Investment Pitches

Pitch Summary:
Readers may remember the now notorious “Blue Screen of Death” associated with massive software outages across multiple industries in the U.S. Crowdstrike was at the center of the crisis. In July, CrowdStrike released a faulty software update for its Falcon security platform, which caused widespread system crashes affecting around 8.5 million Windows machines globally. For whatever reason, the software update bypassed CrowdStrike’s usual validation checks, leading to massive outages. We sold the stock immediately. Since the incident occurred, several companies including Delta Airlines—which canceled over 7,000 flights—announced it would seek to recover losses estimated at $550 million through legal action. Other affected businesses, including banks and IT-dependent firms, are also pursuing claims.

BSD Analysis:
CrowdStrike enters 2026 having successfully pivoted from "security vendor" to the definitive "Operating System of the SOC." Following a record Q3 2026 (ended October 31, 2025), the company reported a 22% revenue increase to $1.23 billion and net new ARR of $265 million—a 73% year-over-year acceleration. Management has set a "North Star" goal of reaching $10 billion in ARR by 2028, with the current run rate already nearing $5 billion. The investment thesis for 2026 centers on Falcon Flex, a credit-based consumption model introduced to reduce sales friction following the 2024 outage. The platform’s expansion into Next-Gen SIEM and Identity Security is driving record module adoption, with 24% of customers now using eight or more modules. While the $500M+ Delta Air Lines lawsuit remains a lingering legal variable, the firm's $4.8 billion cash pile and "best-in-breed" edge in non-Windows environments maintain its status as the apex predator of the cybersecurity ecosystem.

Pitch Summary:
Our ongoing risk analysis ultimately showed that Super Micro Computer had a margin problem. Gross margins had plummeted in the latest earnings report, and net margins were approaching 0%—which, compared to NVIDIA’s ~50% net margins, made no comparison. We sold the stock on August 7. Certain transactions were also not fully disclosed, with $110 million in sales to entities linked to the CEO’s brothers over a three-year period. Additionally, the report highlighted concerns about the company’s export of restricted technology to Russia, possibly in violation of U.S. sanctions. And it raised corporate governance concerns, namely that SMCI re-hired executives involved in prior accounting scandals. With risks piling up, we were happy to be out of the stock.

BSD Analysis:
Supermicro has emerged from a period of extreme governance volatility as the "rack-scale" architect of the AI factory era. On February 3, 2026, the company reported a massive fiscal Q2 beat, with revenue surging 123% year-over-year to $12.7 billion, significantly exceeding the $10.4 billion analyst consensus. Despite this top-line strength, gross margins declined to 6.3% from 11.8% a year ago, reflecting high expedited shipping costs and the low-margin nature of large-scale liquid cooling deployments. Management has raised its full-year 2026 revenue guidance to at least $40 billion, betting heavily on the ramp-up of NVIDIA Blackwell clusters and its new Data Center Building Block Solutions (DCBBS). Strategic catalysts for 2026 include the transition of the Malaysian manufacturing hub to full capacity, which is expected to restore margins to the 8–10% range by late 2026. Having regained Nasdaq compliance in January after a long-delayed filing saga, the company is now focused on institutional "re-stocking" to stabilize its high-beta share price, which has recently found support in the $30–$34 range.

Pitch Summary:
Finally, we’re making a play on China’s internet behemoths like Alibaba, JD.com, Baidu, and others. China’s economic growth struggles have resulted in sustained selling pressure in equity markets there, which we think has opened the door to opportunities at attractive valuations. China recently announced stimulus measures, including interest rate cuts, lower reserve requirements, mortgage rate reductions, and forward fiscal spending. These policy shifts may provide strong tailwinds for Chinese equities.

BSD Analysis:
The KWEB ETF remains a high-risk, high-beta vehicle (1.45x market volatility) as it enters 2026, currently trading near the lower end of its $28 to $43 fifty-two-week range. The fund offers pureplay exposure to Chinese tech giants like Alibaba (9.8%) and Tencent (9.5%), but performance is heavily dictated by geopolitical sentiment rather than pure earnings multiples. While technically "oversold" following a 26% maximum drawdown last year, the ETF offers an attractive annual dividend yield of 6.1%. Investors are looking for a sustained thaw in U.S.-China relations or a definitive end to domestic regulatory tightening as the primary catalysts for a bull-case push toward $55.

Pitch Summary:
Tesla should be viewed as far more than just a car maker—the company has plenty of market share to claim across energy, storage, semiconductors, AI, and data center segments. Tesla is looking into datacenter/AI opportunities tied to their energy generation and storage segment and is developing chips—called Dojo—in hopes of reducing its AI dependence on NVIDIA.

BSD Analysis:
Tesla is undergoing a massive strategic reset in 2026, committing $20 billion toward autonomous driving and humanoid robots (Optimus). Management has ended production on two older vehicle models to free up capacity at the Nevada factory for the Tesla Semi, which is now reaching full-scale production. In Austin, the Robotaxi pilot has begun ferrying employees without human safety monitors, and a broader Unsupervised FSD launch is expected later this year. While 2025 financial performance was weakened by rising operating expenses, analysts point to an 182% total upside over the next three years if the pivot to software-led growth and the Cybercab commercialization successfully reshapes Tesla's earnings power.

Pitch Summary:
We think the next big wave of spending for artificial intelligence will shift from infrastructure build-out/chips/data centers to software development. Gitlab is an enterprise hub for software development, enabling teams to collaborate efficiently from code creation to deployment. The company’s promise lies in providing a single interface for version control, continuous integration, and delivery, which accelerates the software development lifecycle. By integrating security, automation, and monitoring tools, GitLab enhances productivity and ensures high-quality code delivery—which is precisely what enterprise development teams are looking for.

BSD Analysis:
GitLab has issued a fiscal 2026 revenue guidance of $946 million to $947 million, representing sustained 25% year-over-year growth. The company is successfully monetizing its Duo AI Agent Platform, with the number of customers contributing over $100k in ARR increasing by 23%. While the stock has faced a 50% slump over the past year due to broader SaaS valuation resets, a Discounted Cash Flow (DCF) analysis suggests an intrinsic value of approximately $69.76, significantly higher than its current $31.55 trading price. Management is prioritizing the "intelligent orchestration" of the software lifecycle, aiming for non-GAAP operating income of $147 million to $148 million for the full year.

Pitch Summary:
Much like Gilead and Eli Lilly, Zoetis is also a leader of innovation in the healthcare space—but for animals. Zoetis provides advanced, science-driven solutions for the prevention and treatment of diseases in livestock and companion animals. The company has a comprehensive product portfolio and global reach, and its unmatched R&D efforts have led to groundbreaking vaccines, diagnostics, and therapeutic products that improve animal well-being and productivity. These treatments are increasingly crucial in a world where animal diseases are becoming more common.

BSD Analysis:
Zoetis enters 2026 navigating a "messy" near-term environment characterized by softer veterinary visit trends, which led to a slightly reduced 2026 outlook. However, the company’s monoclonal antibody products for osteoarthritis pain—Librela (dogs) and Solensia (cats)—continue to drive international revenue growth. Despite the guidance trim, management reaffirmed a quarterly dividend of $0.53 per share, signaling confidence in long-term cash generation. Analysts suggest the stock may be undervalued by as much as 37%, noting that its active R&D engine and 10% expected growth in the International segment provide a solid floor for recovery as companion animal clinic traffic stabilizes.

Pitch Summary:
Gilead has made phenomenal advancements in the healthcare space, particularly in the treatment of viral diseases such as HIV and hepatitis. Their innovations include groundbreaking antiviral therapies that have transformed these conditions from life-threatening diseases to manageable chronic illnesses. Gilead has also expanded into oncology and inflammation treatments, pushing the boundaries of therapeutic options for cancer and immune-related diseases.

BSD Analysis:
Gilead has successfully rebranded itself as an oncology and cell-therapy powerhouse in 2026, moving beyond its legacy role as a pure virology player. The stock recently hit all-time highs of $152.50 following the FDA's decision to remove label restrictions for Yescarta, making it the only CAR T-cell therapy available for certain lymphomas without prior use limitations. Financially, Gilead reported 2025 revenue of $29.4 billion with an industry-leading net margin of 39%. For 2026, investors are focused on the long-acting HIV injectable Sunlenca (lenacapavir) and its rollout for PrEP, which is expected to change adherence dynamics and capture significant market share.

Pitch Summary:
Simply put, Medtronic is developing some of the most innovative technology in healthcare today. Medtronic’s smart devices, including remote monitoring tools and implantable technologies, allow physicians to track patient health in real time, enabling quicker interventions and better outcomes. These advancements are particularly impactful in managing chronic conditions, such as heart disease, where continuous monitoring improves treatment efficacy.

BSD Analysis:
Medtronic has raised its fiscal 2026 outlook following a strong start to the year, with organic revenue growth now projected at 5.5% to 6.8%. The company’s Pulsed Field Ablation (PFA) franchise has emerged as a major catalyst, with cardiac ablation revenues skyrocketing nearly 50% (up 72% in the U.S.) due to high demand for the PulseSelect system. Non-GAAP EPS guidance for the full year has been narrowed to $5.60 to $5.66. While operating margins faced some compression due to tariff-related costs, management has successfully scaled manufacturing to support the acceleration of the Hugo robotic surgery platform and the Symplicity Spyral hypertension treatment.

Pitch Summary:
Aviation technology is big business, and GE Aerospace is a key player. But one of the attributes we like most about the company is that services account for about 70% of revenue, underscoring the importance of maintenance, repair, and overhaul (MRO) operations in its business model. The longevity of aircraft engines, which typically remain in service for over two decades, ensures a steady demand for the company’s services and parts.

BSD Analysis:
GE Aerospace enters 2026 with substantial momentum, issuing a full-year EPS guidance of $7.10 to $7.40, which sits above the market consensus of $7.12. In its recent late-January report, the company posted a Q4 beat with $11.9 billion in revenue (up 17.6% year-over-year), driven primarily by the high-margin commercial aftermarket segment. The firm's total backlog has reached an unprecedented $190 billion, providing multi-year visibility for services and parts. To reward shareholders, management recently raised the quarterly dividend by 30% to $0.47 per share. Analysts maintain a "Moderate Buy" rating with a price target of $314, viewing the company as the primary beneficiary of the global aviation "supercycle."

Pitch Summary:
Mitsubishi Heavy is a Japanese industrial conglomerate with four broad segments: Energy Systems (38% of F2023 sales), Logistics & Thermal Drive Systems (28%), Aircraft, Defense and Space (17%), and Plants and Infrastructure Systems (17%). The company is a global leader in the design and production of gas turbines and nuclear power systems. It is also the largest domestic defense contractor in Japan – a nation committed to nearly doubling defense spending as a percent of GDP in short order. This is an unusual situation and position. I had been tracking Mitsubishi Heavy for some time, and while the business and outlook looked attractive, shares were expensive. Then, in early August the Japanese market had its own "flash crash." Mitsubishi Heavy shares dropped ~40% in short order and were suddenly cheap. Because of Upslope's nimble structure ("investment committee of one") and size, the Fund was able to move fast and purchase shares at a steep discount. The stock has rebounded surprisingly fast. Upslope's thesis is that Mitsubishi Heavy holds leading market positions in unique end markets – Japanese defense, nuclear power, and gas turbines – that should continue to see very strong (and in some cases accelerating) demand over the medium- and long-term. At 14x EBITDA shares are no longer "cheap," as they were just a few weeks ago. But given the tailwinds noted above, I believe they shouldn't be. Key risks include: FX, cyclical end markets, political and geopolitical uncertainty (re: defense unit), potential for operational accidents/liability.

BSD Analysis:
Upslope capitalized on the August Japanese market crash to acquire Mitsubishi Heavy Industries at a steep 40% discount, demonstrating the fund's nimble execution capabilities. The industrial conglomerate holds dominant positions in three secular growth markets: Japanese defense (largest domestic contractor), nuclear power systems, and gas turbines. Japan's commitment to nearly doubling defense spending as a percentage of GDP provides a powerful tailwind for the defense segment, while global nuclear renaissance and energy transition support the power systems business. The manager had been tracking the company for some time but waited for an attractive entry point, highlighting disciplined valuation approach. At current 14x EBITDA following the rapid rebound, shares no longer appear cheap but remain reasonable given the strong secular tailwinds across core end markets. The investment benefits from Japan's strategic defense buildup amid regional tensions and global shift toward nuclear power for energy security. Primary risks include foreign exchange volatility, cyclical exposure, geopolitical uncertainty affecting defense contracts, and potential operational accidents in nuclear operations.

Pitch Summary:
CompoSecure is the leading producer of premium metal credit cards, with almost 85% market share in the U.S. and a growing international presence. The company dominates this growing, niche market, and does so via defensible, long-term contracts. Fundamentally, CMPO has performed well despite being a de-SPAC (that also navigated a COVID era demand surge). FCFE has historically been strong – growing HSD% and typically converting at ~100% of adjusted EPS. In early August, the company announced a financially and strategically transformative transaction (now closed): David Cote, a legendary capital allocator (ex-Honeywell, Vertiv) would invest $372mm via his family office entity. Financially, the transaction cleans up the capital/share structure and immediately boosts free cash flow by eliminating the old dual class share structure and associated tax payments. Strategically, Cote will assume the role of Executive Chairman and seems poised to streamline operations and leverage CMPO for acquisitions in complementary verticals (a playbook Cote has deep experience deploying). Prior to the transaction, CMPO shares traded in the 7x EPS range due to the SPAC stigma, customer concentration risk (serious, but pushed out many years following recent renewals), and uncertainty regarding the terminal value of the physical card business. Upslope effectively purchased shares for 9x EPS shortly after the transaction was announced, with a simple thesis that the deal was very clearly transformative – eliminating or mitigating most of the prior perceived issues and creating significant optionality via Cote's involvement. Shares have continued to re-rate, but at 12x EPS remain reasonable considering the tangible and intangible benefits of the transaction. Key risks include: cyclical end markets (partially tied to credit card issuance volumes), uncertain strategic changes, M&A execution, "key man" risk (Cote), customer concentration, and potential for accelerated shift to digital/phone-based cards.

BSD Analysis:
Upslope's CompoSecure investment represents a classic transformation story centered on David Cote's involvement as Executive Chairman and $372 million investment. The company dominates the premium metal credit card market with 85% U.S. market share and defensible long-term contracts, generating strong free cash flow conversion at ~100% of adjusted EPS. The Cote transaction addresses key investor concerns by eliminating dual-class structure, reducing tax burden, and bringing proven operational expertise from his Honeywell and Vertiv tenures. Upslope purchased shares at 9x EPS following the announcement, recognizing the transformative nature of the deal despite SPAC stigma and customer concentration concerns. The investment thesis relies on Cote's track record of streamlining operations and executing complementary acquisitions to expand beyond the core metal card business. At current 12x EPS valuation, shares appear reasonably priced given the strategic optionality and operational improvements expected under new leadership. Primary risks include cyclical credit card issuance volumes and potential digital payment disruption.

Pitch Summary:
CME Group is a leading operator of global derivatives exchanges. Key end markets include interest rates (34% of transaction/clearing fees in 2023), energy + other commodities (31% combined), equities (23%), and FX (4%). Upslope's thesis is simple: CME is an attractive business that has been relatively out of favor vs. peers due to exaggerated worries about new competition and the end of the interest rate hiking cycle. The financial exchange sector is comprised of durable, monopoly-like businesses, and has a history of predictable mean-reversion. Exchange stocks come in and out of favor, as investors extrapolate short-term issues and opportunities (not unlike other sectors, but I see this space as more predictable than most). CME is the "out of favor" exchange today: shares have materially lagged peers over the past 1/3/5 years and are reasonably valued today. Over the past 10 years shares have rarely been cheaper on a forward earnings basis. This, despite CME being in a strong position to benefit from continued interest rate volatility and ever-expanding U.S. government debt issuance, as well as general commodity volatility. What makes CME a high-quality business? Due to the unique nature of derivatives market structure, the company holds a monopoly-like position in many key products. This is reflected in CME's ~70% EBITDA margins. Additionally, unlike most global exchanges, which have shifted significantly away from being trading volume-driven and towards data/other services, CME still derives most of its revenue (82% in 2023) from trading. While most investors prefer the new exchange model, I hold the opposite view: I prefer to own shares of a company that benefits when volatility surges – even if that makes it harder to predict/model in the short-term. On the competitive front, investors have worried that CME's core rates products could be pressured by new competition from BGC Group, who launched the FMX Futures Exchange in late September. With the benefit of very significant network effects (liquidity begets liquidity), legacy exchanges have historically been able to easily fend off competition from new entrants. This situation appears no different. And while it's early days, FMX volumes and open interest have not impressed to date. BGC's CEO also appears to have other priorities: he is co-chair of the Republican presidential candidate's transition team. Key risks include: heightened volatility and trading volumes may not be sustained, potential for FMX volumes to improve significantly, large scale M&A, and potential trade matching/execution errors.

BSD Analysis:
Upslope presents a compelling contrarian thesis on CME Group, arguing the derivatives exchange operator is undervalued due to temporary headwinds. The manager emphasizes CME's monopoly-like market position in key derivatives products, evidenced by 70% EBITDA margins and dominant market share across interest rates, commodities, and equity products. Unlike peers that have diversified into data services, CME remains primarily trading-driven (82% of revenue), which Upslope views as advantageous during volatile periods. The investment case centers on mean reversion potential, with shares trading at historically attractive forward earnings multiples despite strong positioning for interest rate volatility and expanding government debt issuance. Competitive concerns around BGC Group's FMX exchange appear overblown given weak early volumes and network effects favoring incumbents. The timing appears opportunistic given CME's underperformance versus exchange peers over multiple time horizons. Risk factors include sustained low volatility, successful competitive threats, and operational execution issues.

Pitch Summary:
Flutter Entertainment Plc ("Flutter") was another significant contributor adding 0.7%. Flutter shifted its primary listing to New York earlier this year to reflect the US now being substantially its largest market, and in an attempt to achieve a more reasonable valuation relative to its most obvious US peer, Draftkings Inc. ("Draftkings"). The company reported strong first half results in August, announced a couple of acquisitions in Italy and Brazil, and issued bullish medium to long term forecasts for its US operations at a recent capital markets day. We believe Flutter has structurally superior economics to Draftkings, and even more so its other US competition, thanks to its global scale, pricing capabilities, marketing execution, and brand / product positioning to appeal to more casual play as demonstrated by its high accumulator (or parlay in the US) bet mix. We continue to find the risk-reward attractive, particularly after a sell-off in October on concerns that the UK's new government will look to the gambling sector for additional tax revenues to help fund its commitments. So far the idea has just been floated in the media, but from our perspective the market appears to have priced in a fairly extreme scenario. Australia provides the best-case study for the impact of an increasing tax take on gambling operators: Australian gambling taxes have increased significantly over the last few years, but Flutter's market-leading Australian business has largely protected its operating margin as increased scale and lower marketing expenses have offset a lower gross margin. The market leader is more resilient to tax increases and typically can gain market share and advertise more efficiently as more marginal operators retrench.

BSD Analysis:
Ennismore presents a compelling bull case for Flutter Entertainment, emphasizing the company's structural competitive advantages over peers like DraftKings. The manager highlights Flutter's superior economics driven by global scale, pricing power, and marketing execution, particularly its ability to attract casual players through high accumulator bet penetration. The recent primary listing shift to New York appears to be achieving its objective of closing the valuation gap with US peers, with Flutter outperforming DraftKings by over 35% since the move. The manager views recent UK tax concerns as overblown, citing Australia as a case study where Flutter's market-leading position has proven resilient to tax increases through operational leverage and market share gains. Flutter's diversified global footprint and dominant market positions provide defensive characteristics while maintaining growth optionality. The combination of structural advantages, proven resilience to regulatory headwinds, and attractive risk-reward following recent volatility supports the manager's continued conviction in the position.

Pitch Summary:
Arthur J. Gallagher (AJG) and Rollins are two other serial acquirers in Andvari's client portfolios. Both are some of the largest, and best, businesses in their respective industries. AJG is a leading property and casualty insurance and reinsurance broker. Rollins is home to many of the top brands in the pest service industry in North America. Importantly, while both AJG and Rollins have large market shares, their respective markets are still highly fragmented. There are thousands of small and medium-sized businesses left for AJG and Rollins to acquire. Andvari believes the pace of acquisitions for both companies can continue for many years to come. Whether its our collection of VMS companies, Rollins with their pest service businesses, or AJG's insurance brokerage business, they all have highly rational acquisition strategies and proven acquisition track records. Acquisitions have created enormous value for their respective shareholders over the years. Companies like Constellation, Rollins, or AJG position themselves as the "acquirers of choice" in their respective industries. They offer a fair price, but never top dollar. What they offer in exchange is a permanent home for the business and the employees of the seller. Also, when Constellation, Rollins, or AJG acquire a company, the acquired company benefits by becoming part of a larger organization with greater resources. The acquired company has access to extraordinarily honed best practices. The acquired company can offer more robust career opportunities for their own employees. Given all the above, it's likely the acquired company can more easily grow its profit margins and revenues at a higher pace post acquisition. Another benefit of M&A done correctly is that, in some cases, an acquired company can become an additional acquisition vehicle that can grow by making acquisitions of its own. It has also happened at Rollins. Jeff Dunn, Co-President of Northwest Exterminating, one of Rollins' brands based in the South, speaks about the experience of being acquired by Rollins: "When we were acquired back in 2017, we were very much a family-owned business. And the Phillips family sought out Rollins. And Jerry was the leader at that time, and Jerry said, "Trust us. We'll give you autonomy. You guys can be Northwest, we'll provide resources so that you can scale." And 6.5 years later, we've more than tripled our revenue. We've got opportunities for our teammates that we would have never had before. We've done 15 acquisitions since becoming a part of Rollins. So it's been an incredible experience."

BSD Analysis:
Andvari's investment thesis on Rollins emphasizes the company's dominant position in the highly fragmented pest control industry and its proven acquisition strategy. The manager highlights Rollins' impressive track record of 282 acquisitions from 2014-2023, demonstrating consistent execution in a roll-up strategy. The investment case centers on the vast runway for continued acquisitions, with thousands of small and medium-sized pest control businesses remaining as potential targets in the fragmented market. Andvari values Rollins' positioning as an "acquirer of choice" that offers fair pricing and permanent homes for family-owned businesses, enabling better deal selection and cultural fit. The Northwest Exterminating case study provides compelling evidence of post-acquisition value creation, with revenue tripling over 6.5 years and the acquired company itself completing 15 additional acquisitions. This demonstrates the scalability of Rollins' decentralized model where acquired companies can become acquisition vehicles themselves. The manager believes this acquisition-driven growth model can continue for many years, supported by the company's proven ability to integrate acquisitions while maintaining operational autonomy and enhancing growth prospects through access to best practices and resources.

Pitch Summary:
Arthur J. Gallagher (AJG) and Rollins are two other serial acquirers in Andvari's client portfolios. Both are some of the largest, and best, businesses in their respective industries. AJG is a leading property and casualty insurance and reinsurance broker. Rollins is home to many of the top brands in the pest service industry in North America. Importantly, while both AJG and Rollins have large market shares, their respective markets are still highly fragmented. There are thousands of small and medium-sized businesses left for AJG and Rollins to acquire. Gallagher currently has a pipeline of 100 potential acquisitions that represents about $1.4 billion of annualized revenue (compare this to $10.1 billion of revenues for 2023). Andvari believes the pace of acquisitions for both companies can continue for many years to come. Whether its our collection of VMS companies, Rollins with their pest service businesses, or AJG's insurance brokerage business, they all have highly rational acquisition strategies and proven acquisition track records. Acquisitions have created enormous value for their respective shareholders over the years. Companies like Constellation, Rollins, or AJG position themselves as the "acquirers of choice" in their respective industries. They offer a fair price, but never top dollar. What they offer in exchange is a permanent home for the business and the employees of the seller. Also, when Constellation, Rollins, or AJG acquire a company, the acquired company benefits by becoming part of a larger organization with greater resources. The acquired company has access to extraordinarily honed best practices. The acquired company can offer more robust career opportunities for their own employees. Given all the above, it's likely the acquired company can more easily grow its profit margins and revenues at a higher pace post acquisition. Patrick Gallagher, Chairman and CEO of AJG, talks about the benefits a firm receives when they choose to sell to AJG: "Most of these firms have less than $25 million of annual revenue and have terrific roots in their local communities. So when they sell and join Gallagher, we get revenue and profit. But more importantly, we get new talent and capabilities. Basically, we get their brains. And they get immediate access to our niche experts, our extensive data and analytics and our centers of excellence. And all of our tools and capabilities are on their desk overnight. That creates immediate value for their clients, gives them a terrific new story for prospects, and it offers enhanced career opportunities for their employees."

BSD Analysis:
Andvari's thesis on Arthur J. Gallagher centers on the company's position as a leading insurance broker with a highly effective acquisition strategy in a fragmented market. The manager highlights AJG's substantial acquisition pipeline of 100 potential targets representing $1.4 billion in annualized revenue, compared to the company's $10.1 billion in 2023 revenues, indicating significant growth runway. The investment case emphasizes AJG's track record of 416 acquisitions from 2014-2023, demonstrating consistent execution capability. The manager values AJG's positioning as an "acquirer of choice" that offers fair pricing and permanent homes for sellers, enabling better deal selection and integration outcomes. Post-acquisition value creation occurs through access to AJG's specialized expertise, data analytics, and centers of excellence, which immediately enhance acquired firms' capabilities and client value propositions. The CEO's commentary reinforces the strategic focus on acquiring talent and capabilities rather than just revenue, suggesting sustainable competitive advantages. Andvari believes this acquisition-driven growth model can continue for many years given the highly fragmented nature of the insurance brokerage market.

Pitch Summary:
Our three serial acquirers of vertical market software (VMS) companies are Constellation Software, Topicus.com, and Lumine Group. This trio acquired another 22 software businesses in just the prior quarter. Given the decentralized nature of all three companies, and their many different business units and sub-business units, a few acquisitions may have flown under our radar. We continue to view this group as a semi-permanent holding still capable of outperforming the market over the long term. Whether its our collection of VMS companies, Rollins with their pest service businesses, or AJG's insurance brokerage business, they all have highly rational acquisition strategies and proven acquisition track records. Acquisitions have created enormous value for their respective shareholders over the years. Companies like Constellation, Rollins, or AJG position themselves as the "acquirers of choice" in their respective industries. They offer a fair price, but never top dollar. What they offer in exchange is a permanent home for the business and the employees of the seller. Thus, not only can they earn a potentially better return, they are also better able to select for business owners motivated by more than just money. Also, when Constellation, Rollins, or AJG acquire a company, the acquired company benefits by becoming part of a larger organization with greater resources. The acquired company has access to extraordinarily honed best practices. The acquired company can offer more robust career opportunities for their own employees. Given all the above, it's likely the acquired company can more easily grow its profit margins and revenues at a higher pace post acquisition. Another benefit of M&A done correctly is that, in some cases, an acquired company can become an additional acquisition vehicle that can grow by making acquisitions of its own. There are several examples of this that have already happened at Constellation Software.

BSD Analysis:
Andvari presents a compelling thesis on Constellation Software as part of their vertical market software (VMS) acquisition strategy. The manager emphasizes Constellation's proven track record as a serial acquirer, having completed 22 software acquisitions in just the prior quarter alongside Topicus and Lumine Group. The investment thesis centers on Constellation's position as an "acquirer of choice" that offers fair pricing and permanent homes for acquired businesses, enabling better selection of motivated sellers. The manager highlights the value creation through multiple arbitrage, where acquisitions are made at lower multiples than Constellation's trading multiple. Post-acquisition value creation occurs through access to best practices, enhanced career opportunities, and improved growth prospects for acquired companies. The decentralized structure allows acquired companies to potentially become acquisition vehicles themselves, creating a compounding effect. Andvari views this as a "semi-permanent holding" capable of long-term market outperformance, reflecting high conviction in the sustainable competitive advantages of the acquisition model.

Pitch Summary:
By far, the most rewarding development this quarter was The Gym Group plc (GYM). Although we had anticipated gains earlier in the year, it's encouraging to see investor sentiment finally turning positive. The new management team is delivering results in line with expectations, and there are ample opportunities to invest capital into new gym openings at attractive returns. Membership growth has been strong as the company continues to recover from post-Covid lows, and even modest membership increases significantly improve profitability since new revenues come with minimal additional costs. These operational improvements are laying the foundation for long-term value creation, and we remain confident that this business will continue to grow stronger. Gaining more members now will support the results going forward. The full impact on a yearly basis will only be seen next year. At the same time, the cost side is improving steadily. As the lowest-cost gym provider in the UK, GYM offers great value for money to currently stretched consumers. The company is even able to very meaningfully increase prices in the currently weak consumer environment. We continue to hold this position and expect further positive news to emerge in the coming quarters.

BSD Analysis:
The manager's thesis on GYM centers on the company's recovery trajectory and operational leverage inherent in the fitness center business model. New management execution has met expectations while creating attractive reinvestment opportunities through new gym openings at compelling returns. The post-COVID membership recovery provides significant operating leverage, as incremental members generate high-margin revenue with minimal additional costs. GYM's positioning as the UK's lowest-cost provider creates defensive characteristics during economic weakness while enabling pricing power even in challenging consumer environments. The combination of membership growth, cost optimization, and pricing flexibility creates multiple drivers for margin expansion. Strong operational improvements are building sustainable competitive advantages and long-term value creation potential. The manager expects continued positive developments as the full-year impact of current improvements materializes.

Pitch Summary:
The Property Franchise Group plc (TPFG), the leading property franchising business in the UK, which is also under the FCA's scope, is less exposed. While TPFG generates about a third of its revenues from financial services, these activities are primarily as representatives of MAB. Here too, we do not expect a significant impact. TPFG delivered strong quarterly results in September and made good progress integrating its recently acquired businesses. As with MAB, we added to our position, seizing the opportunity created by short-term market mispricing.

BSD Analysis:
The manager views TPFG as a compelling opportunity trading at a discount due to guilt-by-association with broader FCA regulatory concerns affecting the sector. The investment thesis emphasizes TPFG's limited exposure to regulatory risk, with only one-third of revenues from financial services primarily conducted as MAB representatives. Strong quarterly results and successful integration of recent acquisitions demonstrate operational excellence and management execution capability. The manager's decision to increase the position during regulatory uncertainty reflects confidence in the fundamental business quality and growth trajectory. This represents a classic value opportunity where market participants indiscriminately sell quality businesses due to sector-wide concerns. The property franchising model provides recurring revenue streams and scalable growth potential in the UK real estate market.

Pitch Summary:
Similarly, Mortgage Advice Bureau (Holdings) plc (MAB), a leading UK mortgage and related insurance broker, saw its share price decline from recent peaks after the Financial Conduct Authority (FCA) announced an investigation into the UK pure protection market. Operationally, however, the company is performing in line with our expectations. Having consulted management and industry experts, we do not foresee any major impact from the investigation. In fact, we took advantage of this overreaction by the market rather aggressively and meaningfully increased our position, which has already started to pay off as the shares rebounded strongly post-results.

BSD Analysis:
The manager executed a classic contrarian strategy by aggressively increasing exposure to MAB during regulatory uncertainty-driven weakness. The investment thesis relies on separating temporary market noise from fundamental business performance, with the company continuing to meet operational expectations despite FCA investigation concerns. Through direct management consultation and industry expert analysis, the manager concluded the regulatory investigation poses minimal material risk to the business model. The aggressive position sizing during the market overreaction demonstrates high conviction in the fundamental analysis. Early vindication came through strong share price recovery following results, validating the manager's assessment that market fears were overblown. This exemplifies disciplined value investing where thorough due diligence enables capitalizing on temporary market inefficiencies.

Pitch Summary:
We used the capital from the Stemmer exit to reinvest in JOST Werke SE (JOST), an on- and off-highway component manufacturer. You may remember this company from our previous case study in LtP #5. The automotive sector is clouded with uncertainties, but JOST isn't burdened with the structural issues that many OEMs and auto suppliers face. JOST is experiencing a slowdown in its end markets but its ability to perform very resiliently in challenging environments, coupled with an attractive valuation and solid long-term growth potential, again made it a compelling addition to the portfolio.

BSD Analysis:
The manager demonstrates conviction in JOST Werke by reinvesting proceeds from a successful exit back into this automotive components manufacturer. The investment thesis differentiates JOST from troubled OEMs and traditional auto suppliers, emphasizing the company's structural advantages and resilient business model. Despite acknowledging current end-market headwinds, the manager highlights JOST's proven ability to navigate challenging operating environments effectively. The combination of attractive valuation metrics and solid long-term growth prospects creates a compelling risk-adjusted opportunity. This represents a contrarian bet on a quality industrial company trading at depressed levels due to sector-wide pessimism. The manager's familiarity with the company from previous analysis (referenced case study) suggests deep fundamental research underpins this investment decision.