Investment Pitches

Pitch Summary:
Other notable contributors during December came in the form of Disco (Information Technology). Disco benefited from positive returns in Information Technology as semiconductor-related holdings contributed to performance. The company remains exposed to long-term semiconductor manufacturing demand, particularly in advanced nodes and packaging. Its highly specialized equipment and consumables business provides strong pricing power and recurring revenue characteristics. Performance reflected improving sentiment toward high-quality semiconductor capital equipment names.

BSD Analysis:
Disco sits at a brutally technical choke point in semiconductor manufacturing: wafer dicing and grinding where yield loss is unacceptable. Customers don’t switch tools lightly because qualification risk dwarfs equipment cost. Demand is cyclical, but process precision requirements only increase over time. Investors trade Disco like a generic capex name and miss its near-monopolistic niches. Margins reflect engineering depth and consumables pull-through. AI and advanced packaging increase stress on wafers, not reduce it. This is semiconductor tooling paid for by physics, not cycle optimism.

Pitch Summary:
We also initiated a position in Compass Group, a global provider of contract catering and support services. We expect the company to continue compounding earnings at a double-digit rate, with the recent valuation contraction offering an attractive entry point. The business benefits from scale, long-term contracts, and outsourcing trends across corporate, healthcare, and education end markets. Margin recovery and operating leverage should support sustained earnings growth.

BSD Analysis:
Compass is outsourced food services scaled to a level where execution beats cuisine. Corporate offices, schools, hospitals, and arenas don’t want to manage food complexity, labor volatility, or compliance anymore. Scale gives Compass purchasing power and labor flexibility smaller rivals can’t match. Investors worry about wage inflation and margin pressure, yet pricing resets and contract structures absorb much of it. Organic growth tracks employment and foot traffic, not consumer whim. The asset-light model converts volume recovery straight into cash flow. This is services infrastructure monetizing operational hassle, not discretionary dining.

Pitch Summary:
A position in the leading US independent broker-dealer LPL Financial was established. LPL is well positioned to benefit from the ongoing shift toward fee-based wealth management and greater adviser independence. The company has delivered impressive organic revenue growth over time, targeting the 7–13% range, driven by strong adviser recruitment and platform switching. This momentum has translated into consistent net new asset inflows and robust revenue growth, while technology investments enhance platform stickiness and operating leverage. Although LPL has interest rate sensitivity through its cash sweep program, expectations already embed a prudent buffer for rate cuts. Trading at a reasonable valuation relative to its growth profile and capital return potential, LPL offers a compelling risk-reward profile.

BSD Analysis:
LPL is the tollbooth for independent financial advisors who want freedom without operational headaches. Regulatory complexity keeps advisors outsourcing compliance, tech, and custody — exactly where LPL sits. Asset levels move with markets, but net advisor flows are the real driver, and they remain strong. Operating leverage is significant as scale builds. Competition exists, but switching platforms is painful once practices mature. Margin pressure comes from reinvestment, not structural weakness. This is not a brokerage chasing retail traders. It’s infrastructure for the advice economy. As independence keeps winning, LPL keeps taking share.

Pitch Summary:
One of the new entrants into the portfolio was W.W. Grainger, a North American distributor of industrial consumables, tools and supplies. The driver to re-introduce the stock is an attractive valuation and our view that an up-cycle seems imminent. Our modelling calls for double digit revenue growth and mid-teens EPS CAGR over the next few years, together with good potential for multiple expansion as earnings accelerate. W.W. Grainger has a solid moat allowing for pricing and market share gains on top of industrial production growth. Its profitability metrics and cash conversion rank in the top quintile of peers, and financial leverage is low, allowing for generous shareholder returns.

BSD Analysis:
Grainger runs one of the dullest businesses imaginable and turns it into a cash machine. Customers buy from Grainger because running out of parts is more expensive than paying a premium. Scale, inventory depth, and logistics speed create advantages competitors can’t fake. Digital tools improve margins without disrupting trust-based relationships. Cycles affect order volumes, but not customer dependence. Grainger wins by being reliable, not clever. Cost discipline is cultural, not reactive. This is not an e-commerce casualty. It’s industrial distribution dominance hiding in plain sight.

Pitch Summary:
At a stock level, Old Dominion Freight Line (ODFL), the American less-than-truckload (LTL) shipping company, ranked among the portfolio’s top performers in December. Most of this outperformance arose in early December and coincided with ODFL’s mid-Q4 update, which showed volume decline rates easing faster than expected and pricing tracking above expectations, indicating to investors that the cycle trough may have been reached or even possibly passed in the process. Additionally, the stock’s P/E ratio in early December sat near multi-year lows, reflecting overly cautious expectations, which amplified the rebound into year-end. ODFL remains the benchmark in the LTL industry, with pricing, margins and return multiples ahead of peers, supporting our conviction in the name heading into 2026.

BSD Analysis:
Old Dominion is what happens when a trucking company refuses to chase bad freight. Its LTL network is built around service quality, density, and pricing discipline — not volume for volume’s sake. That restraint shows up every downturn when margins hold and competitors bleed. The network effect is real: more density lowers costs and improves service simultaneously. Capex is heavy, but returns justify it because assets are sweat intelligently. Freight cycles come and go, but Old Dominion exits each one stronger. Management plays the long game without apology. This is not a logistics beta play. It’s execution-driven compounding in a cyclical industry.

Pitch Summary:
The small-cap investment committee bought Central Garden & Pet Company (CENT). Central Garden & Pet is a leading U.S. distributor and manufacturer in the lawn, garden, and pet supply industries. Founded in 1980, it initially focused on distributing lawn and garden products, later expanding through acquisitions to include pet supplies. During the past 30 years, CENT has completed 60 acquisitions and evolved into a market leader, manufacturing both branded and private label products for national retailers. Slowing revenue growth from post-pandemic demand normalization, increased competition from low-cost overseas suppliers and shifting consumer spending habits have weighed on CENT’s share price, creating an attractive investment opportunity at current levels. Despite the top-line pressure, CENT has demonstrated resilience in maintaining its operating margins, supported by its ongoing Cost and Simplicity Program, which is midway through implementation. We believe further margin expansion and profitability improvements are possible, especially given the operational complexity introduced by decades of mergers and acquisitions-driven growth. Management is also shifting the company’s product mix toward higher-margin consumable pet products and focusing on product innovation and further acquisitions to drive top-line growth. Additionally, we believe that the long-term prospects for the pet and garden industry are supported by durable trends.

BSD Analysis:
Central Garden & Pet is a roll-up hiding inside an unglamorous corner of consumer goods that people don’t stop buying. Gardening and pet care are emotionally sticky categories, even when discretionary spending tightens. The portfolio is messy, but that mess creates scale advantages in sourcing and distribution. Margin volatility reflects commodity inputs more than demand fragility. Management’s job is less about innovation and more about integration and cost control. Growth isn’t linear, but the underlying categories are durable. This is not a premium brand story. It’s a scale-and-survival story in everyday consumer habits. When input costs normalize, earnings snap back faster than sentiment.

Pitch Summary:
We first invested in Tesco over a decade ago when the company faced operational restructuring challenges and a weak UK retail environment. We viewed Tesco as a dominant food retailer with significant real estate assets and the potential for margin recovery following an accounting scandal and intense competitive pressures. Under new management, Tesco executed a successful turnaround, improving margins, cash flow, and balance sheet strength. However, the competitive landscape continued to evolve, with discounters gaining share and consumer habits shifting. As the share price approached our intrinsic value estimate and long-term upside became more limited, we elected to exit the position.

BSD Analysis:
Tesco is proof that scale and discipline still matter in grocery, even in a brutally competitive market. Its logistics network, supplier leverage, and data-driven pricing give it advantages discounters can’t fully replicate. Inflation actually reinforced Tesco’s relevance as shoppers traded trust for reliability. Clubcard isn’t a gimmick — it’s a behavioral lock-in and pricing weapon. Margins will never be exciting, but cash flow is dependable. Management has learned hard lessons from past missteps and now runs the business with fewer ego projects. Competition is relentless, but Tesco survives by being the default. This is not a growth stock. It’s essential consumer infrastructure that compounds slowly and stubbornly.

Pitch Summary:
National Grid is one of the world’s leading regulated utilities, responsible for electricity transmission and distribution in Great Britain and electricity and gas networks in the northeastern United States. The company operates under well-established regulatory frameworks that provide predictable returns and inflation protection in the UK, while its US operations benefit from nominal rate structures and legally binding decarbonization mandates. Over the past decade, National Grid has repositioned its asset base toward electricity networks, aligning with long-term electrification trends. Despite strong fundamentals, the stock is out of favor due to weak UK macro sentiment and a lower near-term dividend payout as capital is reinvested. Over the next five years, significant capex in grid modernization and renewable integration is expected to drive regulated asset base growth, earnings expansion, and inflation-linked dividend growth.

BSD Analysis:
National Grid is regulated utility infrastructure that only gets noticed when it fails. Electricity and gas transmission assets are irreplaceable, which caps downside as much as upside. Investors fixate on political noise and rate resets instead of asset indispensability. Grid modernization and electrification expand the regulated asset base over time. Inflation linkage quietly supports returns. Capital intensity is high, but recovery is largely embedded. This is slow compounding backed by wires no one can replace.

Pitch Summary:
Mondi is a leading European producer of corrugated packaging, containerboard, kraft paper, and uncoated fine paper. With a strong presence in Eastern and Western Europe and a vertically integrated model from pulp to finished products, Mondi enjoys cost advantages and scale benefits. Currently, Mondi is out of favor due to a prolonged downturn in the European containerboard market, driven by oversupply and weak demand since 2022. Margins have been pressured by inflation in non-fiber input costs and an influx of new capacity, leaving much of the industry operating below breakeven. Despite these near-term challenges, secular trends such as sustainability, convenience, and the shift from plastic to paper underpin steady growth in fiber-based packaging. Mondi’s cost leadership, strong positioning in the high-barrier-to-entry kraft paper market, and completed investment program position it for margin recovery and free cash flow inflection as demand normalizes.

BSD Analysis:
Mondi is packaging infrastructure tied to consumption and logistics, not sentiment. Paper and flexible packaging demand is steady because goods still need to move and protect contents. Investors overreact to input cost volatility and miss contract repricing mechanisms. Sustainability trends favor fiber-based solutions, quietly supporting volume. Capital intensity is front-loaded, but returns normalize well once assets are built. Pricing power exists when alternatives are limited. This is industrial cash flow hiding in brown paper.

Pitch Summary:
SAP is the world’s leading enterprise resource planning (ERP) software company. As customers transition to the cloud with SAP, they take more SAP applications and their annual spend with SAP typically increases 2–3x. Most of its customers are yet to begin the transition to the cloud. We see SAP as being in an advantageous position when it comes to data analytics and AI tools, since most of its customers’ essential data resides within SAP systems. The early progress in these areas is very encouraging. We see many years of attractive earnings growth ahead for SAP.

BSD Analysis:
SAP is enterprise gravity disguised as a slow-growth software company. Mission-critical ERP systems anchor finance, supply chains, and compliance across global corporations. Cloud migration pressure hurt optics but strengthened long-term customer lock-in. Investors mistake transition noise for competitive erosion. Switching costs are existential, not contractual. Once migrations complete, recurring revenue quality improves materially. This is corporate plumbing that companies complain about but never rip out.

Pitch Summary:
IHG Group is a brand owner and franchisor of hotel chains globally. IHG provides hotel owners the benefits of its loyalty program, property management system, reservation system, and revenue management system in return for a franchisee fee. IHG today accounts for 4% of global hotel rooms and 10% of the pipeline, which indicates it should increase its share of the hotel market and grow earnings at an attractive rate for many years to come.

BSD Analysis:
IHG is hospitality monetized through brand and loyalty rather than real estate risk. Asset-light management contracts convert occupancy recovery directly into cash flow. Brands like Holiday Inn and InterContinental benefit from global scale and standardized trust. Investors fixate on travel cyclicality and miss loyalty-driven repeat demand. Pricing power shows up fastest in midscale and business travel segments. New room growth expands fee streams without balance-sheet strain. This is travel infrastructure that scales with confidence, not capex.

Pitch Summary:
Jack Henry is a leading provider of essential software to small and mid-sized banks and credit unions in the US. Its offering includes core account management software, digital banking, fraud detection and treasury management. Jack Henry has an established record of very high customer satisfaction, which has aided its long record of new customer wins and market share gains. We believe Jack Henry can continue its history of attractive earnings growth for many years to come.

BSD Analysis:
Jack Henry is banking infrastructure for institutions that don’t want to be experiments. Core processing systems are deeply embedded, regulated, and painful to replace, which makes churn exceptionally low. Growth looks modest because customers prioritize stability over feature churn. Investors underestimate how much pricing power exists once compliance and switching risk are factored in. Digital modules layer on incremental revenue without destabilizing the base. Margin expansion comes from mix and scale, not heroic sales growth. This is fintech that survives because banks can’t afford downtime. Boring software, lethal moat.

Pitch Summary:
Grainger (W.W.) is one of the largest distributors of products used in maintenance, repair and operations (MRO) in the US. In what is a fragmented market, Grainger has gained market share in most years in the last decade, and grown earnings per share at a rate of 12% p.a. over that period. Grainger has also increased its dividend for 52 consecutive years. We believe it can continue to grow its earnings at an attractive rate in the future.

BSD Analysis:
Grainger runs the dullest business in America — and prints money doing it. It sells industrial supplies customers can’t afford to run out of, regardless of the economy. Scale, logistics, and vendor relationships create pricing power competitors can’t touch. The digital platform improves margins without alienating core customers. Cycles affect volumes, but not relevance. Grainger’s cost discipline shows up every downturn when weaker players fold. Cash generation is relentless and returned consistently. This is not e-commerce disruption bait. It’s industrial distribution dominance built on trust and availability.

Pitch Summary:
RELX provides data and software tools to a variety of professional markets, including legal, insurance, risk, and scientific research. The data at the core of RELX’s solutions is proprietary and not available to AI models. Rather than undermining the value of its solutions, technology, including AI, enhances it. In the Legal segment, RELX released LexisNexis Protégé, a purpose-built AI assistant for legal work, contributing to accelerated growth. Building on the acceleration in earnings growth over the last two years, we expect to see further strategic progress and strong earnings growth in the years ahead.

BSD Analysis:
RELX is what happens when information becomes infrastructure. Its analytics, legal, scientific, and risk platforms are embedded in workflows where accuracy beats cost. Customers don’t churn because the downside of switching is professional embarrassment or regulatory failure. Subscription revenue is recurring, high-margin, and incredibly sticky. AI enhances RELX’s products rather than threatening them by making data more actionable. Growth is steady and unexciting — exactly how infrastructure behaves. Capital allocation is disciplined and shareholder-friendly. This is not a media company anymore. It’s decision-making plumbing with monopoly-like economics.

Pitch Summary:
Accenture is the world’s leading IT consulting and outsourcing company. Its share price declined 28% in 2025. Accenture helps the world’s largest organisations manage change and improve their efficiency. To use AI effectively and at scale, an enterprise typically will need to move their many databases and hundreds of IT applications to the cloud. Data needs to be simplified, cleaned, connected, and properly governed. Large organisations are complex and usually find they need outside help to do all these things. This is what Accenture is good at. Accenture has invested to position itself as an AI and transformation partner of choice to large organisations, and its recent results showed encouraging contract growth, including large AI-related deals.

BSD Analysis:
Accenture is the firm companies hire when failure is expensive and excuses don’t work. Digital transformation, cloud migration, and now AI adoption create multi-year demand rather than one-off projects. Scale, talent density, and global delivery give Accenture a moat most consultancies can’t match. Growth slows when clients hesitate, but relevance never disappears. Margins are protected through offshore delivery and process rigor. Cash flow supports buybacks and steady acquisitions. Accenture doesn’t sell vision — it sells execution. This is not a consulting fad. It’s enterprise change infrastructure with compounding economics.

Pitch Summary:
Copart operates an auction platform, primarily to serve US auto insurers disposing of damaged vehicles that have been deemed too expensive to repair. Its share price declined 25% in 2025 until it was sold from the portfolio in July. The company has a single competitor of note: IAA Inc. After many years of losing share to Copart, IAA has in the last two years improved its operating performance and regained some market share. This caused us to question Copart’s competitive strengths, as well as its long-term growth and earnings prospects. Our error here was not appreciating the risk to any business that has just one competitor.

BSD Analysis:
Copart has built one of the cleanest marketplace monopolies in the world by monetizing chaos. Rising repair costs push insurers to total vehicles more often, feeding Copart’s supply pipeline. Its global auction platform scales with almost no incremental cost, driving absurd operating leverage. Physical yard infrastructure and buyer liquidity create barriers competitors can’t replicate quickly. Bad macro events — floods, inflation, accidents — are perversely good for business. International expansion adds runway without changing economics. Margins stay elite because Copart controls both sides of the transaction. This is not cyclical exposure — it’s structural inefficiency harvesting. Copart compounds because reality keeps breaking cars.

Pitch Summary:
In 2024, it seemed to us that other investors were unduly focused on a slowdown in consumer spending in China, an important market for L’Oréal yet contributing only 17% of its sales. L’Oréal is a broad, balanced business such that in any given year, faster-growing parts of the world will typically offset the weaker ones. We saw this in 2025, where strength in markets such as Europe, the Middle East and South America offset sluggish markets in China and the US, allowing L’Oréal to deliver a year of solid earnings growth. Importantly, L’Oréal gained market share broadly across its end markets in 2025. In fact, L’Oréal has increased its share of the global beauty market in 18 of the last 20 years. It invested heavily in product innovation, its brands, technology, and its distribution channels in 2025, positioning it well for another year of outperformance and earnings growth in 2026.

BSD Analysis:
L’Oréal is the rare consumer company that combines brand power with scientific depth. Beauty demand proves resilient across cycles because it’s tied to identity, not discretion. Scale in R&D, marketing, and distribution creates barriers smaller brands can’t replicate sustainably. Investors worry about indie disruption and miss L’Oréal’s ability to acquire, incubate, or outspend challengers. Pricing power holds because innovation refreshes demand rather than discounts it. Emerging markets and dermatological beauty extend the runway. This is global brand infrastructure with compounding advantages.

Pitch Summary:
Based in the UK, Halma is a leading global supplier of specialty products used in three broad end markets – safety, environmental, and health care. Halma focuses on growing niches within these broad markets, such as gas and flame detectors used in manufacturing facilities, and sensors, radars and emergency communication systems that are used in elevators and car parks, and on motorways. In the environmental sphere, among its many products and solutions are air- and water-quality testing products, and devices that detect leaks in a municipal water system. For Halma, 2025 was another successful year, with its earnings growing by about 15%. While Halma is a highly diversified business, it also has an optical technology business that serves the data centre market, which has experienced exceptional growth in the last couple of years. Even without this tailwind, the rest of Halma grew at an impressive rate in 2025.

BSD Analysis:
Halma is industrial compounding disguised as a safety and measurement portfolio. Its businesses sell mission-critical sensors and systems where failure carries real consequences. Decentralized operations allow steady innovation without integration risk. Growth is incremental but highly reliable, which is the point. Investors underestimate how regulation and safety standards entrench incumbents. Margins stay resilient because customers buy outcomes, not products. This is risk mitigation monetized quietly over decades.

Pitch Summary:
Amphenol is a leading manufacturer of electronic connectors. These small devices are used to join electrical circuits and can be found in a wide range of end markets, including cars, laptops, mobile phones, aerospace, and data centres. The data centre market has grown rapidly in the last few years and now accounts for around one-third of Amphenol’s sales. Data centres built for AI workloads are more intensive in their requirement for electronic connectors than those used for conventional cloud computing. Amphenol has captured a large portion of this wave of spending, driving very strong growth in its earnings in the last year. As beneficial as the AI-centric data centre buildout has been in the last couple of years, Amphenol is far from being a one-trick pony. It is a deliberately broad business, and we have been impressed by the strong growth across its many other end markets, as well as the earnings contribution from its successful acquisition program.

BSD Analysis:
Amphenol is a silent compounder embedded in nearly every growth theme without chasing narratives. Its connectors are small-ticket but mission-critical, creating brutal switching costs and pricing power. Content per system keeps rising as electronics grow more complex across aerospace, defense, data centers, and industrial automation. Investors still misclassify Amphenol as a generic components supplier. Margins reflect engineering depth and customization, not commodity volume. Bolt-on acquisitions extend reach without diluting returns. This is infrastructure hidden inside hardware.

Pitch Summary:
Management of Dick’s Sporting spoke of the need to get back to “Retail 101” and warned of more than USD 500m in pre-tax write-offs after its Foot Locker acquisition. However, the core Dick’s business again flourished and management updated guidance. There was no impact to our valuation and we remain positive with the position at 5.1%.

BSD Analysis:
Dick’s has quietly consolidated share in sporting goods as weaker competitors exited or retrenched. Scale gives it pricing power, exclusive product access, and superior inventory turns. Participation sports demand is steadier than fashion-driven apparel cycles. Investors fixate on normalization after COVID and miss structural margin improvement. Private labels and experiential stores deepen customer engagement without bloating costs. Balance sheet discipline supports opportunistic buybacks. This is category dominance built on execution, not hype.