Investment Pitches

Pitch Summary:
Further supporting our emphasis on portfolio diversification, Industria de Diseno Textil (Inditex) is a global apparel, footwear and accessories retailer (its flagship brand is Zara) that offers us a quality compounder in the consumer discretionary sector. Inditex is the leader in fast fashion with strong margins and return on capital employed, a huge cash position on the balance sheet and a steady dividend policy. Shares came off recent highs following softer February comps, and we used the pullback to start a position.

BSD Analysis:
The managers initiated a position in Inditex as a quality compounder in the consumer discretionary sector, emphasizing portfolio diversification. They highlight Inditex's leadership position in fast fashion with strong operational metrics including robust margins and high return on capital employed. The company maintains a fortress balance sheet with substantial cash reserves and offers a steady dividend policy, appealing to the fund's income-focused mandate. The investment timing was opportunistic, capitalizing on a pullback following softer February comparable store sales. This temporary weakness provided an attractive entry point into what they view as a high-quality retail franchise. The Zara parent company represents exposure to global fashion retail with strong competitive positioning. The managers appear confident in the company's ability to navigate cyclical retail challenges while maintaining its market leadership.

Pitch Summary:
Meanwhile, we initiated positions in CVS, Inditex and TE Connectivity. Poor execution at Aetna, CVS's health insurance business, and declining retail profits precipitated a decline in the shares which created an attractive entry point. We anticipate that underwriting improvements for its Medicare Advantage program will yield considerable profit growth over the next few years, which should lead to a re-rating in the stock.

BSD Analysis:
The managers initiated a position in CVS Health following a significant decline driven by poor execution at Aetna and declining retail profits. They view this as an attractive entry point for a quality healthcare services company. The investment thesis centers on anticipated underwriting improvements in CVS's Medicare Advantage program, which they expect to drive considerable profit growth over the next few years. This operational improvement should lead to multiple expansion and stock re-rating. The position represents a contrarian bet on management's ability to fix execution issues at the health insurance business. The timing appears opportunistic, capitalizing on temporary operational challenges rather than structural problems. CVS offers exposure to the growing Medicare Advantage market with potential for margin expansion as underwriting discipline improves.

Pitch Summary:
The Fund initiated a new position in WEC Energy earlier this year for two reasons: First, WEC operates in a stable service area with one of the most balanced regulatory environments for a utility. Second, their Wisconsin service territory is seeing considerable investment in AI-related data centers which should provide a tailwind to rate base growth as well as long-term earnings growth.

BSD Analysis:
The fund initiated a position in WEC Energy based on two compelling investment drivers that position the utility for sustained growth. The first factor is WEC's operational advantage through its stable Wisconsin service territory and favorable regulatory environment, providing predictable cash flows and reasonable rate recovery mechanisms. The second and more dynamic catalyst is the significant AI-related data center investments occurring within WEC's service territory, creating substantial incremental electricity demand. This data center buildout should drive meaningful rate base expansion as WEC invests in grid infrastructure to support these high-demand customers. The combination of regulatory stability and secular growth from data center demand creates an attractive risk-adjusted return profile. This positioning allows WEC to benefit from the AI infrastructure boom while maintaining the defensive characteristics typical of regulated utilities.

Pitch Summary:
The Fund initiated a new position in Amazon, which is well positioned to continue capturing market share in retail distribution while also growing its market-leading cloud business. The Fund took advantage of weakness in the stock during April to start the position as tariff news and a precipitous market decline provided an attractive valuation opportunity.

BSD Analysis:
The fund initiated a new position in Amazon, viewing the company as uniquely positioned to benefit from dual growth engines in both retail and cloud computing. The managers highlight Amazon's ability to continue gaining market share in retail distribution, leveraging its logistics network and customer relationships. Simultaneously, they recognize the strength of Amazon Web Services as the market-leading cloud platform, providing high-margin recurring revenue growth. The timing of the position initiation demonstrates opportunistic investing, as the fund capitalized on market weakness in April driven by tariff concerns and broader market volatility. This approach reflects disciplined value investing, waiting for attractive entry points in high-quality businesses. The dual-platform strategy positions Amazon to benefit from both e-commerce penetration and digital transformation trends across multiple industries.

Pitch Summary:
Fiserv (FI) also underperformed and is a large holding in the Fund. Lower guidance on the growth of its Clover cloud-based payment platform was to blame, but we remain convinced that Fiserv is well-positioned long-term. Fiserv revised guidance lower for its Clover product, a cloud-based payment platform, which is at the core of its growth in merchant acceptance. The company had performed well in recent years, and the Clover product had been a meaningful part of that growth. Although we remain confident in the company's future, the revision downward of expectations had an outsized impact on stock performance.

BSD Analysis:
The fund maintains conviction in Fiserv despite disappointing guidance revisions for the Clover platform, which represents a core growth driver in merchant acceptance services. The managers acknowledge that Clover has been instrumental in the company's recent strong performance, making the guidance reduction particularly impactful on investor sentiment and stock performance. However, they view this as a temporary setback rather than a fundamental deterioration of the investment thesis. The fund's continued confidence reflects their belief in Fiserv's competitive positioning in the payments processing industry and the long-term secular growth trends in digital payments. Their decision to maintain the position suggests they view current weakness as potentially creating future opportunity. The emphasis on long-term positioning indicates patience with near-term execution challenges while maintaining faith in the underlying business model.

Pitch Summary:
UnitedHealth Group (UNH) underperformed and is a large holding in the Fund. The stock was hampered by financial missteps, reduced earnings guidance, and an abrupt CEO departure. We have confidence going forward but have not meaningfully adjusted our position. UnitedHealth lagged during the period as the company experienced higher than expected medical loss ratios which led to a significant decline in earnings expectations. The company is likely to fix its pricing issues for new members, while it has some work ahead to improve its Medicare Advantage managed care business. In addition, the company experienced an abrupt management change when it announced that former CEO Stephen Hemsley would return to the role to "steady the ship." The company still has an enviable earnings profile and historically has demonstrated an ability to manage through temporary disturbances. We continue to hold our UnitedHealth position and will look to add when valuation opportunities present themselves.

BSD Analysis:
The fund maintains a bullish stance on UnitedHealth despite significant near-term headwinds including elevated medical loss ratios, reduced earnings guidance, and management turnover. The managers acknowledge the company's pricing challenges in new member acquisition and operational issues in Medicare Advantage but express confidence in management's ability to navigate these temporary setbacks. They highlight UnitedHealth's historically strong earnings profile and proven track record of managing through cyclical disruptions. The return of former CEO Stephen Hemsley is viewed as a stabilizing factor. The fund's decision to maintain their position while preparing to add on weakness demonstrates conviction in the long-term investment thesis. This contrarian approach reflects confidence in UnitedHealth's competitive moat and operational capabilities despite current execution challenges.

Pitch Summary:
With that as the backdrop, we did make a sale early this quarter as Axon's valuation had gotten ahead of itself. The stock's IRR for our day one investors was over 80% annually. A good chunk of that was due to multiple expansion so the valuation piece of the Infuse formula has been severely handicapped. The forward expected returns simply aren't good enough compared to some other opportunities so we trimmed significantly.

BSD Analysis:
The manager executed a disciplined sell decision on Axon after achieving exceptional returns of over 80% annually for day-one investors. The position was trimmed significantly due to valuation concerns, with much of the gains attributed to multiple expansion rather than fundamental improvement. The manager's decision reflects a systematic approach to portfolio management, prioritizing forward-looking expected returns over past performance. While Axon has clearly been a successful investment, the current valuation no longer meets the fund's risk-adjusted return requirements. The sale demonstrates the manager's commitment to the 'Infuse formula' which appears to emphasize attractive valuations as a key component. This disciplined approach to taking profits when valuations become stretched is consistent with long-term wealth preservation strategies. The decision also aligns with the manager's broader philosophy of optimizing after-tax returns while maintaining portfolio discipline.

Pitch Summary:
For some time we have been supportive of holding hard asset producers such as well financed, profitable miners and their allied providers. A standout performer has been a Canadian producer, New Gold (NGD), owner of the Rainy River gold mine and New Afton copper/gold mines. The stock has more than doubled this past year, buoyed by increased production, higher grades and reserves, plus lower costs providing a substantial increase in free cash flow. With all-in sustaining costs (AISC) less than $1,400 per ounce, NGD is positioned to prosper. However, now priced in excess net asset value, NAV, we have taken advantage of increased interest and higher prices by trimming holdings. The proceeds were utilized to increase our holdings in two other miners which our research indicates are priced at 50% discounts to their NAV's.

BSD Analysis:
Heartland demonstrates disciplined portfolio management by trimming New Gold after the stock doubled in value over the past year. The fund originally identified NGD as an attractive hard asset play with strong operational metrics including increased production, higher grades and reserves, and lower costs driving substantial free cash flow generation. With all-in sustaining costs below $1,400 per ounce, NGD maintains competitive cost positioning in the current gold price environment. However, the fund's decision to trim reflects valuation discipline as the stock now trades above net asset value. This profit-taking strategy allows reallocation to other miners trading at 50% discounts to NAV, demonstrating active portfolio optimization. The position management illustrates the fund's commitment to buying undervalued assets and selling when fair value is exceeded. NGD's operational improvements and cost structure remain intact, but valuation no longer offers compelling risk-adjusted returns relative to other opportunities in the mining sector.

Pitch Summary:
While Columbus McKinnon is an example of a stock that was negatively impacted by policy uncertainty (at least temporarily), PotlatchDeltic (PCH) is a company that could benefit from recent policy changes. Potlatch, a timber REIT that focuses on harvesting sawlogs and producing wood products, has been in our portfolios for quite some time. When we first entered this position, it stood out as a domestic provider of homebuilding materials. That remains a highly relevant point, given the supply gap of housing in the United States and tariffs established by the Trump administration on Canadian timber products. The new levies, on top of those already in place, brings the total tax on Canadian lumber to over 50%. As PCH is the only American wood products company that manufactures entirely in the U.S, it is likely to be a primary beneficiary of the rising cost of imported timber. Potlach's harvest volume is mostly comprised of Southern Yellow Pine, which may not be a perfect substitute in terms of quality compared to trees historically imported from Canada but will likely be preferred by the market in terms of cost. We value PCH, which is currently trading at around $45 per share, with a target price of $54.

BSD Analysis:
Heartland positions PotlatchDeltic as a direct beneficiary of Trump administration trade policies targeting Canadian lumber imports. The fund highlights PCH's unique competitive advantage as the only American wood products company manufacturing entirely in the U.S., creating a natural hedge against tariff impacts. With total taxes on Canadian lumber exceeding 50%, PCH's Southern Yellow Pine products become increasingly cost-competitive despite potential quality differences. The investment thesis centers on the structural housing supply shortage in the United States, which should drive sustained demand for domestic lumber products. PCH's timber REIT structure provides additional income generation through timberland ownership and harvesting operations. Trading at $45 with a $54 target price implies 20% upside potential. The tariff protection creates a durable competitive moat that should support margin expansion and market share gains. This represents a classic policy-driven value opportunity where regulatory changes create tangible economic benefits for domestic producers.

Pitch Summary:
A good example is Columbus McKinnon Corp. (CMCO), which we initially added to our Strategy in the fourth quarter. The company designs, manufactures, and distributes materials, handling products, and systems used in a variety of industrial applications, including lifting, precision conveyance, and linear motion. Historically, CMCO's growth has been largely driven by changes in manufacturing activity. A new CEO joined the business in June 2020 with the goal of higher growth and margin applications while increasing the recurring revenue mix. CMCO, however, reported a softer recent quarter due to slowing industrial demand driven by U.S. policy uncertainty. The company also announced a $2.7 billion acquisition of competitor Kito Crosby, which sent the stock plummeting 41% due to uncertainty around execution and an increased leverage profile of 4.8x upon closing. We believe Columbus McKinnon offers investors a compelling risk/reward case and a strong catalyst as it seeks to reduce leverage and improve the growth and margin profile of the consolidated business. Management, which has been aggressively purchasing the stock in the open market during the recent sell-off, is targeting mid-20% EBITDA margins upon integration. That's up from an estimated 15.5% in FY25 pre-acquisition. At the end of the quarter, the stock was trading at about $17 a share. Our current target price target of $54 would imply a valuation of 10.5 times Enterprise Value to EBITDA. Upon execution of the acquisition, however, we believe CMCO should be treated similarly to its industrial peers trading an at average of 12x EV/EBITDA.

BSD Analysis:
Heartland presents a compelling turnaround thesis for Columbus McKinnon following a major acquisition-driven selloff. The fund views the 41% stock decline after the $2.7 billion Kito Crosby acquisition as an overreaction, creating an attractive entry point at $17 per share. Management's aggressive insider buying during the selloff validates the investment thesis and demonstrates confidence in execution. The acquisition is expected to drive significant margin expansion from 15.5% to mid-20% EBITDA margins upon integration, representing substantial operational leverage. With a leverage profile of 4.8x upon closing, deleveraging becomes a key catalyst for multiple expansion. The $54 target price implies 10.5x EV/EBITDA, which appears conservative relative to industrial peers trading at 12x multiples. The new CEO's strategic focus on higher-margin applications and recurring revenue mix should drive sustainable growth beyond the acquisition benefits.

Pitch Summary:
Cogent's share price was impacted following a couple of quarters of missing earnings, as investors lost patience with the length of time the Sprint wireline integration was taking. Although management has already captured the targeted $220m of cost savings, the integration work is still consuming time and operating expenses, and revenue has yet to inflect, leaving headline results soft and sentiment poor. Behind the noise, the wavelength build-out is gathering momentum. The funnel now sits at 3,433 orders. Importantly, Cogent can activate new wavelength circuits in as little as two weeks, versus the three-to-nine-month lead times typical of Lumen, Zayo, and others, a speed advantage that should translate into share gains as the backlog converts. Cogent aims to ramp up to a sustained pace of approximately 500 installations per month by year-end. Wavelength ARPU is roughly $1,930, with incremental EBITDA margins of over 90%, thanks to minimal variable costs, implying a potential run-rate incremental cash flow of over $100 million within a year. If those installations and associated cash flow fail to materialize over the next quarter or two, I will exit the position. However, for now, the market's focus on near-term integration headaches leaves ample upside once wave scale.

BSD Analysis:
The manager presents a contrarian bull case for Cogent Communications, acknowledging near-term execution challenges while highlighting significant underlying business momentum. The Sprint wireline integration has taken longer than expected, consuming management time and operating expenses despite achieving the targeted $220 million in cost savings, leading to soft headline results and poor investor sentiment. However, the wavelength business is showing strong progress with 3,433 orders in the funnel and a significant competitive advantage in activation speed—two weeks versus 3-9 months for competitors like Lumen and Zayo. This speed advantage should drive market share gains as the substantial backlog converts to revenue. Management targets 500 installations per month by year-end, with wavelength ARPU of approximately $1,930 and incremental EBITDA margins exceeding 90% due to minimal variable costs. The economics are compelling, with potential run-rate incremental cash flow exceeding $100 million annually once at scale. The manager acknowledges execution risk and has set a clear timeline for progress, stating he will exit if installations don't materialize within the next quarter or two. The investment thesis relies on the market's myopic focus on integration issues creating an opportunity as the high-margin wavelength business scales.

Pitch Summary:
Amazon's structural edge keeps widening. Its high-return, capital-light businesses compound without depending on the retail cycle. AWS is growing at mid-teens rates with nearly 40% segment margins and now contributes more than half of the group's operating income. Advertising, an asset-light adjunct to the marketplace, is expanding even faster at 19% and directly impacts the bottom line. Meanwhile, the core retail business continues to benefit from the regionalized fulfilment network built over the last two years. North American retail margins would have reached roughly 7% absent tariff-related charges. Amazon generated approximately $25 billion of trailing free cash flow, more than enough to cover stepped-up investments in artificial intelligence and robotics, while also funding Project Kuiper, whose first production satellites launched in April and can extend AWS into connectivity white spots around the world. I view Amazon as a self-funded, multi-legged compounding machine that trades at what appears to be a mid-teen multiple of normalized free cash flow.

BSD Analysis:
The manager presents a strong bull thesis for Amazon emphasizing the company's diversified, high-return business model with multiple compounding growth drivers. AWS continues to be the primary profit engine, growing at mid-teens rates with nearly 40% segment margins while contributing over half of total operating income. The advertising business represents another high-margin, asset-light revenue stream expanding at 19% annually with direct bottom-line impact. The core retail business has benefited significantly from the regionalized fulfillment network investments, with North American retail margins approaching 7% excluding tariff impacts. Amazon's financial strength is evident in its $25 billion trailing free cash flow generation, providing ample self-funding capacity for strategic investments in AI, robotics, and Project Kuiper satellite constellation. Project Kuiper's first production satellites launched in April, potentially extending AWS's reach into underserved connectivity markets globally. The manager views Amazon as a "multi-legged compounding machine" that appears attractively valued at a mid-teen multiple of normalized free cash flow. The combination of high-return, capital-light businesses (AWS and advertising) with the improving retail margins creates a compelling investment profile with multiple avenues for continued growth and margin expansion.

Pitch Summary:
Kingsway's shares spent most of the past year moving sideways, which is unsurprising for a roughly $400 million market cap company that receives little sell-side coverage and whose value depends more on future acquisition-driven growth than on reported earnings today. Execution across the portfolio has been uneven. Acquisitions such as Ravix and SPI have performed well, while CSuite has proven difficult, and Secure Nursing has faced soft demand for travel nurses and wage pressure, resulting in revenue remaining flat and margins under strain as the industry normalizes following the pandemic. At the May Investor Day, management reaffirmed its goal of two to three acquisitions a year at 5-7x EBITDA on companies earning $1.5 - $3 million and walked through an operating playbook for their most recent acquisition Buds Plumbing that showed how pricing, service mix expansion, and bolt-on M&A can double profits within three years. Two weeks later, Kingsway closed a $15.7 million PIPE at $11.75 per share, lifting its acquisition cadence target to three to five deals per year. The share price has run up on that news and could be volatile until the playbook is proven; but if management executes on a handful of high quality acquisitions a year and brings solid operational discipline to formerly lifestyle family businesses, the earnings base could expand meaningfully over the next few years.

BSD Analysis:
The manager presents a cautiously optimistic bull case for Kingsway Financial Services, acknowledging both the execution risks and potential upside from the company's acquisition-driven growth strategy. As a $400 million market cap company with limited sell-side coverage, Kingsway's value proposition depends heavily on successful M&A execution rather than current earnings. The track record shows mixed results with successful acquisitions like Ravix and SPI offset by challenges at CSuite and Secure Nursing, where post-pandemic normalization has pressured margins. Management's acquisition strategy targets companies earning $1.5-$3 million EBITDA at 5-7x multiples, with an operational playbook demonstrated through Buds Plumbing showing potential to double profits within three years through pricing optimization, service expansion, and bolt-on acquisitions. The recent $15.7 million PIPE financing at $11.75 per share has increased the acquisition target from 2-3 deals annually to 3-5 deals, providing more capital for growth. The manager acknowledges near-term volatility risk until the playbook is proven but sees meaningful earnings expansion potential if management successfully applies operational discipline to lifestyle family businesses. The investment thesis hinges on execution of the acquisition strategy and operational improvements across the portfolio.

Pitch Summary:
We started a position in NVIDIA (NVDA) following a significant pullback in the stock. The decline was prompted by concerns stemming from the emergence of DeepSeek, an unknown Chinese AI software company, which unveiled a highly efficient large language model (LLM). DeepSeek's breakthrough raised investor fears that U.S. hyperscalers might reduce their capital expenditure plans due to a shift toward more resource-efficient AI models. This led to concerns over potential overcapacity in the AI infrastructure market, weighing heavily on NVDA's stock. As a result, NVDA shares declined nearly 30% from recent highs, presenting an attractive entry point. On our cost basis, NVDA was trading at approximately 25x expected 2025 earnings and 20x expected 2026 earnings, valuations we found compelling for a company projected to grow revenue and earnings by over 50% in calendar year 2025. We viewed this risk-reward profile as favorable, especially given NVIDIA's dominant position in powering the transition to accelerated computing architecture that powers the AI ecosystem. The AI market is still in its preliminary stages, characterized by fast-paced innovation, and evolving rapidly. While DeepSeek's advancement sparked a debate around capital efficiency, we believe it reinforces a broader trend we have seen in past technology cycles. Specifically, we view Jevons' paradox, where gains in efficiency lead to increased overall consumption, as highly relevant to AI. Supporting this view, U.S. hyperscalers increased their 2025 capital expenditure guidance during Q4 2024 earnings calls in January, despite being fully aware of DeepSeek's progress. Further, the integration of reasoning capabilities into leading LLMs, such as those used in ChatGPT, is significantly increasing computing intensity. Some experts estimate that inferencing models with reasoning can demand up to one hundred times more computing, reinforcing the idea that greater efficiency will not lessen, but rather increase, demand for NVIDIA's infrastructure. We are still mindful of the rapid evolution within the AI space from the emergence of more efficient models to the still-nascent monetization of AI software. Against this backdrop, we chose to start a focused position in NVDA while reducing exposure to other AI-related holdings such as Broadcom, Amphenol, and Oracle. In our view, NVIDIA offers an attractive way to take part in the generative AI buildout, combining scale, technological leadership, and a healthy growth outlook.

BSD Analysis:
Mar Vista initiated a position in NVIDIA following a 30% decline, viewing the DeepSeek-driven selloff as an attractive entry opportunity. The fund acquired shares at compelling valuations of 25x 2025 earnings and 20x 2026 earnings for a company expected to grow revenue and earnings over 50% in 2025. Mar Vista applies Jevons' paradox to AI, arguing that efficiency gains will increase rather than decrease overall computing demand. The integration of reasoning capabilities into large language models could require 100x more computing power, supporting continued infrastructure demand. Hyperscalers' increased 2025 capex guidance despite DeepSeek awareness validates this thesis. NVIDIA's dominant position in accelerated computing architecture provides sustainable competitive advantages in the AI ecosystem transition. The company's technological leadership, scale advantages, and comprehensive software stack create high switching costs for customers. Mar Vista views the AI market as still in preliminary stages with rapid innovation ahead. The focused position approach while trimming other AI holdings demonstrates conviction in NVIDIA's superior risk-reward profile. The fund sees NVIDIA as the best way to participate in generative AI buildout given its market leadership and growth outlook.

Pitch Summary:
Apple's stock came under pressure in Q1 due to concerns of softening iPhone demand; increased competition from Huawei in China; challenges with the rollout of Apple Intelligence, its new AI offering for the iPhone; and potential tariff-related headwinds. Despite these near-term challenges, we continue to view Apple as competitively advantaged, supported by the strength of its ecosystem, which includes a loyal customer base encompassing over 2 billion active devices and more than 1 billion paying subscribers. This ecosystem generates recurring service revenue and supports a stable cash flow stream, which enables Apple to invest in product development during cyclical slowdowns like its recent experience with soft iPhone sales. We believe these cyclical headwinds are transitory, and Apple is well-positioned to emerge from this period of softer iPhone demand as a leader in AI-enabled edge devices.

BSD Analysis:
Mar Vista maintains conviction in Apple despite near-term headwinds from iPhone demand softness, Chinese competition, and AI rollout challenges. The fund emphasizes Apple's ecosystem strength as a sustainable competitive advantage, with over 2 billion active devices and 1 billion paying subscribers creating powerful network effects. The recurring services revenue provides cash flow stability during hardware cycles, enabling continued R&D investment in next-generation products. Apple's loyal customer base demonstrates low switching costs and high lifetime value, supporting premium pricing power. The company's financial strength allows strategic investments during cyclical downturns, positioning it for the next growth phase. Mar Vista views current challenges as transitory rather than structural, with Apple well-positioned to lead the AI-enabled edge device market. The integration of Apple Intelligence across the device ecosystem could drive the next upgrade cycle. China competition from Huawei appears manageable given Apple's brand strength and ecosystem lock-in. The services business provides margin expansion opportunities and reduces hardware cyclicality over time.

Pitch Summary:
KKR's share price fell earlier this year after tariff headlines and worries about a tougher market for private equity realizations, the exits that turn paper gains into cash and carried interest, before rebounding partly in Q2. While those concerns are real, the firm's strength is its resilient cash-flow engine. Most earnings come from what the company recently started to call "Total Operating Earnings," which are generally steadier than investment income and generate $4.5bn a year. Three elements drive this figure. First, steady management fees which are charged on committed or invested capital, not quarterly marks. Fee paying AUM grew 12 % year over year to $526bn, lifting fee related earnings 23 % to $823m at a 69 % margin. Second, insurance operating earnings: Global Atlantic manages nearly $200bn and earned $259m pre tax in the quarter, nearly a 20 % return on equity. Every new annuity brings both an investment-management fee and a balance-sheet spread, creating a stable, self-funded growth flywheel. Third, strategic holdings, core companies KKR plans to own long term, now contribute $90m, with a line of sight to $300m and eventually $1bn. As regards investment income, $116bn of uncalled commitments, $245bn of carry-eligible assets already marked above cost, and an $800m monetization pipeline give visibility on future fees and carry, supporting KKR's ability to compound regardless of where the fundraising cycle sits in the near term.

BSD Analysis:
The manager presents a compelling bull case for KKR focused on the firm's resilient earnings diversification beyond traditional private equity realizations. Despite near-term headwinds from tariff concerns and private equity exit market challenges, KKR's "Total Operating Earnings" of $4.5 billion annually provide stability through three key revenue streams. Management fees on $526 billion of fee-paying AUM grew 12% year-over-year, generating $823 million at impressive 69% margins based on committed capital rather than volatile quarterly marks. The Global Atlantic insurance platform manages nearly $200 billion in assets with $259 million in quarterly pre-tax earnings, achieving nearly 20% ROE while creating a self-funded growth flywheel through annuity sales. Strategic holdings contribute $90 million currently with visibility to $300 million and eventually $1 billion, providing another stable income source. The firm maintains substantial dry powder with $116 billion in uncalled commitments and $245 billion in carry-eligible assets marked above cost, supporting future fee and carry generation. An $800 million monetization pipeline provides near-term visibility on realizations. The manager emphasizes KKR's ability to compound earnings regardless of fundraising cycles, making it less dependent on market timing than traditional private equity models.

Pitch Summary:
The Brookfield machine kept humming in the quarter. Distributable earnings climbed 27 % to $1.55bn. Fee related earnings hit a record $698m at a 57 % margin, while fee bearing capital reached $549bn. Management closed two new $16bn flagship funds and raised roughly $25bn of total commitments, further enlarging the base of steady, compounding fees that do not depend on exit markets. Brookfield also agreed to buy a majority stake in Angel Oak, an $18bn mortgage credit platform that will seed a new lending strategy. Insurance and operating platforms continue to extend Brookfield's runway. Insurance generated $430m of earnings on $133bn of assets, backed by $4bn of new annuity sales and a 5.7 % portfolio yield that sits 180 bp above the cost of funds. Looking beyond the quarter, Bruce Flatt recently re-emphasized the three structural tailwinds Brookfield is leaning into, digitization, decarbonization, and deglobalization. Many of the investable assets tied to these themes did not exist at scale two decades ago, yet they now represent expanding opportunity sets that play directly to Brookfield's strengths. Critics often seize on the firm's complexity, a trait that can attract the occasional short-seller attack, but Mr. Flatt maintains the same architecture lets management shift capital among listed partnerships, private funds, and the insurance balance sheet wherever risk-adjusted returns look best and wherever the market is willing to ascribe value (such as with high multiples for asset-light managers). That flexibility has helped Brookfield compound capital at roughly 19 % annually over the past 30 years.

BSD Analysis:
The manager presents a strong bull thesis for Brookfield Corporation, emphasizing the company's diversified asset management platform and exceptional long-term track record. Distributable earnings grew 27% to $1.55 billion with fee-related earnings reaching a record $698 million at impressive 57% margins. The company's fee-bearing capital base of $549 billion provides substantial recurring revenue streams that are less dependent on volatile exit markets. Recent fundraising success includes two new $16 billion flagship funds and $25 billion in total commitments, demonstrating strong investor demand. The Angel Oak acquisition adds an $18 billion mortgage credit platform, expanding Brookfield's lending capabilities. The insurance platform generated $430 million in earnings on $133 billion of assets with a compelling 180 basis point spread over funding costs. Management has identified three key structural tailwinds: digitization, decarbonization, and deglobalization, representing expanding investment opportunities that align with Brookfield's core competencies. While critics point to the firm's complexity, the manager views this as a competitive advantage that allows flexible capital allocation across multiple platforms to optimize risk-adjusted returns. The 19% annual capital compounding rate over 30 years validates this approach.

Pitch Summary:
Alphabet's stock, currently trading around $150, carries the lowest valuation among the "Magnificent Seven" at just 16.6 times this year's earnings—a below-market multiple that suggests deep investor skepticism. The concerns are well-documented: AI-powered competition threatening Google Search, an ongoing antitrust battle, and ballooning capital expenditures, expected to rise 40% to $75 billion this year. We think most of the fear may already be priced into the stock price. Google still dominates search, holding nearly 80% market share, particularly in high-value commercial queries that drive its core advertising business. While AI innovations like ChatGPT and Perplexity AI present potential challenges, Google's integration of AI into search could help it keep leadership. Operationally, Alphabet is more disciplined than the market believes. The company is improving efficiency, with operating margins rising four percentage points in 2024. The appointment of CFO Anat Ashkenazi signals further cost-conscious execution ahead. Beyond search, Alphabet offers a diversified tech portfolio. YouTube is still a digital media powerhouse, Google Cloud is scaling toward profitability with $50 billion in annual sales, and Waymo is a frontrunner in autonomous driving. Meanwhile, Android continues to power the global mobile ecosystem. At 18 times earnings, Alphabet trades at a meaningful discount to peers, despite its robust cash flow and dominant market positions. With AI threats overstated and cost controls improving, current valuation is compelling.

BSD Analysis:
Mar Vista presents a compelling contrarian case for Alphabet, emphasizing the disconnect between valuation and fundamental strength. Trading at 16.6x earnings, the stock represents the cheapest valuation among mega-cap technology companies despite maintaining dominant market positions. The 80% search market share, particularly in high-value commercial queries, provides sustainable competitive advantages and pricing power. Management's operational discipline is evident in the 400 basis point operating margin improvement in 2024, with new CFO Anat Ashkenazi likely to drive further efficiency gains. The diversified portfolio beyond search includes YouTube's media dominance, Google Cloud's $50 billion revenue run-rate approaching profitability, and Waymo's autonomous driving leadership. Android's mobile ecosystem control provides strategic leverage across multiple business lines. The 40% capital expenditure increase to $75 billion reflects necessary AI infrastructure investments rather than wasteful spending. AI competition concerns appear overblown given Google's integration capabilities and search moat durability. The valuation discount to peers creates an attractive risk-reward profile for patient investors.

Pitch Summary:
We keep a positive outlook on Broadcom shares, despite recent stock price pressure stemming from two key concerns: (1) uncertainty around potential tariffs and the impact on global growth, and (2) investor skepticism on the return profile of large-scale AI capex investments by hyperscalers. This skepticism has been amplified by the efficiency gains recently shown by DeepSeek, an unknown Chinese software company, which developed a competitive large language model at a much lower cost. These efficiency gains stoked fears that hyperscalers may have overbuilt AI infrastructure. Broadcom keeps a strong competitive position in the custom AI ASIC market, as well as a disciplined capital allocation, most recently reflected in the VMWare acquisition. That deal is already delivering better-than-expected top-line growth and margin expansion. Broadcom is the leading provider of custom AI ASICs and has been steadily diversifying its customer base beyond its first anchor client, Alphabet. Many hyperscalers are interested in developing custom ASICs, which are tailored to specific computing tasks, given their lower costs and attractive performance attributes compared to general-purpose GPUs from providers like NVIDIA. While we are still constructive on Broadcom's long-term prospects, we did trim our position earlier in the quarter at higher levels to reallocate capital toward a more favorable risk-reward opportunity. Nonetheless, Broadcom is still a core holding in our portfolio and offers an attractive margin of safety. We believe the company is well-positioned to grow intrinsic value by +20% over the intermediate term.

BSD Analysis:
Mar Vista maintains a bullish long-term view on Broadcom despite near-term headwinds from tariff uncertainty and AI infrastructure skepticism. The fund emphasizes Broadcom's dominant position in custom AI ASICs, which offer superior cost and performance characteristics compared to general-purpose GPUs. The VMware acquisition demonstrates management's disciplined capital allocation, already delivering above-expected revenue growth and margin expansion. Customer diversification beyond Alphabet reduces concentration risk while expanding market opportunities. The DeepSeek efficiency concerns appear overblown given hyperscalers' continued interest in custom silicon solutions. Broadcom's competitive moat in complex semiconductor design and manufacturing creates high switching costs for customers. The company's software transformation through VMware provides recurring revenue streams and higher margins. Mar Vista's +20% intrinsic value growth target over the intermediate term reflects confidence in the AI infrastructure buildout and Broadcom's market leadership. The position trimming at higher levels demonstrates disciplined portfolio management while maintaining core conviction.

Pitch Summary:
Fairfax's progress over the last three years has been a textbook exercise in compounding. Hard-market pricing from 2022 to 2024 enabled the group to expand net written premiums at a double-digit clip, increasing float to $33 billion, up roughly 12% per year since 2020. With that larger float invested in longer-duration bonds, interest and dividend income have climbed from $0.6 billion in 2021 to about $2.5 billion last year. Adding a steady $1bn+ of associate earnings and normalized underwriting profit, Fairfax is positioned to earn more than $165 per share in 2025, over triple the approximately $52 per-share run rate we underwrote in 2019. These four pillars, disciplined underwriting, growing float, higher fixed-income yields, and associate contributions, have driven the company's outperformance since 2022. The share price has adjusted accordingly: Fairfax now trades at around 1.7x stated book value, or 1.5x forward, rewarding us with both earnings growth and multiple expansion. The insurance hard market may be coming to an end, and even if premium growth slows to the 6% base-case forecast and the combined ratio drifts toward the high 90s, management still expects more than $1.5 billion in underwriting profit, in addition to the recurring income streams noted above. A substantial cash cushion and excess capital across the underwriting subsidiaries provide Fairfax with flexibility to continue repurchasing shares or reinvest opportunistically. While we should not expect the same pace of multiple expansion from here, the company's scalable earnings engine and conservative balance sheet leave ample room for attractive, though more measured, long-term returns.

BSD Analysis:
The manager presents a compelling bull case for Fairfax Financial based on exceptional operational execution and earnings transformation. The company has successfully leveraged the insurance hard market cycle from 2022-2024 to grow premiums at double-digit rates while expanding float to $33 billion. Most impressively, the combination of larger float invested in higher-yielding bonds has driven interest income from $0.6 billion to $2.5 billion annually. The manager highlights four key value drivers: disciplined underwriting, growing float, higher fixed-income yields, and associate earnings contributions. With earnings power expected to exceed $165 per share in 2025 versus $52 per share in 2019, the company has achieved remarkable operational leverage. Trading at 1.7x book value, the stock has benefited from both earnings growth and multiple expansion. Even as the hard market cycle potentially moderates, management expects over $1.5 billion in underwriting profit alongside recurring income streams. The manager acknowledges that future multiple expansion may be more limited but remains confident in the company's scalable earnings engine and balance sheet strength to generate attractive long-term returns.