Investment Pitches

Pitch Summary:
First American Financial is a title insurer that also facilitates escrow and closing services. Title insurance is relatively consolidated and, crucially, First American also owns a leading data repository of transactions called the "title plant". Revenues are currently depressed with residential existing home sales averaging about 4m vs. a more normal rate of about 5.5m. FAF is currently overcapitalized, pays a ~4% dividend yield and has historically, opportunistically bought back shares.

BSD Analysis:
The fund manager presents a compelling value thesis for First American Financial, highlighting the company's dominant position in the consolidated title insurance market and its valuable proprietary data asset in the "title plant." The investment case centers on cyclical recovery potential, as current revenues are depressed due to low existing home sales volumes (4M vs. normal 5.5M annually). The manager emphasizes FAF's strong capital position and shareholder-friendly policies, including a 4% dividend yield and opportunistic share buybacks. This appears to be a classic value play on a market leader trading at depressed levels due to cyclical headwinds in the housing market. The thesis relies on eventual normalization of housing transaction volumes and the company's ability to maintain market share through its data moat and operational scale.

Pitch Summary:
Following its March 2020 spin-off from United Technologies, residential and commercial HVAC provider Carrier Global is now a focused, high-quality business that we believe is in an excellent position to continue to gain market share and improve margins long term. However, a cyclical downturn in residential markets has weighed on near-term results, creating an opportunity to initiate a position at a significant discount to our estimate of intrinsic value.

BSD Analysis:
Diamond Hill initiated a position in Carrier Global, viewing the post-spinoff entity as a focused, high-quality HVAC business with strong competitive positioning. The fund believes Carrier is well-positioned for long-term market share gains and margin improvement following its separation from United Technologies. Current cyclical headwinds in residential markets have created near-term pressure on results, providing an attractive entry opportunity. The investment thesis centers on Carrier's ability to capitalize on secular trends in HVAC efficiency and building automation. The fund sees the current valuation as trading at a significant discount to intrinsic value due to temporary cyclical factors. This contrarian positioning reflects confidence in the company's long-term fundamentals despite near-term residential market weakness. The investment represents a bet on cyclical recovery combined with structural market share gains in the HVAC industry.

Pitch Summary:
We added global consumer staples leader Kimberly-Clark to the portfolio following its announced acquisition of Kenvue and subsequent share price decline. Over the long term, we view this as an opportunity to own a high-quality core business alongside a portfolio of strong but under-managed consumer health brands where Kimberly-Clark's operating discipline can drive meaningful cost synergies and improve growth.

BSD Analysis:
Diamond Hill added Kimberly-Clark following the Kenvue acquisition announcement, which created a temporary share price decline and attractive entry opportunity. The fund views this as a strategic acquisition that combines Kimberly-Clark's high-quality consumer staples business with Kenvue's portfolio of consumer health brands. The investment thesis centers on Kimberly-Clark's proven operating discipline driving meaningful cost synergies from the acquired assets. The fund believes Kenvue's brands have been under-managed and represent significant value creation potential under Kimberly-Clark's stewardship. This acquisition should enhance the company's growth profile while maintaining its defensive characteristics. The temporary market reaction to the deal provides an attractive entry valuation for a strengthened combined entity. The investment reflects confidence in management's ability to execute successful integration and realize anticipated synergies.

Pitch Summary:
We initiated a position in global software provider Microsoft as near-term concerns around Azure's cloud computing growth and capacity constraints weighed on sentiment, giving us the opportunity to purchase the shares at a very attractive valuation. We believe these factors, along with the company's evolving relationship with OpenAI, have temporarily obscured long-term competitive advantages and growth potential.

BSD Analysis:
Diamond Hill initiated a position in Microsoft, viewing current weakness as a compelling entry opportunity. The fund manager believes near-term concerns around Azure growth deceleration and capacity constraints have created temporary headwinds that obscure the company's fundamental strengths. The evolving OpenAI partnership adds complexity but also represents significant long-term potential in the AI space. Microsoft's competitive moats in enterprise software and cloud infrastructure remain intact despite current sentiment challenges. The fund sees the current valuation as attractive relative to the company's long-term growth prospects. This contrarian positioning reflects confidence in Microsoft's ability to navigate current headwinds while capitalizing on secular technology trends. The investment thesis centers on temporary market pessimism creating an attractive entry point for a high-quality technology franchise.

Pitch Summary:
Marsh & McLennan is the world's largest insurance broker and risk management firm. Marsh has led the industry in organic revenue growth while generating consistent operating margin expansion over the past two decades. Management is engaged in a multi-year effort to rebrand under the single Marsh name, unify service offerings across the firm, and centralize technology and operations to drive efficiencies. Although the softer industrywide rate environment is pressuring revenue growth today, we believe that Marsh is likely to sustain mid-single digit operating income growth for the foreseeable future. Moreover, fears about the potential for AI to disrupt insurance brokers seem exaggerated – and Marsh is already using AI tools to drive productivity enhancements in areas such as data ingestion and new business proposals. We were pleased to have the opportunity to invest in Marsh at a mid-teens multiple of its earnings power.

BSD Analysis:
The fund initiated a position in Marsh & McLennan, attracted by the company's market-leading position as the world's largest insurance broker and its consistent track record of organic revenue growth with operating margin expansion over two decades. The manager appreciates management's strategic multi-year rebranding initiative to unify operations under the single Marsh name, which should drive operational efficiencies through centralized technology and operations. While acknowledging near-term headwinds from a softer industrywide rate environment, the fund maintains confidence in the company's ability to sustain mid-single digit operating income growth over the long term. The manager dismisses AI disruption concerns as exaggerated, noting that Marsh is already successfully implementing AI tools to enhance productivity in data processing and business development. The company's proactive adoption of AI technology positions it as a beneficiary rather than a victim of technological advancement. The fund views the current valuation as attractive, acquiring shares at a mid-teens earnings multiple that appears reasonable for a market-leading franchise with sustainable competitive advantages.

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:
The fund initiated a position in Gartner, viewing the AI-related stock decline as a compelling entry opportunity for a market-leading research services company. The manager emphasizes Gartner's dominant brand position in IT research, supported by significant scale advantages and a compelling customer value proposition that has historically driven strong organic growth and robust free cash flow conversion. The fund believes investor concerns about AI disruption are overstated, arguing that Gartner's research expertise and customer relationships provide defensibility against technological threats. Management's confidence stems from continued high customer engagement levels and substantial growth opportunities with both new and existing clients. The company's well-established market position and proven ability to adapt to technological changes support the fund's conviction in its resilience. The manager views the current valuation as attractive, representing a "bargain price" for a well-managed company with sustainable competitive advantages. This contrarian investment reflects the fund's strategy of capitalizing on temporary market dislocations to acquire quality companies at discounted valuations.

Pitch Summary:
Salesforce was the top 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 being the quarter's top detractor, the fund maintains conviction in Salesforce, viewing the AI-related stock price decline as a temporary market overreaction rather than a fundamental threat. The manager emphasizes that quarterly results remain strong with continuing margin improvement, indicating operational resilience amid market concerns. Management's guidance for accelerating subscription revenue growth in the second half of 2026, driven by Agentforce adoption, suggests the company is successfully integrating AI capabilities into its platform rather than being disrupted by them. The fund particularly values management's aggressive capital allocation strategy, including a substantial $50 billion buyback authorization and $25 billion accelerated share repurchase program. These actions demonstrate management confidence in the business while providing significant shareholder value at depressed prices. The manager views this as an opportunistic period where Salesforce can strengthen its market position through strategic capital deployment. The fund's continued bullish stance reflects confidence in the company's ability to navigate AI transformation successfully.

Pitch Summary:
Phillips 66 was the top 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:
The fund maintains a bullish stance on Phillips 66, viewing it as a durably advantaged downstream energy company positioned to benefit from favorable refining dynamics. The manager highlights PSX's ability to capitalize on higher crack spreads, which represent the profit margin between crude oil input costs and refined petroleum product prices. The company's solid fourth-quarter 2025 earnings demonstrate operational execution during a period of heightened geopolitical risk that has supported energy markets. The fund appreciates management's shareholder-friendly capital allocation strategy, emphasizing cash flow returns to investors. Phillips 66's downstream focus provides exposure to refining margins rather than commodity price volatility, offering a differentiated energy investment profile. The manager's confidence in PSX as a "major beneficiary" of rising crack spreads suggests expectations for continued margin expansion. This positioning reflects the fund's preference for energy companies with sustainable competitive advantages and disciplined capital allocation practices.

Pitch Summary:
Minor International is a major global hospitality, restaurant, and lifestyle company. Minor operates a robust, ever-growing portfolio of over 500 hotels and 2700 restaurants spanning 68 countries. In our view, management has done a sound job of creating value through strategic acquisitions, notably the Spain-based NH Hotel Group, which we believe was essential to rounding out Minor's brand portfolio and helping it pursue an asset-light strategy. Still, investors are concerned about the company's high leverage due to its traditionally asset-heavy, owner-operator hotel model, which has led it to trade at multiples that were last seen during COVID and the Great Financial Crisis. This has allowed us to initiate a position in an industry leader that we believe will see its multiple improve as its strong free-cash-flow allows the company to de-lever and ultimately accelerate earnings growth.

BSD Analysis:
The manager identifies Minor International as an undervalued hospitality leader trading at distressed multiples despite strong operational fundamentals. The company operates an impressive global footprint with over 500 hotels and 2700 restaurants across 68 countries, demonstrating significant scale and diversification. Management's strategic acquisition of NH Hotel Group appears well-executed, enhancing brand portfolio breadth and supporting the transition to an asset-light model. The current valuation disconnect stems from investor concerns over high leverage inherited from the traditional asset-heavy hotel model. However, the manager sees this as a temporary issue, expecting strong free cash flow generation to drive deleveraging and multiple expansion. The investment thesis relies on operational improvements and balance sheet optimization unlocking value in a quality hospitality platform trading at crisis-level valuations.

Pitch Summary:
DTS is a leading systems integrator in Japan, helping companies modernize IT systems from manual, on-premise environments to automated, digital, and cloud-based platforms. The company has a long operating history and deep relationships with large enterprise customers, particularly in financial services, telecom, and manufacturing. Japanese system integrators (SI) benefit from powerful structural tailwinds as the country remains well behind other developed markets in digitization, driving a multi-year increase in IT investment. A structural shortage of IT engineers and a strong preference for onshore talent further support favorable industry dynamics. Despite these fundamentals, DTS trades at a meaningful discount to our estimate of its intrinsic value due to short-term earnings sentiment and elevated investment spending. As the company nears the end of its investment cycle, we expect earnings to accelerate and valuation to re-rate with improving operating leverage.

BSD Analysis:
The manager presents a compelling value opportunity in DTS, a Japanese systems integrator positioned to benefit from Japan's digital transformation lag. The investment thesis centers on structural tailwinds including Japan's digitization gap versus developed markets, driving multi-year IT investment growth, and a shortage of IT engineers favoring established players. DTS maintains competitive advantages through long-standing enterprise relationships in financial services, telecom, and manufacturing sectors. The current valuation discount appears driven by temporary factors including short-term earnings sentiment and elevated investment spending as the company modernizes. The manager expects earnings acceleration as DTS completes its investment cycle, with improving operating leverage driving valuation re-rating. This represents a classic value play where temporary headwinds mask strong underlying fundamentals and structural growth drivers.

Pitch Summary:
NICE Ltd. is a Contact Center-as-a-Service (CCaaS) provider, maintaining dual headquarters in Israel and the United States, with a customer base that is predominantly in the U.S. NICE has evolved alongside changing technology and customer requirements. Historically, the company provided software and services to help enterprises manage on-premise customer contact centers. In this capacity, NICE was one of several software and hardware vendors offering tools to staff, manage, measure and evaluate call center operations. The company was particularly strong in workforce engagement management (WEM) software, a critical component for effective contact center operations. In recent years, CCaaS offerings have been increasingly adopted because they lower total cost of ownership, better integrate customer service channels and leverage automation, including AI. All of this enables a superior customer experience that can be applied to other areas of a business. NICE responded to this shift by acquiring a leading CCaaS provider, inContact, in 2016. This acquisition gave NICE a nearly complete CCaaS solution, and as cloud-based offerings grew at the expense of on-premise systems, NICE benefited from higher revenue per licensed seat. The market rewarded this industry-leading position with strong valuation multiples. However, in 2025 rapid advances in AI capability and adoption began to cloud NICE's outlook. On one hand, improving AI functionality has accelerated the shift toward CCaaS solutions and away from on-premise deployments. On the other, the pace of change has intensified competition among CCaaS providers and has driven increased investment to incorporate advanced AI features. NICE has indicated that this heightened investment, including the approximately $1-billion acquisition of Cognigy, will put pressure on its earnings over the next year. This uncertainty contributed to a sharp correction in the share price, pushing it to multi-year lows and compressing valuation multiples to near all-time lows. While it is impossible to predict definitive winners and losers in the AI arms race, NICE remains favorably positioned as an established incumbent in the CCaaS market with a well-capitalized balance sheet. AI-enhanced contact center functionality could meaningfully expand the overall market size over time. We will continue to monitor the competitive landscape for evidence of NICE's performance in navigating this transition. For the patient, long-term investor, the current opportunity in NICE appears attractive.

BSD Analysis:
Brandes initiated a position in NICE Ltd, a leading Contact Center-as-a-Service provider, following a sharp correction driven by AI disruption concerns. The manager recognizes NICE's strong historical position in workforce engagement management and successful transition to cloud-based CCaaS solutions through the strategic inContact acquisition in 2016. While acknowledging near-term earnings pressure from the $1 billion Cognigy acquisition and increased AI investment, Brandes views the current valuation compression to multi-year lows as creating an attractive entry point. The investment thesis centers on NICE's established incumbent position, well-capitalized balance sheet, and potential for AI-enhanced functionality to expand the overall market size. Despite intensified competition and uncertainty around AI disruption, the manager believes patient long-term investors can benefit from the current dislocation, though they will monitor competitive positioning closely.

Pitch Summary:
Mohawk Industries is the world's largest flooring manufacturer. With a leading position on ceramic tile, carpet, laminate, vinyl and stone products, the company serves residential remodeling, new construction and commercial markets. Its global manufacturing and distribution footprint provides substantial scale advantages, broad product reach and cost efficiency across cycles. The market is currently focused on near-term headwinds facing Mohawk, including slowing home-remodeling demand, elevated input costs and margin pressure after an unusually strong post-COVID rebound. While cycle risks are still elevated, the company benefits, in our opinion, from a strong balance sheet and a free-cash-flow profile that has stayed positive throughout this period. Additionally, management owns a meaningful equity stake and has shown a willingness to deploy capital opportunistically through share repurchases and acquisitions during times of industry stress. In our view, Mohawk trades at a valuation that can withstand a prolonged downturn scenario. Based on our assessment of normalized earnings power and balance sheet strength, we believe its shares offer an attractive margin of safety and favorable long-term return potential.

BSD Analysis:
Brandes initiated a position in Mohawk Industries, viewing the world's largest flooring manufacturer as an attractive value opportunity amid cyclical headwinds. The manager acknowledges near-term challenges including slowing home remodeling demand and margin pressure but emphasizes the company's structural advantages including global scale, broad product portfolio, and cost efficiency. Key investment merits include a strong balance sheet that has maintained positive free cash flow throughout the downturn and management's opportunistic capital allocation through share buybacks and acquisitions during industry stress. The manager believes current valuations provide significant downside protection and can withstand a prolonged downturn scenario. With meaningful management ownership aligning interests and normalized earnings power assessment supporting the thesis, Brandes sees attractive long-term return potential despite elevated cyclical risks.

Pitch Summary:
One example is Booking Holdings, a dominant global travel platform (including Booking.com, Priceline, and Kayak) with high market share in hotel and travel reservations, particularly in Europe. The company's stock price recently declined on fears that AI may replace its core service for customers. We believe Booking's infrastructure would be extremely difficult for competitors to replicate, as over 10,000 European hotels rely on Booking for visibility and online reach. We believe AI is unlikely to cause consumers to abandon Booking's platform, and investors are underestimating the durability of the company's competitive advantage. Given the lower valuation, we decided to add to the Fund's position.

BSD Analysis:
Dodge & Cox added to their Booking Holdings position amid AI-related concerns that have pressured the stock, viewing the market fears as overblown and creating an attractive entry point. The fund managers emphasize Booking's dominant market position in European hotel reservations, with over 10,000 hotels dependent on the platform for visibility and customer reach. This network effect creates significant barriers to entry and switching costs that would be extremely difficult for competitors to replicate. The managers argue that AI disruption fears are misplaced, believing consumers will continue to value Booking's comprehensive platform and established relationships. The decision to increase the position during weakness demonstrates conviction in the company's durable competitive advantages and long-term prospects. Booking's high market share in travel reservations, particularly in Europe, provides defensive characteristics and pricing power. The fund's contrarian stance on AI disruption risks reflects their belief that Booking's infrastructure and customer relationships create sustainable competitive moats that technology alone cannot easily displace.

Pitch Summary:
We also initiated a position in Roper Technologies, a leading software and technology company that provides critical technology solutions and systems of record for small and medium businesses. Following a recent decline in its stock price, Roper now trades at 16.1 times forward earnings—an attractive valuation given the company's importance to its customer base, strong free cash flow generation, and active share buyback program.

BSD Analysis:
Dodge & Cox initiated a new position in Roper Technologies, capitalizing on recent stock price weakness to acquire shares at an attractive 16.1x forward P/E valuation. The fund managers highlight Roper's strategic position as a provider of critical technology solutions and systems of record for small and medium businesses, suggesting strong customer retention and pricing power. The emphasis on Roper's importance to its customer base indicates the company operates mission-critical software with high switching costs. Strong free cash flow generation demonstrates the quality and sustainability of Roper's business model, while the active share buyback program shows disciplined capital allocation. The timing of this initiation during a stock price decline reflects the fund's value-oriented approach and willingness to act contrarian. Roper's focus on SMB customers provides diversification from larger enterprise software providers. The combination of attractive valuation, strong fundamentals, and defensive business characteristics aligns well with Dodge & Cox's investment philosophy during uncertain market conditions.

Pitch Summary:
In Software, we added to the Fund's position in Microsoft. We believe the current valuation, at 20.0 times forward earnings, does not reflect the company's long-term growth potential and its pivotal role in the AI ecosystem.

BSD Analysis:
Dodge & Cox increased their Microsoft position, viewing the current 20.0x forward P/E as attractive relative to the company's long-term growth prospects and strategic positioning in artificial intelligence. The fund managers believe the market is undervaluing Microsoft's role in the AI ecosystem, suggesting significant upside potential. This contrarian stance comes amid broader technology sector weakness during Q1 2026, when growth stocks faced pressure from rising oil prices and shifting interest rate expectations. The fund's decision to add to Microsoft during market volatility demonstrates confidence in the company's fundamental strength and AI leadership position. Microsoft represents 2.5% of the fund's holdings, indicating meaningful conviction in the investment thesis. The managers appear to be capitalizing on temporary market dislocations to build positions in quality technology companies. Their focus on Microsoft's AI capabilities aligns with the fund's strategy of identifying long-term value opportunities during periods of market uncertainty.

Pitch Summary:
We initiated a position in Tencent. The stock is down roughly 30% from its recent peak, back to the level at which it traded six years ago when the company was grossing a profit half of what it is now, and trades at about 14 times net earnings. Tencent is China's dominant digital ecosystem. Everything flows through WeChat — a super-app combining messaging, payments, content and commerce that functions more like a mobile operating system than a social platform. With 1.3 billion monthly users, any service built on WeChat inherits its user base instantly. The model is self-reinforcing: engagement generates transaction data, data improves ad targeting, better ads deepen merchant activity, strengthening WeChat Pay, which makes WeChat more central to daily life. Beyond its operating businesses, Tencent holds minority stakes across China's digital economy (Meituan, JD.com, Pinduoduo) — gaining distribution access and competitive intelligence without full operational ownership. We think Tencent's P&L does not fully reflect the company's true underlying earning power. First, advertising monetization remains structurally underexploited. WeChat's ad load is deliberately kept well below industry peers, and as closed-loop capabilities mature the runway for improvement is substantial. That approach to advertising reflects Tencent founder Pony Ma's mindset and superior discipline of prioritizing long-term value creation over short-term profit. Second, the recent launch of Mini Shops represents an emerging e-commerce franchise of real scale, embedding transactional commerce natively within WeChat's social graph — a differentiated alternative to Alibaba and Pinduoduo without the fulfilment complexity. Finally, we think AI is quietly transforming the economics of the core business: Hunyuan is already driving measurable lift in ad targeting and content recommendations, Tencent Cloud is scaling profitably on enterprise AI workloads, and agentic AI solutions embedded across WeChat's mini program ecosystem could unlock an entirely new monetization layer across millions of merchant and developer relationships.

BSD Analysis:
The manager presents a compelling value thesis on Tencent, emphasizing the disconnect between current valuation and underlying earning power. Trading at 14x earnings despite being down 30% from peaks, the stock appears attractively priced relative to a business generating double the profits of six years ago. The investment case centers on WeChat's dominant ecosystem position with 1.3 billion users, creating a self-reinforcing moat through data network effects. The manager identifies three key value drivers: undermonetized advertising with significant runway for improvement, the emerging Mini Shops e-commerce platform that differentiates from Alibaba and Pinduoduo, and AI integration through Hunyuan driving measurable improvements in ad targeting and cloud services. The thesis reflects confidence in management's long-term value creation approach and the structural advantages of Tencent's super-app model. The position represents a contrarian bet on Chinese tech at attractive valuations with multiple catalysts for earnings growth.

Pitch Summary:
Rather than being disrupted by AI, as the market has been suggesting lately, we believe SAP is very well positioned to benefit from it. The mission critical nature of the software, the deep integration with customers' IT systems and comprehensive suite of products will allow SAP to naturally embed AI agents, both horizontally — through SAP Business AI and the Joule copilot — and vertically within each product across planning, execution, and network function. Beyond the long-term tailwind from AI, SAP will benefit in the coming years from a set of structural growth drivers that are specific to the company's businesses: The catch up in cloud-based products, the ongoing migration wave to the S/4data base and strong growth in Supply Chain Management (SCM) Geopolitical tensions, pandemic-era disruptions, and climate-related volatility have elevated the focus on supply chain management. SAP is uniquely advantaged to benefit from a structural, multi-year upgrade cycle in SCM because approximately 77% of its revenue derives from industries where supply chains are mission critical. Its end-to-end Supply Chain Management (SCM) suite provides a single-vendor, integrated-data-model solution that standalone best-of-breed vendors cannot replicate. We feel that the large-scale decline of the stock in 2026 is overdone.

BSD Analysis:
The manager counters market concerns about AI disruption, arguing SAP is positioned to benefit rather than suffer from AI adoption. The thesis rests on the mission-critical nature of SAP's software and deep customer integration, enabling natural AI agent embedding through Business AI and Joule copilot across planning, execution, and network functions. Multiple structural growth drivers support the investment case: cloud migration acceleration, S/4 database transitions, and supply chain management expansion. The fund highlights SAP's unique SCM advantage, with 77% of revenue from supply chain-critical industries and an integrated solution that standalone vendors cannot match. Recent geopolitical tensions and supply chain disruptions have elevated SCM importance, creating a multi-year upgrade cycle opportunity. The manager believes the 2026 stock decline significantly overreacts to AI concerns while ignoring these fundamental growth catalysts.

Pitch Summary:
Oracle's investment thesis has been dominated by a sharp rise in its Remaining Performance Obligation (RPO, or future sales) from USD 104bn to USD 523bn in H2/2025 which were driven by AI training contracts — most notably with OpenAI. The stock today trades below its pre-announcement level, implying the large additional backlog has negative or zero value. This is irrational. While we will not deny that their large-scale investments in AI data centers for which they will take on approx. USD 80-100bn in new debt will increase risk, the additional business opportunities it creates and the large margin of safety more than compensate for it. Additionally, risks are mitigated by the fact that: (1) The backlog comprises non-cancelable contracts — clients are legally obligated to pay. (2) Data center capacity (contracted at $248bn over 15–19 years) can be sub-leased to hyperscalers in any excess capacity scenario; given the chronic shortage of powered data center space, Microsoft or others would be willing takers.

BSD Analysis:
The manager argues Oracle's stock presents an irrational valuation opportunity following a massive RPO increase from $104bn to $523bn driven by AI training contracts, particularly with OpenAI. Despite this substantial contracted revenue growth, the stock trades below pre-announcement levels, suggesting the market assigns zero value to the new backlog. While acknowledging increased leverage risk from $80-100bn in new data center debt, the manager believes the business opportunity and margin of safety are compelling. Key risk mitigation factors include non-cancelable contract terms ensuring payment obligations and the ability to sublease excess capacity to hyperscalers given chronic data center shortages. The fund views this as a classic case of market inefficiency where fundamental value creation is being overlooked due to near-term financing concerns.

Pitch Summary:
The sharp drop in the stock in the January-February period has opened a rare opportunity to acquire more of this high-quality IT stock at a steep discount to fair value. Various discussions with our experts and research partners have reinforced our view that ServiceNow is not only well protected from AI disruption, but well-positioned to benefit from the AI wave. Why? The ServiceNow platform is very broadly and deeply intertwined with enterprises' IT systems and thus will enable the deployment of AI capabilities and act as a command center for AI agents at scale – a very favorable position to be in, in our view. ServiceNow's recent acquisitions (e.g., Moveworks, Armis) and the rollout of AI-driven features (Pro Plus, Now Assist, AI Control Tower) are seen as strategic moves to not only enhancing its AI capabilities, but also driving expansion into new verticals such as security, IoT, CRM, data orchestration and governance, opening further avenues for future growth. As an additional benefit, the ServiceNow platform is becoming increasingly valuable to manage and protect against cyber risks, enabling end-to-end collaboration across tasks such as analyzing threat bulletins, assessing the attack surface, calculating risk posture, prioritizing threat response, and remediating exposure. Checks with our expert network covering IT security confirm the growing position of the company in that field.

BSD Analysis:
The manager views the recent stock decline as a compelling entry opportunity for this high-quality enterprise software company. The bull thesis centers on ServiceNow's deep integration within enterprise IT systems, positioning it as a natural command center for AI agent deployment rather than a disruption target. Strategic acquisitions like Moveworks and Armis, combined with AI-driven product rollouts, are expanding the platform into new verticals including security, IoT, and CRM. The fund emphasizes ServiceNow's growing cybersecurity capabilities, enabling comprehensive threat management and response coordination. Expert network checks validate the company's strengthening position in IT security. The manager believes the platform's mission-critical nature and broad enterprise integration create sustainable competitive advantages that will drive long-term growth as AI adoption accelerates.

Pitch Summary:
Broadcom delivered another strong quarter. While revenue and EPS both were only slightly above Street consensus, the real highlight was FY2027 guidance for AI revenues, which were well above expectations and have led to analysts upgrading their sales and profit estimates, some of them significantly. Additionally, at the latest analyst call management proactively and effectively countered investor concerns that have weighed on the stock such as margins risks, competition risks from hyperscalers building their own customer chips (ASICs) and software disintermediation. The combination of AI ASIC dominance, enterprise software durability (due to being right at the center of the IT infrastructure stack), and best-in-class margins reinforces our conviction in our investment case. Therefore, Broadcom remains a core holding to play the AI opportunity.

BSD Analysis:
The manager maintains strong conviction in Broadcom following solid quarterly results and significantly raised FY2027 AI revenue guidance that exceeded expectations. The investment thesis rests on three key pillars: AI ASIC market dominance, durable enterprise software positioned at the core of IT infrastructure, and best-in-class profit margins. Management effectively addressed key investor concerns including margin pressure, hyperscaler competition through custom chip development, and potential software disruption. The fund views Broadcom as a premier way to capitalize on the AI opportunity, with the company's dual semiconductor and software exposure providing multiple avenues for growth. Analyst upgrades following the guidance raise suggest the market is recognizing the company's strengthened competitive position and financial outlook.