Investment Pitches

Pitch Summary:
One of the biggest detractors to our strategy's performance in the quarter was Stifel Financial Corp. (SF), which provides brokerage, investment banking, investment advisory, and related financial services. Shares of the global wealth manager began selling off in early February as the market expressed concerns around AI's ability to disrupt their business. Then, the spike in interest rates, driven by concerns about higher inflation and oil prices, further weighed on the stock as the market sold off in March, impacting total client assets and investment banking prospects during a period of potentially "higher for longer" rates. We believe Stifel should still be able to grow revenues and expand margins for the foreseeable future as the company continues to execute on organic asset growth. The company ranked no. 1 in JD Power's Advisor Satisfaction study for the third consecutive year. As a result, Stifel continues to attract new financial advisors to its platform. Meanwhile, AI should be a tailwind for operational efficiency as it allows Stifel to automate routine tasks like compliance checks, client onboarding, and producing reports. This should help boost advisor productivity and better client retention. Yet with price/earnings ratio of 11 times 2026 consensus EPS estimates, we believe Stifel is trading at an attractive valuation, especially for a business enjoying durable low-double-digit EPS growth.

BSD Analysis:
Heartland maintains conviction in Stifel Financial despite recent underperformance, viewing market concerns about AI disruption and rising rates as temporary headwinds rather than structural threats. The manager's contrarian stance is supported by Stifel's market-leading advisor satisfaction rankings from JD Power for three consecutive years, which drives organic growth through advisor recruitment. Rather than viewing AI as disruptive, Heartland sees it as an operational efficiency catalyst that can automate routine tasks and enhance advisor productivity. The company's ability to grow revenues and expand margins through organic asset growth provides fundamental support for the investment thesis. At 11x 2026 consensus earnings, Stifel trades at an attractive valuation for a wealth management business generating durable low-double-digit EPS growth. The disconnect between market sentiment and fundamental performance creates an opportunity for patient value investors. Heartland's willingness to hold through temporary volatility while focusing on long-term competitive advantages demonstrates disciplined investment approach in a quality financial services franchise.

Pitch Summary:
In this K-shaped recovery, shares of Wyndham Hotels (WH) have been punished as revenues for hotels that operate in the midscale and economy space have lagged behind upscale peers such as Marriott or Hilton. This isn't so surprising, as inflation has eaten into the consumer budgets while the weak manufacturing economy also impacted Wyndham's grey and blue collar business travel base. Yet a broadening economy and improving PMI should benefit Wyndham's base of business travelers and middle income customers. The global franchisor of hotels such as Wyndham, Days Inn, Laquinta, Ramada, and Super 8 should also see an incremental boost in demand in some of its key markets thanks to key events this year, including the World Cup in North America, the 250th birthday celebration for the U.S., and the 100th anniversary of Route 66. Wyndham shares are valued at just 11-12x EBITDA, which compares favorably to Marriott and Hilton, which trade at 17-20x EBITDA. Even better, management has been actively buying back the company's shares while consistently boosting its dividend payout, hitting two of our three capital allocation priorities.

BSD Analysis:
Heartland identifies Wyndham Hotels as a compelling value play positioned to benefit from economic broadening after being disproportionately impacted by the K-shaped recovery. The manager's thesis centers on the company's exposure to middle-income consumers and blue-collar business travelers who have faced headwinds from inflation and weak manufacturing activity. Improving PMI readings and economic broadening should drive recovery in Wyndham's core customer base. The investment case is strengthened by several demand catalysts including major events like the World Cup, U.S. 250th anniversary, and Route 66 centennial. At 11-12x EBITDA, Wyndham trades at a significant discount to premium peers Marriott and Hilton (17-20x), creating an attractive valuation gap. Management's capital allocation through active share buybacks and consistent dividend increases demonstrates confidence and shareholder-friendly policies. This combination of cyclical recovery potential, event-driven demand catalysts, attractive valuation, and strong capital allocation makes Wyndham an appealing contrarian value opportunity.

Pitch Summary:
An example is Silicon Motion Technology Corporation (SIMO). A year ago, shares of the leading maker of memory components used in PCs, smartphones, data centers, and industrial and auto applications sold off amid a variety of concerns. They included tariffs, consumer spending worries, and questions over whether investors might be overestimating the capex needs of large-scale cloud service providers known as hyperscalers. At the time, we remained committed to the stock because we believed the company was in the early days of a re-rating process, as SIMO had been making a push away from trailing-edge, lower-margin consumer electronics into higher-margin, leading-edge applications driven by hyperscaler demands. What a difference a year makes. In the first quarter, the stock was a contributor to our outperformance, as consumer spending has held up and hyperscalers continue to indicate robust datacenter capex growth. In their fourth-quarter conference call, management reiterated the firm's outlook for their PC and smartphone end markets and the growth prospects for their data center storage components, which are expected to drive margins substantially higher. Yet in our opinion, SIMO remains meaningfully undervalued versus our current price target. The stock currently trades at $117, but we believe the company should be valued at $185. That's based on a multiple of 15X EBITDA plus an anticipated $160 million cash settlement from SIMO's ongoing arbitration with MaxLinear surrounding the termination of a proposed merger agreement more than two years ago.

BSD Analysis:
Heartland presents a compelling turnaround story for Silicon Motion Technology, highlighting the company's strategic pivot from low-margin consumer electronics to high-margin data center applications. The manager's conviction stems from SIMO's successful transition into hyperscaler-driven demand, which has proven resilient despite earlier market concerns about tariffs and consumer spending. Management's reiterated guidance for PC/smartphone markets and data center storage components provides visibility into margin expansion potential. The $185 price target represents 58% upside from current levels, based on 15x EBITDA plus a $160 million arbitration settlement with MaxLinear. This valuation framework appears reasonable given the company's improving product mix and exposure to robust datacenter capex growth. The timing of this pitch coincides with renewed strength in small-cap tech stocks after previous selloffs created attractive entry points. Heartland's patience through the downturn and focus on the re-rating catalyst demonstrates disciplined value investing principles.

Pitch Summary:
We own the alternative asset managers Brookfield Corporation and KKR. Both manage private credit vehicles. Assets under management (AUM) for both have benefitted from the growth of private credit in recent years. The share prices of both companies have also suffered year-to-date through March 31 (KKR down 27.31%, BN down 11.66%) as concerns over private credit coupled with exposure to software businesses have risen. Brookfield has even less exposure to direct lending than KKR, likely in the -3% range of fee-paying AUM. Brookfield recently disclosed that total software exposure comprised just 1% of private equity AUM. At similarly high default rates the exposure is even lower for Brookfield. For historical context, consider that during the 2008-2009 financial crisis, losses for sponsor-backed direct loans peaked at 7%.

BSD Analysis:
Akre Capital presents Brookfield as an even more defensive play than KKR within the alternative asset management space, despite both companies facing similar market headwinds. Brookfield's 11.66% year-to-date decline appears overdone given the company's minimal exposure to the private credit concerns plaguing the sector. With direct lending exposure estimated at only 3% of fee-paying AUM and software exposure comprising just 1% of private equity AUM, Brookfield offers superior risk-adjusted exposure to alternative asset growth trends. The firm's diversified platform spanning real estate, infrastructure, renewable power, and private equity provides multiple growth vectors beyond private credit. Historical context from the 2008-2009 crisis, where direct lending losses peaked at 7%, suggests current market fears may be excessive. Brookfield's long-term investment approach and focus on high-quality assets positions the company well for continued AUM growth and fee generation. The current valuation presents an attractive entry point for a premier global alternative asset manager with limited downside exposure to current market concerns.

Pitch Summary:
We own the alternative asset managers Brookfield Corporation and KKR. Both manage private credit vehicles. Assets under management (AUM) for both have benefitted from the growth of private credit in recent years. The share prices of both companies have also suffered year-to-date through March 31 (KKR down 27.31%, BN down 11.66%) as concerns over private credit coupled with exposure to software businesses have risen. In assessing the risks, context and nuance are critical. Again, the entirety of the direct lending market is less than 4% of the $45 trillion global credit market. For KKR, total private credit represents 18% of total AUM as of December 31, 2025, of which 63% is asset-based finance (11% of total AUM) and 37% is direct lending (-6.5% of total AUM). Only 2.3% of AUM sits in retail-oriented BDC form, and only 0.4% sits in semi-liquid BDCs. In terms of software exposure firmwide, KKR recently disclosed that its exposure ("generously defined") was just 7% of total AUM. Does this mean that problems will not arise in the broader private credit market or for certain software businesses? No. But the above context gives us comfort in owning KKR and Brookfield. If 10% of KKR's total private credit investments defaulted, it would amount to 1.8% of AUM. If 20% of KKR's direct lending loans defaulted, it would amount to 1.4% of AUM. At similarly high default rates the exposure is even lower for Brookfield.

BSD Analysis:
Akre Capital provides a detailed defense of KKR amid private credit market concerns, emphasizing the manageable scale of potential risks relative to the firm's diversified AUM base. Despite KKR's 27.31% year-to-date decline through March, the manager argues that market fears are overblown given the context. Private credit represents only 18% of KKR's total AUM, with the majority (11%) in lower-risk asset-based finance rather than direct lending. The firm's software exposure is limited to just 7% of total AUM, addressing AI disruption concerns. Even under stress scenarios with 10-20% default rates in private credit, the impact would represent less than 2% of total AUM. This risk assessment framework demonstrates KKR's diversification benefits and resilient fee-generating capacity. The current valuation appears attractive given the quality of KKR's franchise and growth prospects in alternative assets. Akre views the recent selloff as creating an opportunity to own a premier asset manager at a discount.

Pitch Summary:
For example, the largest performance detractor in the Fund over the past year ended March 31 has been Constellation Software, the stock, down 44.63% in US dollar terms. In stark contrast, Constellation Software, the business grew free cash flow per share more than 26% in 2025. To us, this deviation between plummeting valuation and strong fundamentals makes a better argument for Constellation shares being cheap than it does for a permanently impaired outlook. Which is why we have held on to Constellation shares.

BSD Analysis:
Akre Capital presents a compelling contrarian case for Constellation Software, highlighting a stark disconnect between share price performance and business fundamentals. While the stock declined 44.63% in USD terms over the past year, the underlying business delivered robust free cash flow per share growth exceeding 26% in 2025. This divergence suggests the market has overreacted to broader technology sector concerns, particularly around AI disruption fears affecting software companies. The fund manager views this valuation compression as creating an attractive entry point rather than reflecting permanent business impairment. Constellation's mission-critical vertical market software portfolio provides defensive characteristics and recurring revenue streams. The company's decentralized acquisition model continues to generate value through disciplined capital allocation. Akre's decision to maintain their position demonstrates conviction in the long-term compounding potential despite near-term volatility.

Pitch Summary:
Oracle is a good example. While equity outcomes may span a wide range, we believe credit outcomes are more bounded. Oracle generates strong core cash flows relative to its debt, and it has acted to protect its investment-grade rating, even using its equity as currency—an action that may dilute its equity value but supports its creditors. At the same time, the current narrative assumes a level of capital commitment that may never materialize. Oracle's future AI infrastructure investments are discretionary, not the fixed obligations they are often framed as. If demand does not meet expectations or returns normalize, the company has the flexibility to scale back, pace investment, or pursue more capital-efficient partnerships across the broader ecosystem.

BSD Analysis:
Harris Oakmark presents a credit-focused bull case for Oracle, emphasizing the distinction between equity and credit risk profiles in the AI investment cycle. The manager argues that Oracle's strong cash flow generation relative to debt provides downside protection for bondholders, while the company's commitment to maintaining its investment-grade rating demonstrates credit discipline. The thesis centers on Oracle's operational flexibility, noting that AI infrastructure investments are discretionary rather than mandatory capital commitments. This optionality allows Oracle to adjust spending based on demand and returns, providing a margin of safety for credit investors. The manager contrasts today's technology investment environment with the early 2000s, highlighting that companies are investing to win rather than survive, which introduces valuable optionality that credit markets are undervaluing. The position appears to be in Oracle's convertible bonds, offering exposure to potential upside while maintaining credit protection.

Pitch Summary:
We aren't technology neophytes; we believe AI is for real and is changing the way many of us work, and there will be winners and losers. However, we do believe the market has been too eager to declare victory and defeat. Where there is real threat of change, we lower our estimate of value by reflecting a higher risk of disruption. In the case of large, deeply embedded enterprise software companies such as SAP, we think the market has skewed too negative on the risks introduced by AI, when in fact, there is a real possibility that AI is additive.

BSD Analysis:
Harris Oakmark presents a contrarian bullish view on SAP, arguing that the market has overreacted negatively to AI disruption risks for large enterprise software companies. The manager believes SAP's deeply embedded position in enterprise systems provides defensive characteristics that the market is undervaluing. Rather than viewing AI as purely disruptive, the fund sees potential for AI to be additive to SAP's existing business model. This represents a classic value investing approach of buying when sentiment is overly pessimistic. The thesis relies on SAP's entrenched market position and the difficulty of displacing established enterprise software providers. The manager's confidence stems from their belief that the market's short-term AI fears are creating a buying opportunity in a fundamentally sound business. This contrarian positioning aligns with their broader investment philosophy of going against crowd sentiment when valuations become attractive.

Pitch Summary:
First Solar is strategically positioned as the only large-scale U.S.-based solar technology manufacturer with unique, IP-protected technology. Despite the current market selloff triggered by the Iran/Hormuz crisis, First Solar's stock presents a potential long-term investment opportunity. The company's production is fully booked for the next three years, indicating strong demand. Although it does not directly benefit from rising global gas prices, its position in the renewable energy sector makes it a secular winner. The stock is currently undervalued, with forward P/E multiples signaling a discount, partly due to uncertainty around future tax credits.

BSD Analysis:
First Solar's unique position as a U.S. solar cell producer at scale, combined with its advanced thin-film PV technology, provides a competitive edge. The company's reliance on U.S.-based manufacturing facilities allows it to benefit from the Inflation Reduction Act's tax credits, although these are set to phase out by 2033. The market's deep discount of First Solar's stock reflects concerns over regulatory uncertainty and the expiration of tax credits. However, the growing demand for renewable energy, driven by increased electricity needs and a shift away from coal-fired capacity, supports a positive long-term outlook for First Solar. The company's ability to maintain profitability without government incentives will be crucial as it navigates these challenges.

Pitch Summary:
WesBanco, Inc. recently completed a merger with Premier Financial, significantly expanding its asset base and loan portfolio. The merger brought in $7.9 billion of assets, including $5.9 billion of loans. Despite the growth, the stock is currently trading at a high price-to-earnings multiple of 15.7, which is above the typical threshold for value investors. The company's asset quality is mixed, with a higher percentage of uninsured deposits than preferred. However, the bank's net interest margin has improved, and profitability has increased due to a larger balance sheet and favorable interest rate conditions.

BSD Analysis:
WesBanco's recent merger has bolstered its balance sheet, leading to increased net interest income and profitability. However, the high price-to-earnings ratio suggests that the stock may be overvalued relative to its earnings. The bank's asset quality remains a concern, with a significant portion of loans classified as non-performing. Despite these challenges, the bank is targeting mid-single-digit loan growth for 2026, with strategic expansions into healthcare and the Southeast U.S. market. The Sunbelt region, including South Florida, presents growth opportunities due to its economic appeal. Investors should monitor the bank's ability to achieve its growth targets and improve asset quality before considering a bullish stance.

Pitch Summary:
Hercules Capital has been impacted by the recent downturn in Business Development Companies (BDCs), with a 25% decline year-to-date. The primary concern is its exposure to the software sector, which is perceived as risky due to potential AI disruptions. Despite this, Hercules has shifted 70% of its new commitments to life sciences, attempting to mitigate software-related risks. The company's conservative underwriting in the software sector, with low ARR attachment points and short loan durations, reduces portfolio risk. However, the company's NAV per share of $12.13 as of Q4 2025 could be pressured by potential write-downs. Investors should be cautious, as the market sentiment towards software may not align with the actual financial health of borrowers.

BSD Analysis:
Hercules Capital's exposure to software, while concerning, is somewhat mitigated by its strategic focus on life sciences. The company's PIK interest income has increased significantly, indicating a rise in non-cash income, which could impact dividend sustainability. The premium to NAV is compressing, potentially affecting the company's ability to issue stock at favorable terms. Stress testing scenarios suggest that Hercules' NAV could be vulnerable to write-downs, making the stock appear more expensive than it seems. The dividend coverage is tight, and while the base dividend might be safe, the special dividend is less certain. Overall, Hercules' valuation and future performance heavily depend on maintaining its NAV and managing its PIK balances effectively.

Pitch Summary:
TG Therapeutics' multiple sclerosis drug, Briumvi, is on track to achieve blockbuster status with projected net revenues nearing $600 million by 2025. The company's strategic marketing efforts, including direct-to-consumer campaigns and sales force expansion, have bolstered Briumvi's commercial performance. The ENHANCE trial, aimed at simplifying Briumvi's dosing regimen, presents a near-term catalyst that could further enhance its market appeal. Additionally, the company's financial health is supported by a robust buyback program and a new credit facility, which provides non-dilutive capital. With these factors in play, TG Therapeutics is well-positioned for continued growth, making it an attractive buy.

BSD Analysis:
TG Therapeutics has demonstrated strong revenue growth for Briumvi, with a 19.5% increase in Q4 2025 compared to the previous quarter. The company's investment in marketing and sales infrastructure is expected to sustain this momentum into 2026. The potential success of the ENHANCE trial could significantly enhance Briumvi's competitive positioning by offering a more convenient dosing option. Furthermore, the company's financial strategy, including a $750 million credit facility and an expanded buyback program, provides a solid foundation for future growth. While there are risks associated with clinical trial outcomes and market competition, TG Therapeutics' strategic initiatives and financial resilience support a bullish outlook.

Pitch Summary:
The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) has shown a strong performance with a 22.62% total return over the past year, driven by double-digit earnings growth of its underlying companies. The valuation gap between H-shares and A-shares has narrowed, making A-share ETFs more attractive. Despite a high turnover rate of 143%, the ETF's diversification across 286 holdings and a sector cap of 24% is beneficial in volatile emerging markets. The ETF offers exposure to some of China's most promising companies, which are not listed in Hong Kong, providing a unique investment opportunity.

BSD Analysis:
Investing in ASHR allows access to high-growth Chinese companies, many of which are leaders in their respective sectors. The ETF's average P/E ratio is 16.46, indicating a reasonable valuation given the historical EPS growth rate of 33.20% annually over the past five years. While geopolitical risks and market volatility are concerns, the narrowing valuation gap between A-shares and H-shares reduces the premium previously paid for A-shares. The ETF's exposure to companies with dual listings in Hong Kong and Mainland China provides a balanced risk-reward profile. Long-term investors should consider the potential of China's rapid technological advancements and market share gains.

Pitch Summary:
ME Group's extensive network of self-service machines offers a stable and profitable business model. The company's focus on expanding its laundromat segment has driven significant revenue growth, contributing to high EBITDA and EBIT margins. With a solid balance sheet and ongoing share buyback program, ME Group is well-positioned to deliver shareholder value. The current valuation, with a low EV/EBIT and P/E ratio, suggests the stock is undervalued given its profitability and growth prospects.

BSD Analysis:
ME Group's strategic expansion into laundromats capitalizes on consumer demand for convenient services, enhancing its revenue streams. The company's high-margin business model and strong cash flow generation provide financial stability and support shareholder returns through dividends and buybacks. Despite stagnation in its traditional photo booth business, ME Group's adaptability and focus on growth areas position it for continued success. The stock's undervaluation presents an opportunity for investors seeking exposure to a stable, cash-generative business with growth potential.

Pitch Summary:
Yougov's current valuation appears low given its potential for growth in the data analytics sector. The company faces challenges with its recent strategic shift and financial constraints, but management believes the stock is undervalued. The potential sale of its recent acquisition, 'Shopper,' could unlock value and lead to a stock price increase. However, the company's strategic direction remains uncertain, warranting a cautious approach until clearer growth prospects emerge.

BSD Analysis:
Yougov's expertise in data analytics positions it well to capitalize on the increasing demand for consumer insights. However, the company's recent strategic shift has created uncertainty, impacting investor confidence. The potential divestiture of 'Shopper' could provide financial relief and refocus efforts on core operations. Despite these challenges, Yougov's market position and data capabilities offer long-term growth potential. Investors should monitor the company's strategic developments and financial performance to assess future opportunities.

Pitch Summary:
SAP's strong market position and robust growth prospects make it an attractive investment despite recent stock price declines. The company's high margins and solid balance sheet provide a stable foundation for continued expansion. SAP's strategic focus on cloud solutions and digital transformation aligns with long-term industry trends, offering significant growth potential. The current valuation, following a substantial sell-off, presents a buying opportunity for investors seeking exposure to the enterprise software sector.

BSD Analysis:
SAP's leadership in enterprise software is reinforced by its comprehensive suite of cloud-based solutions, catering to the evolving needs of businesses worldwide. The company's financial strength, characterized by high margins and a strong balance sheet, supports its strategic initiatives in digital transformation. Despite recent market volatility, SAP's long-term growth trajectory remains positive, driven by increasing demand for cloud services. The stock's current undervaluation provides an attractive entry point for investors looking to capitalize on the company's growth potential.

Pitch Summary:
Grupa Pracuj is undervalued, trading at its lowest EV/EBIT multiple since its IPO. The company maintains a strong market position in Poland and Ukraine, with no net debt and a commitment to organic growth. The ongoing conflict in Ukraine presents a short-term challenge, but the company's long-term growth prospects remain intact. With a solid dividend yield and a focus on expanding its software offerings, Grupa Pracuj offers a compelling value investment opportunity.

BSD Analysis:
Grupa Pracuj's market leadership in job portals provides a strong foundation for sustained growth, particularly as it leverages its software division to create synergies. The company's financial health, characterized by a debt-free balance sheet and robust dividend policy, enhances its investment appeal. While geopolitical tensions pose near-term risks, Grupa Pracuj's strategic initiatives and market position suggest resilience and potential for recovery. The current undervaluation presents an attractive entry point for investors seeking exposure to the internet services sector.

Pitch Summary:
Eurokai is poised for significant operational improvements with new terminal openings and strategic deals. The company's recent developments, including the new terminal in Damietta and the Bremerhaven deal, are expected to drive revenue growth. Despite its long-standing presence in the portfolio, Eurokai's operational momentum suggests further upside potential. The stock's performance has been strong, but the most exciting developments are yet to come, making it a compelling investment opportunity.

BSD Analysis:
Eurokai's strategic expansion and operational enhancements position it well to capitalize on increasing demand for port services. The company's ability to secure lucrative deals and expand its terminal network underscores its competitive advantage in the European logistics market. As new projects come online, Eurokai is expected to see a boost in revenue and profitability. The stock's current valuation does not fully reflect the potential impact of these developments, offering investors an opportunity to benefit from future growth.

Pitch Summary:
Kinnevik's recent stock decline is seen as an overreaction to the challenges faced by some of its portfolio companies. Despite these setbacks, the company maintains a strong cash position, with half of its market cap in net cash. The remaining portfolio is significantly undervalued, with an almost 80% discount applied despite containing high-quality businesses. Kinnevik's strategic focus on digital consumer businesses positions it well for future growth, and the current valuation offers an attractive entry point for investors.

BSD Analysis:
Kinnevik's investment strategy in digital consumer businesses aligns with long-term market trends, providing a solid foundation for future growth. The company's strong cash reserves offer financial stability and flexibility to navigate current market challenges. While some portfolio companies face difficulties, the overall quality and potential of Kinnevik's investments remain intact. The market's heavy discounting of its portfolio presents a compelling opportunity for investors seeking exposure to high-growth sectors at a reduced price.