Investment Pitches

Pitch Summary:
Johnson & Johnson (JNJ) appreciated 16% as the market favored businesses with more defensive characteristics. JNJ also posted strong fundamental results in pharmaceutical (+7% revenue growth) ahead of Stelera biogeneric approvals in January 2025. We expect JNJ to grow revenues 5-7% through 2030 with faster EPS growth driven by new innovative immunology, oncology, and neurology drugs. JNJ's MedTech franchise should outpace the growth of the rest of the industry on the strength of new products in electrophysiology, orthopedics, and robotics.

BSD Analysis:
Mar Vista views Johnson & Johnson as a defensive quality play with strong growth prospects across its diversified healthcare portfolio. The 16% quarterly appreciation reflects market rotation toward defensive characteristics amid economic uncertainty. The pharmaceutical segment's 7% revenue growth ahead of Stelera biosimilar competition demonstrates pricing power and pipeline strength. Management's revenue guidance of 5-7% through 2030 appears conservative given the robust innovation pipeline in high-growth therapeutic areas. The immunology, oncology, and neurology franchises represent significant growth drivers with substantial market opportunities. The MedTech division's focus on electrophysiology, orthopedics, and robotics positions it to outgrow industry peers through technological innovation. Johnson & Johnson's diversified revenue streams, strong balance sheet, and consistent dividend growth provide downside protection. The company's R&D investments and regulatory expertise create sustainable competitive advantages in pharmaceutical development.

Pitch Summary:
TransDigm continues to post robust fundamental performance despite increased economic uncertainty and difficult year-over-year comparisons. Revenue grew 12% with strong contributions from commercial aftermarket and defense. These two segments are expected to deliver high single digit growth for the rest of the fiscal year. EBITDA as adjusted reached 52.9%, an industry prominent level. Management expects more EBITDA margin growth of up to 40 basis points for the rest of the year. Moreover, management telegraphed a special dividend and more capital deployment in the commercial aftermarket segment, which has historically led to incremental growth and margin expansion in future periods.

BSD Analysis:
Mar Vista expresses strong confidence in TransDigm's execution despite challenging market conditions. The company delivered impressive 12% revenue growth driven by commercial aftermarket and defense segments, both expected to maintain high single-digit growth trajectories. The standout metric is the 52.9% adjusted EBITDA margin, which represents industry-leading profitability. Management's guidance for additional 40 basis points of margin expansion demonstrates operational leverage and pricing power. The announced special dividend and increased capital deployment in commercial aftermarket reflects strong cash generation and disciplined capital allocation. TransDigm's aftermarket focus provides recurring revenue streams with high switching costs. The company's strategy of acquiring niche aerospace components with limited competition creates sustainable competitive advantages. Management's track record of margin expansion through operational improvements and strategic acquisitions supports the bullish thesis.

Pitch Summary:
Visa's stock appreciated 11% as secular trends in electronic payments are still steady despite macroeconomic uncertainty. Revenues should grow faster than overall consumer spending as electronic network penetration, cross-border travel, and new services help the company's top line. Visa's "toll taker" status should allow the business to thrive even in inflationary environments. We expect Visa to compound intrinsic value at low-mid teen rates in a variety of economic scenarios.

BSD Analysis:
Mar Vista maintains a bullish stance on Visa, highlighting the company's resilient business model amid macroeconomic uncertainty. The fund emphasizes Visa's "toll taker" positioning, which provides defensive characteristics and pricing power during inflationary periods. The manager expects revenue growth to outpace consumer spending due to continued electronic payment penetration, cross-border travel recovery, and new service offerings. The secular shift toward digital payments provides a long-term tailwind for the business. Mar Vista projects intrinsic value compounding at low-to-mid teen rates across various economic scenarios. The 11% quarterly appreciation reflects market recognition of these defensive qualities. Visa's network effects and dominant market position in payment processing create a sustainable competitive moat.

Pitch Summary:
Microsoft (MSFT) reported strong bookings, highlighted by an accelerating remaining performance obligation of nearly $300 billion, representing 36% year-over-year growth, as well as healthy cloud revenue growth of 21% year-over-year. Despite this solid performance, MSFT stock came under pressure as Azure revenue growth, at 31% year-over-year, came in at the low end of expectations. Additionally, guidance for the March quarter forecasted Azure revenue growth of 31% to 32%, reflecting a slowdown in non-AI-related Azure growth. We continue to believe Microsoft is well-positioned to gain market share as organizations of all sizes pivot toward a digital-first future and adopt generative AI solutions. With a strong presence in the enterprise and a comprehensive portfolio spanning infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS), Microsoft is a mission-critical IT provider across industries. The company is executing effectively against a significant market opportunity by delivering a roadmap for digital transformation and the adoption of innovative AI tools like ChatGPT. This helps businesses boost productivity while reducing costs. Consequently, we expect Microsoft's solutions to remain resilient even in a challenging macroeconomic environment, supporting low double-digit intrinsic value growth over our investment horizon.

BSD Analysis:
Microsoft delivered strong fundamentals with $300 billion in remaining performance obligations growing 36% year-over-year and healthy 21% cloud revenue growth, though Azure's 31% growth disappointed at the low end of expectations. The company faces a slowdown in non-AI Azure growth, with guidance of 31-32% for the March quarter reflecting this trend. Despite near-term headwinds, Mar Vista remains bullish on Microsoft's positioning for the digital transformation and AI adoption cycle. The company's comprehensive cloud portfolio spanning IaaS, PaaS, and SaaS makes it a mission-critical IT provider across industries. Microsoft's integration of AI tools like ChatGPT into its platform creates productivity gains and cost reductions for enterprise customers. The fund believes this value proposition will drive market share gains as organizations pivot to digital-first strategies. Mar Vista expects Microsoft's diversified cloud platform and AI capabilities to prove resilient in challenging macro environments, supporting low double-digit intrinsic value growth over their investment horizon.

Pitch Summary:
Salesforce's (CRM) stock came under pressure in Q1 as investors grew concerned about the potential negative impact of trade tensions and tariffs on the global economy, as well as the current lack of monetization from AI-enabled software solutions. Despite these concerns, we remain confident in Salesforce's strong competitive position, deep customer relationships, and its ability to monetize AgentForce, its newly launched generative AI-enabled chatbot designed to automate customer service tasks and significantly reduce costs compared to traditional call center support solutions. As the largest provider of SaaS-based customer relationship management software globally, Salesforce possesses a vast repository of customer data. This data, when combined with generative AI solutions like AgentForce, can be mined for valuable insights and used to deliver enhanced customer outcomes. While AgentForce is still in its initial stages, it has already generated strong interest from both customers and global system integrators. Notably, Salesforce announced that approximately 5,000 customers are currently testing AgentForce, including around 3,000 paying customers. We continue to believe that Salesforce is well-positioned to monetize its AI offerings over time and expect the company to grow intrinsic value at a low double-digit rate.

BSD Analysis:
Salesforce faced pressure from trade tension concerns and skepticism about AI monetization, but Mar Vista remains confident in the company's competitive position and AI strategy. The fund highlights Salesforce's dominant position as the largest SaaS-based CRM provider globally, with deep customer relationships and vast data repositories. AgentForce, the company's generative AI chatbot for automating customer service, represents a significant cost reduction opportunity versus traditional call centers. Early traction is promising with 5,000 customers testing AgentForce, including 3,000 paying customers, demonstrating strong market interest from both customers and system integrators. Mar Vista believes Salesforce's combination of market-leading CRM platform and extensive customer data creates a powerful foundation for AI monetization. The fund expects the company to leverage its data advantage to deliver enhanced customer outcomes through AI-driven insights. Despite near-term headwinds, management projects low double-digit intrinsic value growth as AI offerings mature and gain broader adoption.

Pitch Summary:
Broadcom shares faced recent stock price pressure stemming from two key concerns: (1) uncertainty around potential tariffs and the impact on global growth, and (2) investor skepticism regarding the return profile of large-scale AI capex investments by hyperscalers. This skepticism has been amplified by the efficiency gains recently demonstrated 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 maintains 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 initial 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 relative to general-purpose GPUs from providers like NVIDIA. We did reduce our position earlier in the quarter at higher levels to reallocate capital toward a more favorable risk-reward opportunity.

BSD Analysis:
Broadcom faced pressure from tariff uncertainty and investor skepticism about AI capex returns, amplified by DeepSeek's efficient AI model raising overcapacity concerns. Despite these headwinds, Mar Vista highlights Broadcom's strong competitive position in custom AI ASICs and disciplined capital allocation exemplified by the VMware acquisition. The VMware deal is already exceeding expectations with better-than-expected revenue growth and margin expansion. Broadcom leads the custom AI ASIC market and has successfully diversified beyond its initial anchor client Alphabet. The company benefits from hyperscaler interest in custom ASICs, which offer lower costs and better performance than general-purpose GPUs for specific computing tasks. However, Mar Vista reduced their position at higher levels to reallocate capital to more attractive risk-reward opportunities. The fund maintains a positive view of Broadcom's competitive moat and execution capabilities despite near-term market concerns.

Pitch Summary:
We initiated 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 remain 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 initiate a focused position in NVDA while reducing exposure to other AI-related holdings. In our view, NVIDIA offers an attractive way to participate 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 from recent highs, triggered by concerns over DeepSeek's efficient AI model potentially reducing hyperscaler capex demand. The fund views the pullback as creating an attractive entry point at 25x 2025E and 20x 2026E earnings for a company expected to grow revenue and earnings over 50% in 2025. Management believes NVIDIA's dominant position in accelerated computing architecture for AI infrastructure remains intact despite efficiency concerns. They apply Jevons' paradox theory, arguing that AI efficiency gains will actually increase overall computing demand rather than reduce it. The thesis is supported by hyperscalers increasing 2025 capex guidance despite awareness of DeepSeek's progress, and the integration of reasoning capabilities requiring up to 100x more computing power. Mar Vista sees NVIDIA as the optimal way to participate in generative AI buildout given its scale, technological leadership, and growth outlook. The position represents a focused bet on AI infrastructure demand while reducing exposure to other AI-related holdings.

Pitch Summary:
Despite PepsiCo's stock trading at a modest discount to fair value, the absence of clear actions for immediate improvement in Frito-Lay's and carbonated soft drink (CSD) trends makes it challenging to foresee a narrowing of the valuation gap. While the business remains resilient, we recycled the capital into better opportunities within the portfolio. From a broader perspective, PepsiCo faces increasing fundamental pressures. The U.S. Department of Health's push for stricter regulations on artificial ingredients and carbonated soft drinks in schools adds to the already significant challenge posed by GLP-1-driven shifts in consumer behavior. While PepsiCo is better positioned than many peers to navigate the artificial ingredient issue, the lost beverage volume is unlikely to be recovered. This structural change creates a difficult financial outlook despite the company's strong brand portfolio. Our initial decision to trim our position a year ago at higher prices was based on these concerns, and today, the thesis appears even more challenging. While valuation and bearish sentiment provide some support, the main concern is intrinsic value growth. PepsiCo encounters challenges in reaching its ambitious 8-10% growth target over the next two years. These obstacles include the headwinds posed by GLP-1, regulatory risks, and the potential for product boycotts stemming from tariff-related tensions. The stock's value rose by 10% intra-quarter, partly due to the trend towards investing in defensive companies. Taking advantage of that staples' outperformance period, we decided to sell our investment.

BSD Analysis:
Mar Vista adopted a bearish stance on PepsiCo, completely liquidating the position due to structural headwinds and limited growth prospects. The manager identifies multiple challenges including GLP-1-driven consumer behavior shifts, regulatory pressures on artificial ingredients and school beverage sales, and potential tariff-related boycotts. Despite PepsiCo's resilient business model and strong brand portfolio, the company faces difficulty achieving its ambitious 8-10% growth target over the next two years. The lost beverage volume from regulatory changes and health trends is viewed as unlikely to be recovered, creating a challenging financial outlook. While the stock traded at a modest discount to fair value, the absence of clear improvement catalysts for Frito-Lay and carbonated soft drink trends limited upside potential. Mar Vista took advantage of defensive stock outperformance during the quarter to exit at favorable levels. The decision reflects concerns about intrinsic value growth rather than near-term valuation, emphasizing the structural nature of the challenges facing the business.

Pitch Summary:
We initiated 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 remain 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 initiate 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 participate 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 significant pullback, viewing the DeepSeek-driven decline as an attractive entry opportunity. The manager emphasizes compelling valuations of 25x 2025 earnings and 20x 2026 earnings for a company projected to grow revenue and earnings over 50% in 2025. The thesis centers on NVIDIA's dominant position in accelerated computing architecture powering the AI ecosystem. 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 LLMs significantly increases computing intensity, with some models requiring 100x more computing power. Hyperscaler capex guidance increases despite DeepSeek awareness support the continued infrastructure demand thesis. The AI market remains in early stages with rapid innovation and evolving monetization models. NVIDIA's combination of scale, technological leadership, and growth outlook provides attractive exposure to the generative AI buildout. The focused position approach while reducing other AI holdings demonstrates conviction in NVIDIA's competitive positioning.

Pitch Summary:
The Fund established a position in LPL Financial Holdings Inc., the largest independent broker-dealer (IBD) in the U.S. LPL uses technology to help independent financial advisors run their practices more efficiently and service their clients more successfully. LPL should continue to benefit from secular growth in the demand for financial advice, and a shift among financial advisors away from large wire houses towards independent practices. We believe LPL, as the largest IBD, is well placed to continue gaining market share, as it offers its advisors high-quality technology, a range of affiliation models, and best-in-class financial incentives. LPL invests more than its competitors in developing the technologies that allow advisors to run their practice smoothly. The company has also developed a range of possible outsourcing relationships for advisors to choose among, allowing a high degree of flexibility as they transition their practices to independence. LPL's scale allows it to spread their costs over a $1.5 trillion-plus asset base. LPL then uses its superior scale to pay industry-leading economics to its advisors, who can earn payouts of over 90% of the revenue they generate. The combination of these benefits enables LPL to continue recruiting more assets onto its platform, which in turn reinforces these scale advantages. LPL also benefits from the long-term trend of rising asset prices, which grows its base of assets under management. We believe that LPL is well positioned to continue winning new advisors and asset inflows. As it leverages its scale to continue developing its advisor offerings, LPL is gaining share in a growing market. With low teens asset growth and ongoing margin expansion, we believe that LPL can grow EBITDA at a mid-teens rate, and coupled with share repurchases, compound earnings per share at a high teens rate for an extended period.

BSD Analysis:
Baron established a new position in LPL Financial, the largest independent broker-dealer in the U.S., capitalizing on secular trends favoring independent financial advisory practices over traditional wirehouses. The investment thesis is built on LPL's competitive moat through superior technology investments, flexible affiliation models, and industry-leading advisor compensation structures with payouts exceeding 90% of generated revenue. LPL's scale advantage is evident in its $1.5+ trillion asset base, enabling cost efficiencies that fund both technology development and attractive advisor economics, creating a virtuous cycle of advisor recruitment and asset growth. The company benefits from dual tailwinds: growing demand for financial advice and the structural shift toward independent practices. Baron projects compelling financial returns with low-teens asset growth driving mid-teens EBITDA growth, while share repurchases should enable high-teens EPS compounding over an extended period. The secular growth in asset prices provides additional tailwinds to the asset-based fee model.

Pitch Summary:
Microsoft (MSFT) reported strong bookings, highlighted by an accelerating remaining performance obligation of nearly $300 billion, representing 36% year-over-year growth, as well as healthy cloud revenue growth of 21% year-over-year. Despite this solid performance, MSFT stock came under pressure as Azure revenue growth, at 31% year-over-year, came in at the low end of expectations. Additionally, guidance for the March quarter forecasted Azure revenue growth of 31% to 32%, reflecting a slowdown in non-AI-related Azure growth. We continue to believe Microsoft is well-positioned to gain market share as organizations of all sizes pivot toward a digital-first future and adopt generative AI solutions. With a strong presence in the enterprise and a comprehensive portfolio spanning infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS), Microsoft is a mission-critical IT provider across industries. The company is executing effectively against a significant market opportunity by delivering a roadmap for digital transformation and the adoption of innovative AI tools like ChatGPT. This helps businesses boost productivity while reducing costs. Consequently, we expect Microsoft's solutions to remain resilient even in a challenging macroeconomic environment, supporting low double-digit intrinsic value growth over our investment horizon.

BSD Analysis:
Mar Vista maintains a bullish view on Microsoft despite near-term Azure growth concerns, emphasizing the company's strong fundamental performance and strategic positioning. The accelerating remaining performance obligation of $300 billion with 36% year-over-year growth demonstrates robust demand visibility and customer commitment. While Azure growth of 31% disappointed expectations, the manager views this as a temporary slowdown in non-AI workloads rather than a structural issue. Microsoft's comprehensive cloud portfolio spanning IaaS, PaaS, and SaaS positions the company as a mission-critical IT provider across industries. The integration of generative AI tools like ChatGPT creates significant productivity enhancement opportunities for enterprise customers. Mar Vista expects the digital transformation trend and AI adoption to drive market share gains across economic cycles. The projected low double-digit intrinsic value growth reflects confidence in Microsoft's execution capabilities and the durability of its competitive advantages in enterprise technology.

Pitch Summary:
Samsara Inc. was a new addition to the Fund during the quarter. The company provides a cloud-based software platform for commercial vehicle telematics, video-based driver safety, driver workflow automation, and industrial equipment monitoring. Its software collects and analyzes data from sensors and cameras installed in its customers' commercial trucks, construction equipment, warehouses, and other assets, helping companies visualize and improve the state of their operations. More than 20,000 customers in the transportation, field services, construction, utilities, and other industries have adopted Samsara, and the company recently became one of the fastest software companies ever to reach $1.5 billion in ARR. Samsara has been winning share from competitors in the $51 billion market for connected fleet software because of its superior cloud native architecture, ability to address multiple use cases in a single platform, and its rapid product release cycle. Importantly, as Samsara continues to expand its connected asset base, we believe it is building an unmatched data asset that drives better outcomes for its customers relative to its competitors. Capturing more than 14 trillion data points from over 80 billion miles driven spanning roughly 99% of major U.S. roads, Samsara uses AI to help companies optimize their vehicle routes, prevent accidents, improve asset utilization, conduct predictive maintenance, and lower insurance premiums. In fiscal year 2025, across its customer base, the company prevented 250,000 accidents and reduced carbon emissions by 3 billion pounds. Seeing a fast and tangible return on investment, customers have renewed and expanded their Samsara subscriptions at a healthy rate. We anticipate a long runway for growth as Samsara expands into existing accounts and wins new customer logos. Samsara is less than 50% penetrated in its existing customers' vehicle fleets and has a significant opportunity to cross-sell newer non-vehicle products (which already account for more than $200 million of ARR) into its base. The company has also increased its customer count by approximately 20% year-over-year every quarter and identified hundreds of thousands of potential new accounts to win. As it has scaled, Samsara has delivered healthy operating leverage, and we think free cash flow margins can expand to more than 20% longer term.

BSD Analysis:
Baron initiated a position in Samsara, a cloud-based telematics platform serving commercial vehicle and industrial equipment markets. The manager highlights Samsara's competitive advantages including superior cloud-native architecture, multi-use case platform capabilities, and rapid product development cycle that has enabled market share gains in the $51 billion connected fleet software market. The investment thesis centers on Samsara's data moat, capturing 14 trillion data points from 80+ billion miles driven across 99% of major U.S. roads, which powers AI-driven optimization for route planning, accident prevention, and predictive maintenance. With strong customer retention and expansion rates, Samsara demonstrates clear ROI for clients through measurable outcomes like preventing 250,000 accidents annually. The growth runway appears substantial with less than 50% penetration in existing customer fleets, significant cross-selling opportunities for non-vehicle products (already $200M+ ARR), and hundreds of thousands of potential new accounts identified. Operating leverage is evident as the company scales, with Baron projecting free cash flow margins expanding beyond 20% long-term.

Pitch Summary:
Salesforce's (CRM) stock came under pressure in Q1 as investors grew concerned about the potential negative impact of trade tensions and tariffs on the global economy, as well as the current lack of monetization from AI-enabled software solutions. Despite these concerns, we remain confident in Salesforce's strong competitive position, deep customer relationships, and its ability to monetize AgentForce, its newly launched generative AI-enabled chatbot designed to automate customer service tasks and significantly reduce costs compared to traditional call center support solutions. As the largest provider of SaaS-based customer relationship management software globally, Salesforce possesses a vast repository of customer data. This data, when combined with generative AI solutions like AgentForce, can be mined for valuable insights and used to deliver enhanced customer outcomes. While AgentForce is still in its initial stages, it has already generated strong interest from both customers and global system integrators. Notably, Salesforce announced that approximately 5,000 customers are currently testing AgentForce, including around 3,000 paying customers. We continue to believe that Salesforce is well-positioned to monetize its AI offerings over time and expect the company to grow intrinsic value at a low double-digit rate.

BSD Analysis:
Mar Vista maintains a bullish stance on Salesforce despite near-term pressure from macroeconomic concerns and AI monetization skepticism. The manager emphasizes Salesforce's dominant position in CRM software and the strategic value of its extensive customer data repository. AgentForce represents a significant AI monetization opportunity, with early traction evidenced by 5,000 customers testing the platform and 3,000 paying customers. The generative AI-enabled chatbot addresses a clear customer pain point by automating customer service tasks and reducing costs compared to traditional call centers. Salesforce's deep customer relationships and market-leading position provide competitive advantages in AI adoption and monetization. The combination of proprietary customer data and AI capabilities creates opportunities for enhanced customer outcomes and pricing power. Mar Vista projects low double-digit intrinsic value growth, reflecting confidence in the company's ability to successfully monetize AI innovations over time.

Pitch Summary:
We maintain 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 regarding the return profile of large-scale AI capex investments by hyperscalers. This skepticism has been amplified by the efficiency gains recently demonstrated 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 maintains 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 initial 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 relative to general-purpose GPUs from providers like NVIDIA. While we remain 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 remains 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 manager emphasizes Broadcom's dominant position in custom AI ASICs, which offer superior cost and performance characteristics compared to general-purpose GPUs. Customer diversification beyond Alphabet reduces concentration risk while expanding the addressable market as more hyperscalers adopt custom silicon strategies. The VMware acquisition demonstrates disciplined capital allocation and is already exceeding expectations with strong revenue growth and margin expansion. Despite trimming the position for tactical reasons, Mar Vista maintains Broadcom as a core holding with an attractive margin of safety. The projected 20% intermediate-term intrinsic value growth reflects confidence in the company's competitive positioning and execution capabilities. The custom ASIC market opportunity remains compelling as hyperscalers seek more efficient computing solutions for specific AI workloads.

Pitch Summary:
Visa's stock appreciated 11% as secular trends in electronic payments remain steady despite macroeconomic uncertainty. Revenues should grow faster than overall consumer spending as electronic network penetration, cross-border travel, and new services benefit the company's top line. Visa's "toll taker" status should allow the business to thrive even in inflationary environments. We expect Visa to compound intrinsic value at low-mid teen rates in a variety of economic scenarios.

BSD Analysis:
Mar Vista maintains a strong bullish view on Visa, emphasizing the company's resilient business model and secular growth drivers. The manager highlights Visa's "toll taker" positioning in electronic payments, which provides defensive characteristics during economic uncertainty while capturing secular growth trends. Revenue growth is expected to outpace consumer spending due to continued electronic payment penetration, cross-border travel recovery, and expansion of new services. The business model's inflation-resistant characteristics allow Visa to maintain pricing power and margins across economic cycles. Mar Vista projects low-to-mid teen intrinsic value compounding, reflecting confidence in the durability of electronic payment trends. The combination of secular tailwinds and defensive characteristics positions Visa favorably across various economic scenarios. The 11% quarterly appreciation reflects market recognition of these fundamental strengths despite broader macroeconomic headwinds.

Pitch Summary:
During the quarter we made a new investment in Informa PLC, the global leader in B2B live events. The company connects buyers and sellers in various industries, enabling business interactions, and disseminating knowledge across verticals. We believe Informa has built a strong, underappreciated moat around its core events business benefiting from network effects, scale, and process power since managing events with tens of thousands of attendees is not an easy endeavor. For example, some trade associations have reported incurring losses on their annual shows, while Informa enjoys ~30% margins. Well-run scale events build a brand and become "must-attend" franchises for industry participants. Informa owns and runs some of the most recognizable events globally, including the Monaco/Ft. Lauderdale Boat Shows, the Dubai Air Show, Cannes Lions, SuperReturn, BlackHat, and Money 20/20. The business has strong visibility and positive working capital dynamics. Often, next year's iteration of an event will be more than half pre-sold by the end of the current year's show, giving the company elevated levels of predictability and relatively low cyclicality. Informa has also carved out what we see as a generational opportunity in the Middle East, establishing JVs within both Saudi Arabia and the UAE. Attracting business travel is a core priority for both economies, and local governments are investing heavily in event venues that will support growth in B2B events for years to come. These JVs also allow Informa to bring new iterations of its existing and successful brands into the Middle East, underscored by Money 20/20 adding a Middle East show in Riyadh this fall. We expect more of Informa's marquee franchises to expand to the Middle East in short order. One insight we have derived from our investment in Live Nation and have applied here is that in a world that is becoming increasingly more digital, the value of high-quality live events should meaningfully increase to both exhibitors and attendees. We believe the company will accelerate revenue growth, particularly through its Middle East strategy, and compound earnings at a double-digit rate for many years, all while returning meaningful cash to shareholders through share repurchases and dividends and acting as the sole consolidator of the fragmented events industry. Despite these qualities, the stock trades at a mere 14x forward earnings multiple.

BSD Analysis:
Third Point's investment in Informa is based on the company's dominant position in B2B live events with an underappreciated competitive moat built on network effects, scale, and operational expertise. Informa operates marquee "must-attend" events like Monaco Boat Show, Dubai Air Show, and Money 20/20, generating 30% margins while competitors struggle with losses. The business model benefits from strong visibility with events typically more than half pre-sold by year-end, creating predictable cash flows and low cyclicality. The Middle East expansion through JVs in Saudi Arabia and UAE represents a generational growth opportunity, as both governments prioritize business travel and are investing heavily in event infrastructure. This geographic expansion allows Informa to leverage existing successful brands in new markets, as evidenced by Money 20/20's upcoming Riyadh show. The thesis is reinforced by the increasing value of high-quality live events in a digital world, drawing parallels to their Live Nation investment. Informa is positioned to accelerate revenue growth, compound earnings at double-digit rates, and act as the sole consolidator in the fragmented events industry while returning cash to shareholders. Despite these compelling fundamentals, the stock trades at only 14x forward earnings, suggesting significant undervaluation.

Pitch Summary:
Johnson & Johnson (JNJ) appreciated 16% as the market favored businesses with more defensive characteristics. JNJ also posted strong fundamental results in pharmaceutical (+7% revenue growth) ahead of Stelera biogeneric approvals in January 2025. We expect JNJ to grow revenues 5-7% through 2030 with faster EPS growth driven by new innovative immunology, oncology, and neurology drugs. JNJ's MedTech franchise should outpace the growth of the rest of the industry on the strength of new products in electrophysiology, orthopedics, and robotics.

BSD Analysis:
Mar Vista presents a compelling bull case for Johnson & Johnson based on both defensive characteristics and growth prospects. The manager highlights strong pharmaceutical performance with 7% revenue growth, demonstrating resilience ahead of biosimilar competition for Stelara. The projected 5-7% revenue growth through 2030 is supported by a robust pipeline in high-growth therapeutic areas including immunology, oncology, and neurology. The MedTech division is positioned to outperform industry growth through innovation in electrophysiology, orthopedics, and robotics. JNJ's defensive profile attracted investor interest during market volatility while maintaining strong fundamentals. The combination of steady pharmaceutical cash flows and higher-growth MedTech operations provides a balanced growth profile. Mar Vista expects faster EPS growth than revenue growth, indicating margin expansion and operational leverage from the innovation pipeline.

Pitch Summary:
During the quarter, we continued adding to a new long position in Casey's General Stores. At ~2,900 locations, Casey's is the third largest convenience store chain in the US by store count. More importantly, it is the fifth largest pizza chain in the country. It is a "boring" business to some, but there is an art to boring – we believe the returns and their consistency have been exceptional and stem from a quirky counter-positioning of the business. When a company chooses not to do the easy thing, it is often a powerful signal that something special is at work. Selling gas and cigarettes is easy. Selling fresh food at scale as successfully as Casey's is not. Figuring out food creates a powerful feedback loop – Casey's earns more profit dollars per visit, enabling them to price fuel at a discount to independent gas stations and pizza at a discount to competing QSRs. Consumers save on both purchases, and the result is a brand beloved by a loyal customer base, whose Net Promoter Scores look nothing like the rest of the industry. How has Casey's solved for food? We attribute their success to differentiated employee retention and approaching the business like a community-centric restaurant that consumers trust to feed their families. Annualized labor churn rates north of 100% have long plagued convenience stores – it is hard to retain employees, let alone incentivize them to sell perishables and run open air kitchens. Not so with Casey's. Their stores have 40% more staff than your typical gas station and they have used this as an opportunity to offer viable career paths on a store-by-store basis throughout rural America. We have eaten our fair share of Casey's brisket pizza, and in our store tours we were impressed by the consistency of quality and employee and customer loyalty that they have created at the store level. A recent test roll-out of chicken wings has seen high satisfaction scores and we believe the company is on its way to a system wide rollout of wings that has the potential to meaningfully increase sales densities. Casey's stock has performed well over the last ten years and is up over 30% this year alone; yet we believe the team from Des Moines is just getting started. The recent acquisition of 200 stores from Fike's marked their entrance into the South, and management has since commented that Texas alone could offer 2,000 more units (vs. today's national footprint of 2,900), reinforcing our belief that there are plenty of towns across the South that would love a Casey's. Our expectation is that this unit growth story is likely to play out more quickly than broadly expected given Casey's demonstrated ability to do accretive M&A. In the Fike's example, Casey's paid 11x headline EBITDA, but the pro forma multiple looks more like 7x when pizza is rolled out across the footprint. How many companies have the luxury of replicable, accretive M&A at EBITDA multiples that are half of its own trading levels? In Casey's we see a world class management team with a differentiated mousetrap and a decade of profitable growth ahead of them – whether they are labeled a restaurant or a gas station or a general store is semantics. As the company's slogan goes, "It's Not Crazy, it's Casey's!"

BSD Analysis:
Third Point's thesis on Casey's centers on its unique counter-positioning as a fresh food-focused convenience store chain that has solved the industry's fundamental labor and quality challenges. Casey's operates 2,900 locations and ranks as the fifth largest pizza chain in America, demonstrating its successful pivot from traditional convenience retail to food service. The company's competitive moat stems from superior employee retention (avoiding the industry's 100%+ annual churn) through 40% higher staffing levels and viable career paths in rural communities. This enables consistent food quality and customer loyalty reflected in industry-leading Net Promoter Scores. The food-first strategy creates a powerful economic flywheel where higher profit per visit allows Casey's to discount fuel and pizza prices, driving traffic and market share. Recent expansion into the South via the Fike's acquisition (200 stores) demonstrates management's ability to execute accretive M&A at attractive multiples - paying 11x EBITDA that drops to 7x post-pizza rollout. With Texas alone offering 2,000 potential new locations versus today's 2,900 national footprint, Casey's has a clear decade-long growth runway. The company's replicable M&A strategy at multiples half its trading level provides a sustainable competitive advantage in an otherwise fragmented industry.

Pitch Summary:
Berkshire Hathaway appreciated 17% during the quarter fueled by solid underwriting results for the insurance platform and renewed investor interest in defensive businesses. Berkshire's cash balances expanded to $330 billion as of the end of the year with a notable reduction in its large Apple position. Berkshire's excess capital should allow the company to better navigate turbulent periods and make strategic investments at opportune times.

BSD Analysis:
Mar Vista maintains a bullish stance on Berkshire Hathaway, highlighting the company's strong operational performance and defensive characteristics. The manager emphasizes solid underwriting results from Berkshire's insurance operations, which form the core of the company's business model. The substantial cash position of $330 billion provides significant strategic flexibility and downside protection during market volatility. The reduction in Apple holdings demonstrates disciplined capital allocation and risk management. Berkshire's defensive business profile attracted renewed investor interest during the quarter's market turbulence. The excess capital positions the company to capitalize on strategic investment opportunities during market dislocations. Mar Vista views Berkshire as well-positioned to navigate challenging economic conditions while maintaining optionality for value-accretive investments.

Pitch Summary:
We initiated a position in Rocket Companies during the Second Quarter based on its transformative all-stock acquisition of Mr. Cooper. Rocket has been a persistent share gainer in the fragmented mortgage origination industry, with a 12% market share of refi originations and a 4% share of purchase originations. It has differentiated, industry-leading cost and time to originate, driven by its continuous reinvestment in technology and automation. While the average originator takes 45 days to close a refi loan, Rocket only takes 20 days – and that key metric continues to fall. In fact, over 50% of loans now close in less than 15 days. Mr. Cooper is the leading mortgage servicer, with 11% market share, making it over 50% larger than its next largest competitor. Much like Rocket in the origination space, Mr. Cooper has industry-leading cost-to-service that has fallen by ~50% over the last five years. These differentiated unit economics have allowed Mr. Cooper to be a primary beneficiary of MSR sales by cash-poor, subscale originators struggling to keep afloat in the current high-rate environment. We view the combination of Rocket and Mr. Cooper as a transformative, synergy-rich merger between two technology leaders in the otherwise parochial and cost inflationary mortgage industry. Combining the largest refi originator with the largest servicer will, we believe, enable pro forma Rocket to turn ecosystem unit economics on its head. Rather than an originator having to reacquire a customer in 5-7 years or a servicer having to reacquire the MSR, Mr. Cooper's servicing portfolio could feed Rocket's refi origination machine, leveraging Rocket's ~85% refi recapture rates which are already >3x the industry average. On top of this compelling combination, enter AI. Rocket has begun to realize the benefits of automating workflows – from income verification to document submission, to credit score verification – in ways that set it apart from others in the industry. De-bottlenecking these monotonous administrative chores should enable the company to improve both throughput (applications processed per officer) and conversion (applications that result in a mortgage) and pass through a portion to the end consumer to drive further market share gains.

BSD Analysis:
Third Point initiated a position in Rocket Companies based on its transformative acquisition of Mr. Cooper, creating a vertically integrated mortgage ecosystem. The thesis centers on combining the largest refi originator (Rocket, 12% market share) with the largest servicer (Mr. Cooper, 11% market share) to create powerful synergies. Rocket's technology-driven competitive advantage is evident in its 20-day loan closing time versus the industry average of 45 days, with over 50% of loans now closing in under 15 days. The merger enables a closed-loop system where Mr. Cooper's servicing portfolio feeds Rocket's origination machine, leveraging Rocket's exceptional 85% refi recapture rate that is 3x the industry average. AI automation across workflows from income verification to credit scoring should further improve throughput and conversion rates. The combination addresses the fragmented mortgage industry's cost inflation problem through superior unit economics, with Mr. Cooper's cost-to-service falling 50% over five years. This creates a sustainable competitive moat in an otherwise commoditized industry while positioning the combined entity to gain market share through superior customer experience and pricing.