestly.

BSD Analysis:
Lansdowne views Linde's recent weakness as a buying opportunity, maintaining confidence in the company's defensive business model and long-term prospects. Despite modest earnings downgrades due to persistent US manufacturing weakness, the guidance revision from 8-11% to 9-10% EPS growth represents minimal deterioration from initial expectations. The fund emphasizes that Linde continues generating double-digit EPS growth even while key end markets remain in prolonged recession, highlighting the strength and resilience of the operating model. Market disappointment appears driven by expectations for consistent "beats-and-raises" rather than fundamental deterioration. At 25x PE following the de-rating, Lansdowne believes shares are undervalued for a defensive business offering consistent, low-risk, low double-digit total shareholder returns through the cycle. The fund has opportunistically added to their position during this temporary weakness, viewing current valuations as attractive for a high-quality industrial gas company with proven defensive characteristics.

Pitch Summary:
CapGemini: Cap's third quarter results suffered due to another cut in 2024 organic growth guidance. Whilst broader pressures in Europe were well-known, a worse than expected recovery in the US and specific weakness in aerospace sector prompted the latest revision. Peer reporting and commentary from Accenture and the Indian IT majors (such as Infosys and TCS) underpin the view that the weakness in IT services demand has largely been cyclical, with consistent signs of green shoots beginning to emerge in the US. It is market view that Cap will benefit from similar trends in the US business. Heavy European, particularly French, exposure, could delay growth improvement compared to more US-focused peers, in the contrary the cyclical nature of end-market weakness, a resilient operating model (with flat to slightly rising margins during this recession cycle), and attractive valuations (shares trading at ~14x trough earnings), position the business well. As shareholders, we await a recovery in end markets.

BSD Analysis:
Lansdowne maintains a patient bullish stance on Capgemini despite Q3 disappointments and organic growth guidance cuts driven by weaker-than-expected US recovery and aerospace sector weakness. The fund views the IT services demand weakness as largely cyclical, supported by peer commentary from Accenture and Indian IT majors indicating emerging green shoots in the US market. While Capgemini's heavy European and French exposure may delay growth improvement compared to US-focused peers, Lansdowne believes the company will eventually benefit from similar recovery trends. The fund highlights Capgemini's resilient operating model, which has maintained flat to slightly rising margins during the current recession cycle, demonstrating operational discipline. At approximately 14x trough earnings, the valuation appears attractive for a cyclical recovery play. Lansdowne's investment thesis centers on the cyclical nature of current weakness and the company's strong positioning for when end markets recover, making current valuations compelling for patient investors.

Pitch Summary:
Sika: Although third-quarter organic sales aligned with market expectations, Sika's profitability fell short as the business looks to invest in its end markets, aiming to capitalize on medium-term growth opportunities as market conditions stabilize and recover. To that end, we have been encouraged to note Sika's organic growth in the US has recovered to approximately 4-5% in 2H 2024 well ahead of end markets. Consequently, lending credence to the idea that these investments are enabling the business to continue to take market share and generate growth, albeit in the context of its end markets. Whilst short-term, recessionary end-markets and continued investments to prioritise medium term growth have kept earnings weak vs expectations, we are encouraged by the business' ongoing market share gains.

BSD Analysis:
Lansdowne maintains a constructive view on Sika despite near-term profitability pressures, viewing current investments as strategic positioning for medium-term growth opportunities. While Q3 organic sales met expectations, profitability disappointed as the company continues investing in end markets to capitalize on recovery prospects. The fund is encouraged by Sika's US organic growth recovery to 4-5% in H2 2024, significantly outpacing underlying end markets and demonstrating the effectiveness of their investment strategy. This outperformance validates management's thesis that current investments are enabling continued market share gains and growth generation. Although recessionary end markets and growth investments have pressured near-term earnings versus expectations, Lansdowne views the ongoing market share gains as evidence of strategic success. The fund appears confident that Sika's investment approach will position the company well for when market conditions stabilize and recover, justifying current profitability sacrifices for longer-term competitive advantages.

Pitch Summary:
Leonardo: LDO delivered strong third quarter results with adjusted EBIT 14% ahead of consensus estimates. These results were due to strong growth in the underlying business as well as ahead-of-schedule deliver on their cost efficiency program. If not for a customer issue that was beyond their control, Leonardo confirmed that it would have upgraded FY guidance. The performance in the quarter was underpinned by not only a strong set of results but also increased credibility in the new management team.

BSD Analysis:
Lansdowne expresses confidence in Leonardo following impressive Q3 results that significantly exceeded expectations, with adjusted EBIT coming in 14% above consensus estimates. The strong performance was driven by robust underlying business growth and the successful ahead-of-schedule execution of their cost efficiency program, demonstrating operational excellence. Management indicated they would have upgraded full-year guidance if not for a customer-related issue beyond their control, suggesting underlying business momentum remains strong. The fund highlights the increased credibility of Leonardo's new management team as an additional positive factor supporting their investment thesis. The combination of strong operational results, effective cost management, and improved management credibility positions Leonardo favorably in the aerospace and defense sector. Lansdowne appears optimistic about the company's ability to continue delivering strong performance and executing on strategic initiatives under new leadership.

Pitch Summary:
Essilor Luxottica: Shares continued to perform well following strong feedback from Meta regarding the performance of its RayBan Meta smart glasses. Whilst relatively small as a share of group revenues for Essilor Luxottica (we estimate approximately1%), the innovation could be seen to be a representation of the medium-term growth strategy for the business. Additionally, share prices rose in Q4 following reports that Meta is seeking to build an approximate 4-5% stake in Essilor Luxottica, confirmation that the partnership with Meta is continuing to perform well.

BSD Analysis:
Lansdowne highlights EssilorLuxottica's strong performance driven by positive developments in its strategic partnership with Meta around RayBan Meta smart glasses. While the smart glasses represent only approximately 1% of group revenues currently, the fund views this innovation as indicative of the company's medium-term growth strategy and technological advancement capabilities. The partnership's success has been validated by Meta's reported interest in acquiring a 4-5% stake in EssilorLuxottica, demonstrating the strategic value of their collaboration. This potential equity investment from Meta serves as external validation of the partnership's performance and future prospects. The fund appears optimistic about the company's ability to leverage technology partnerships to drive innovation and growth beyond traditional eyewear markets. The combination of strong operational feedback and strategic investor interest suggests positive momentum for the company's diversification efforts.

Pitch Summary:
Compass: Strong Q4 and FY24 results and a robust guide for FY25 underpinned the market's ongoing re-assessment of Compass' medium-term growth algorithm. We continue to believe the business can grow organically, expand margins and provide positive returns. With the stock still trading at an attractive multiple of c24x, the shares are likely to be under-valued, suggesting continued market interest in the name.

BSD Analysis:
Lansdowne maintains a bullish stance on Compass Group following strong Q4 and full-year 2024 results, coupled with robust FY25 guidance that has prompted market reassessment of the company's medium-term growth prospects. The fund manager believes Compass can deliver organic growth while expanding margins and generating positive returns for shareholders. At approximately 24x earnings, the stock appears attractively valued and potentially undervalued relative to its growth prospects. The combination of strong operational performance, positive forward guidance, and reasonable valuation multiples suggests the market may continue to show interest in the name. Lansdowne's confidence in the company's ability to execute on its growth algorithm and margin expansion strategy underpins their positive investment thesis. The fund views the current valuation as offering an attractive entry point for continued upside potential.

Pitch Summary:
Talen is about a 4% position in the Global Discovery Fund. As an independent power producer (IPP), it owns the 6th largest nuclear power plant in the U.S., located in a region poised for significant power price increases driven by rising demand from data centers. Talen already secured a contract with Amazon to supply power to a data center campus at prices 50% above the forward curve and has the capacity to sign similar agreements in the future. While the stock may seem expensive on current earnings, it is only 12x our 2026 free cash flow estimates, a significant discount to its peers. Management continues to capitalize on this gap through an aggressive repurchase program.

BSD Analysis:
The manager sees Talen Energy as well-positioned to benefit from the data center power demand boom through its substantial nuclear generation capacity. Owning the 6th largest nuclear plant in the U.S. provides significant baseload power generation in a region experiencing rising power prices. The Amazon contract at 50% above forward curve pricing demonstrates the company's ability to capture premium pricing for data center power needs. Additional contract capacity suggests multiple opportunities to replicate this success with other hyperscale customers. While current earnings may suggest high valuation, the 12x 2026 free cash flow multiple represents a significant discount to peers. Management's aggressive share repurchase program helps capitalize on this valuation gap while returning capital to shareholders.

Pitch Summary:
One of the "spicier" names in the portfolio (about a 5% position), Red Cat (RCAT) is a leading supplier of drones, primarily for military applications. The stock surged in 2024 following a major $500mm contract with the U.S. Army to provide field reconnaissance drones. Based on current orders, RCAT trades on a price-to-earnings multiple of 100x next year's earnings. However, the company's recent transformative Army contract opens the door to additional opportunities with other military branches and NATO countries. We expect the momentum of the drone theme/narrative to drive the stock's growth as the incoming Trump administration is highly supportive and weary of alternative (primarily Chinese) suppliers.

BSD Analysis:
The manager acknowledges Red Cat as a speculative position but sees significant upside driven by military drone demand and geopolitical factors. The $500 million Army contract represents a transformative win that validates the company's technology and opens doors to additional military branches and NATO opportunities. While the 100x P/E appears expensive, the manager views this as justified given the contract's scale and future opportunity pipeline. The incoming Trump administration's support for domestic drone suppliers and wariness of Chinese alternatives creates favorable policy tailwinds. The manager expects the broader drone theme and narrative momentum to drive continued stock appreciation. The combination of proven military contracts, expanding opportunity set, and supportive political environment supports the bull case despite high valuation.

Pitch Summary:
Osaka Soda is a 3% position in the Global Discovery Fund. Superficially, the company appears to be an unexciting chemicals company. A closer look, however, finds its healthcare (HC) segment, while only representing 12.5% of sales, accounted for 54% of operating profit in 2024. This success is driven by the company's market-dominant position in supplying silica gel beads, a key ingredient in the production of peptide drugs, including the blockbuster weight loss drugs, Ozempic and Wegovy. While struggling to add capacity to keep up with demand, we believe sales in the HC division will grow 20-30% for the next several years. With a P/E of 14x forward earnings, we see more than 100% upside.

BSD Analysis:
The manager has identified a hidden gem within Osaka Soda's healthcare segment that drives disproportionate profitability despite representing only 12.5% of sales. The company's dominant market position in silica gel beads for peptide drug production provides direct exposure to the booming GLP-1 weight loss drug market including Ozempic and Wegovy. Capacity constraints indicate strong demand that exceeds supply, suggesting pricing power and sustainable competitive advantages. The manager projects 20-30% healthcare division growth for several years, driven by continued peptide drug demand. At 14x forward P/E for a company with such strong growth prospects and market positioning, the valuation appears attractive. The manager sees over 100% upside potential as the market recognizes the value of this specialized healthcare exposure.

Pitch Summary:
This 4.5% position is an under-the-radar Korean electrical equipment company. High-margin export sales of transformers are expected to drive a more than 50% increase in earnings for 2025. Trading at just 12x earnings, with orders booked through the end of the decade, we anticipate robust growth and a potential re-rating, which should propel the stock much higher.

BSD Analysis:
The manager identifies Iljin Electric as an overlooked Korean electrical equipment opportunity with strong fundamental drivers. The company's transformer export business provides high-margin revenue streams that should drive substantial earnings growth of over 50% in 2025. The 12x earnings multiple appears attractive for a company with such robust growth prospects and strong order visibility. Having orders booked through the end of the decade provides exceptional revenue visibility and reduces execution risk. The manager expects both earnings growth and multiple expansion as the market recognizes the company's strong fundamentals. The combination of high-margin business, strong growth, reasonable valuation, and long-term order book creates compelling upside potential.

Pitch Summary:
Hallador is just over a 4% position in our Global Discovery Fund. The company owns a coal mine and an electric power plant in Indiana, where it is poised to benefit from a dramatic increase in average power prices in 2026 when current contracts expire. We believe Hallador could potentially earn twice as much as the Street is estimating for 2026. Trading at just over 4x P/E for 2026, the stock is valued at less than half of its peers. We think the timing is favorable as Indiana is a key hub of data center activity, which could further drive power demand and prices upwards. We anticipate that growing sentiment driven by this theme along with announcements of lucrative power contracts should result in both upward revisions to earnings estimates and increased investor attention.

BSD Analysis:
The manager presents a compelling value opportunity in Hallador Energy, emphasizing a significant catalyst-driven thesis centered on power price increases in 2026. The fund believes the company could earn double Street estimates when current contracts expire, suggesting substantial earnings upside potential. At 4x 2026 P/E, the valuation appears deeply discounted relative to peers, trading at less than half comparable multiples. The Indiana data center hub positioning provides additional demand tailwinds that could drive power prices higher. The manager expects multiple expansion through improved sentiment, contract announcements, and upward earnings revisions. The combination of contract roll-over catalyst, data center demand growth, and significant valuation discount creates an attractive risk-reward profile.

Pitch Summary:
With that said, when surveying the post-split state of play, the valuation of the remaining Vivendi holding company appears highly attractive, something that has been compounded by non-fundamental selling from passive investors in the days following the split. We took advantage of this and built a direct position such that Vivendi is now an 2.5% weight. Vivendi's market cap stands at €2.5bn, and its 10% stake in UMG is worth €4.4bn. Adding in another €2.3bn of listed equity stakes and netting off €2.1bn of debt brings us to a NAV of €4.7bn and a discount of 46%. To us it is interesting that this level of discount is wider than the c.40% Vivendi has averaged in recent years despite Vivendi now being a much simpler beast, with an entirely listed NAV. Such a level of discount stands out against liquid European holding companies with listed, hedgeable NAVs, and even more dramatically so when compared with mono-holding companies – which is now in essence what Vivendi is. It seems likely to us that Vincent Bollore will want to monetise and close this discount. In the meantime, this gives us additional exposure to UMG which underpins an attractive NAV growth outlook.

BSD Analysis:
The manager initiated a new 2.5% position in Vivendi following the company's split, capitalizing on non-fundamental selling pressure from passive investors. The investment case centers on an attractive 46% discount to NAV, which is wider than Vivendi's historical average of 40% despite the company now being significantly simplified with an entirely listed NAV. The manager calculates NAV at €4.7bn based on a 10% UMG stake worth €4.4bn, plus €2.3bn in other listed equity stakes, minus €2.1bn debt, against a €2.5bn market cap. The discount appears anomalous compared to other liquid European holding companies and mono-holding companies, which Vivendi essentially now resembles. The manager expects Vincent Bolloré to monetize and close this discount over time, while the position provides additional exposure to Universal Music Group's attractive growth prospects. The timing of the investment capitalizes on temporary technical selling pressure following the corporate restructuring.

Pitch Summary:
In mid-2023 we (re)initiated a position in Bolloré (4.9% weight) – the French holding company controlled by Vincent Bolloré. The investment case was predicated on the attractive NAV growth potential from Universal Music Group ("UMG"); the potential value creation from Vivendi, the French media conglomerate; and with €6bn of net cash at the holding company level, the prospect for simplifications across the notoriously complex and deeply discounted Bolloré group structure. To date returns have been all but zero (+1.0% ROI). During the month, Vivendi, of which Bolloré owns just shy of 30%, was split into four separate companies - Canal+, Havas, Louis Hachette and Vivendi – with the stated intention to unlock the conglomerate discount at which it traded. Prima facie this has been ineffective: the four sum of the parts now trade collectively at €8.2 per share, versus €8.3 the day prior to the split and €8.0 a little over a year ago when the intention to split up the group was first announced. However, from a Bolloré perspective we wonder whether this is not such a bad thing after all. Having passively moved through 30% in each operating company, and with more lax shareholder protections, Vincent Bolloré may well exploit one or more of these undervaluations. Eighteen months ago, it was a consensus view that Vincent Bolloré would pay a control premium to take over the entire Vivendi conglomerate. As is often the case, he has dumbfounded fund managers and avoided putting his hand in his pocket. Ultimately Vincent Bolloré is motivated by long-term capital gains, not near-term mark to market movements and we have long been of the view that it makes most sense to be aligned with him at the Bolloré level, and hence we did not hold a direct position in Vivendi.

BSD Analysis:
The manager maintains a bull stance on Bolloré despite flat returns since initiation in mid-2023, viewing the position as a strategic play on Vincent Bolloré's value creation capabilities. The investment thesis rests on three pillars: NAV growth potential from Universal Music Group exposure, value creation opportunities from the Vivendi spin-off, and potential simplification of the complex holding company structure backed by €6bn net cash. While the Vivendi split into four entities has not immediately unlocked value, the manager sees this as potentially advantageous for Vincent Bolloré, who now holds 30% stakes in each operating company with more flexible shareholder protections. The manager emphasizes alignment with Vincent Bolloré's long-term capital gains focus rather than short-term market movements, suggesting patience for eventual value realization. The 4.9% position weight reflects conviction in the controlling shareholder's ability to exploit undervaluations across the simplified structure.