Investment Pitches

Pitch Summary:
We exited our position in On Semiconductor after nearly two years as the downturn in electric vehicle demand persisted far longer than anticipated. Changes to U.S. EV tax credits and weakening global growth have delayed recovery in EV sales. Automakers including General Motors, Ford, and Volkswagen announced production cutbacks, reducing near-term chip demand. We revised our estimate of ON’s normalized earnings power downward materially. At today’s price, we believe risk-reward is no longer attractive and moved to the sidelines.

BSD Analysis:
ON Semiconductor is positioned for a cyclical recovery in 2026, with analysts projecting a median upside of 6% as inventory levels normalize. While the company saw a quarter-over-quarter revenue dip in previous cycles, its 18.5% operating margin demonstrates strong underlying efficiency. The investment thesis centers on the firm’s exposure to high-growth segments like electric vehicles and industrial automation, where power management chips are critical. Despite recent volatility, the company maintains a solid cash-to-price ratio and a high return on equity compared to many semiconductor peers. Management is focused on leveraging its manufacturing scale to capture the next wave of automotive electrification demand. ON Semiconductor represents a high-beta play on the long-term industrialization of power electronics.

Pitch Summary:
Zoetis is the leading pharmaceutical and vaccine developer in the global animal health market. The company has delivered consistent organic growth above industry averages driven by a deep R&D pipeline and strong veterinary sales force. Near-term investor concerns around newer product launches pressured the stock in 2025. We believe these concerns are temporary and that Zoetis’ long-term growth trajectory remains intact. We initiated our position near the bottom of our intrinsic value range despite typically requiring a wider margin of safety.

BSD Analysis:
Zoetis enters 2026 with a commitment to consistent shareholder returns, recently approving a 6% increase in its quarterly dividend. As a Fortune 500 leader in animal health, the company benefits from a diversified portfolio of medicines, vaccines, and diagnostics used in over 100 countries. The long-term investment case is supported by the "humanization of pets" trend and the essential nature of livestock productivity in the global food supply chain. Management’s forward-looking views remain positive, focusing on a robust R&D pipeline to sustain its market-leading margins. While the animal health sector can be sensitive to broader economic shifts, Zoetis’ scale and direct-to-veterinarian model provide a formidable competitive moat. The company remains a top pick for those seeking defensive growth within the broader healthcare and agriculture sectors.

Pitch Summary:
FactSet Research Systems is a leading financial data provider with over 45 years of consecutive revenue growth. The company benefits from a sticky subscription model with retention rates above 95% and high returns on invested capital. Shares came under pressure as banks curtailed hiring and FactSet increased investment in GenAI and cloud infrastructure, temporarily compressing margins. We believe these investments are necessary to strengthen FactSet’s competitive position and will drive long-term growth. We initiated our position at what we believe is the lowest valuation multiple the stock has traded at in the past decade.

BSD Analysis:
FactSet Research Systems is reinforcing its bullish profitability narrative in 2026, with net margins holding firm in the mid-25% range despite rising technology costs. The company is successfully converting its data platform into bottom-line results, with earnings growth recently outpacing its five-year historical average. Bulls point to the integration of new acquisitions and the launch of GenAI tools like Pitch Creator as the primary engines for future annual subscription value growth. While technology expenses related to cloud migration are a watchpoint, FactSet’s operational productivity has largely kept pace with these investments. The stock’s valuation remains attractive relative to peers, trading below many fair value estimates despite its resilient competitive position. For 2026, FactSet offers a stable, cash-generative profile for investors seeking exposure to financial data and analytics.

Pitch Summary:
AECOM is the world’s largest engineering, design, and construction management firm. Over the past six years, the company has undergone a structural transformation, divesting its construction operations and exiting lower-return emerging markets to focus exclusively on design, engineering, and project management. This shift has significantly reduced capital requirements and expanded operating margins, while strengthening the balance sheet. Since exiting construction, EPS has grown at a 20% CAGR and operating margins have more than doubled. We believe AECOM warrants a valuation multiple closer to high-quality professional services peers and initiated a position following market confusion around discontinued operations guidance.

BSD Analysis:
AECOM enters 2026 with a strong buy consensus and a projected 36% upside, as analysts bet on its leadership in the global engineering and construction space. The company is expected to deliver nearly 28% EPS growth this year, supported by massive infrastructure backlogs and government-backed sustainability projects. While total revenue may see some technical adjustments, the focus remains on high-margin professional services and capital-light consulting roles. AECOM’s earnings are forecast to grow significantly faster than the broader US market, reflecting its role in essential infrastructure modernization. Management’s ability to win large-scale public contracts provides a level of earnings visibility that is rare in the construction sector. Investors view AECOM as a premier vehicle for playing the multi-year cycle of global infrastructure reinvestment.

Pitch Summary:
Quanta Services is the largest U.S. provider of skilled labor and equipment for energy and communications infrastructure. With more than 58,000 employees, it supports electric grid modernization, renewable energy, pipeline services, and datacenter-related power projects. About 45 percent of its revenue comes from long-term Master Service Agreements, offering recurring demand across cycles. We believe Quanta’s leadership position is growing more valuable as utility investment accelerates. Grid aging, electrification, renewable integration, and AI-related demand are driving a multidecade upgrade cycle. Quanta’s national scale, vertical integration, and execution capabilities give it a competitive edge that smaller contractors cannot match. Its customers, mainly regulated utilities, tend to have stable, long-term spending plans, providing greater visibility. We see Quanta as a core enabler of the North American energy transition and well positioned to benefit from secular investment in resilient, low-carbon infrastructure.

BSD Analysis:
Quanta is critical infrastructure labor for power, communications, and energy networks that can’t afford delays. Electrification, grid hardening, and data center buildouts create sustained demand. Backlogs provide visibility even when macro sentiment turns. Investors worry about construction cyclicality and miss the service-heavy, regulated nature of the work. Skilled labor scarcity strengthens pricing power. Capital discipline has improved returns versus past cycles. Execution matters more than volume growth. This is infrastructure necessity paid to show up on time.

Pitch Summary:
Carpenter Technology is a leading supplier of specialty nickel alloys for the aerospace industry. These high-tolerance, heat-resistant metals are essential for manufacturing high-performance components in the hot sections of aircraft engines and gas turbines. The industry functions as a de facto duopoly, supported by high barriers to entry, including deep technical expertise, strict certification requirements, and long-dated returns on capital for new capacity. After years of maintaining peak-cycle capacity for airframers—much of it underutilized—nickel alloy producers have taken a more measured approach to expansion. Combined with new demand from gas turbines, defense, and space applications, this has shifted pricing power back toward metal suppliers. In our view, pricing must rise meaningfully to incentivize new capacity, given the capital intensity and time required to build it. As Boeing and Airbus resume production growth, we expect supply-demand tightness to persist, supporting a strong pricing environment for incumbents.

BSD Analysis:
Carpenter is a specialty metals supplier leveraged to aerospace, defense, and energy markets where material performance actually matters. Qualification cycles and customer approvals create switching costs that protect margins through downturns. Aerospace recovery and defense demand provide multi-year visibility. Investors anchor to legacy steel cyclicality and miss the specialty alloy mix shift. Capacity investments pressure near-term margins but extend competitive relevance. Pricing power improves as utilization tightens. Balance sheet discipline is materially better than prior cycles. This is advanced materials, not commodity metal.

Pitch Summary:
We exited our position in Dexcom in November. Dexcom grew operating income by over 300 percent from 2019 to 2024 as it benefited from continuous glucose monitor (CGM) adoption. However, this growth was swamped by more than 80 percent multiple contraction, resulting in a negative stock outcome since our 2020 purchase. Dexcom contended with several issues over the course of our ownership, from GLP-1 fears to execution missteps. Most recently, the stock sold off on concerns about product reliability, the timing of Medicare coverage for type-2 non-insulin CGM usage, and signs of decelerating growth for CGMs more broadly. Shares are trading at their all-time low forward multiple, reflecting these concerns. However, at this stage we prefer to re-allocate client capital into a higher-conviction opportunities.

BSD Analysis:
DexCom is building chronic-care infrastructure around continuous glucose monitoring, not just selling devices. Once patients and physicians adopt CGM, switching becomes disruptive and clinically risky. Expansion into broader type 2 populations extends the runway well beyond early adopters. Pricing pressure is real, but volume growth and mix offset it over time. Investors fixate on reimbursement headlines and miss adherence-driven recurring revenue. Product innovation cadence remains strong. International penetration is still early. This is healthcare infrastructure with compounding utilization, not a gadget cycle.

Pitch Summary:
Select Growth exited its position in Venture Global to reallocate capital to higher-conviction businesses that we believe are better positioned to benefit from the rise of AI. We initiated the position at the company’s initial public offering in January. Since then, the stock has faced sustained pressure, driven by poor communication from management, a mishandled IPO process, and ongoing legal overhangs that have obscured progress in scaling its liquefied natural gas operations. We continue to see a long-term opportunity for Venture Global to leverage its low-cost, modular infrastructure amid rising global demand for U.S. gas exports. However, we have greater confidence in the execution potential of other businesses in the portfolio and believe this reallocation strengthens the portfolio’s exposure to key innovation-driven growth themes.

BSD Analysis:
Venture Global sits at the center of the global LNG arms race, exporting U.S. natural gas to energy-hungry allies. Its strategy prioritizes speed, modular construction, and long-term contracts over pristine project aesthetics. Demand visibility is strong as energy security trumps ideology. The model generates massive cash flow once facilities are operational, but execution risk is real during buildout. Regulatory and political noise is constant, yet global buyers keep signing contracts. Cost overruns and timelines are the main swing factors. This is not a clean energy story — it’s an energy reality story. Venture Global works if projects come online as promised. When they do, the cash flow is enormous.

Pitch Summary:
We exited our position in Arthur J. Gallagher to fund our purchase of Carpenter Technology. We first invested in Arthur J. Gallagher in April 2025, viewing it as a high-quality compounder that complemented the Select Growth portfolio given the limited economic sensitivity and inflation-hedging characteristics of its insurance brokerage business. While the company continues to meet our investment criteria, a cyclical downturn in pricing has weighed on its near-term performance. We see a more compelling opportunity in Carpenter Technology over our five-year horizon, as a duration growth business that also enhances portfolio diversification and helps mitigate risk.

BSD Analysis:
Gallagher is one of the most consistent compounders in insurance brokerage, thriving on rate increases and disciplined execution. Its decentralized culture keeps producers hungry while scale improves margins and cross-selling. The business avoids underwriting risk, focusing instead on commissions and advisory fees. Rising premiums are a structural tailwind, not a temporary boost. M&A is frequent but well-integrated, expanding geographic and specialty reach. Client relationships are sticky because insurance decisions are rarely impulsive. Cash flow is reliable across cycles. This is not a flashy financial stock. It’s a fee-based machine that compounds steadily when others stumble.

Pitch Summary:
We exited our position in Oracle due to rising concerns about the company’s financial strength. We originally initiated the investment in September 2025, expecting Oracle to benefit from OpenAI’s long-term secular growth, following the announcement of several multiyear contracts that pointed to a potential inflection in its cloud services business. At the time, we believed Oracle could grow its cloud segment at rates approaching or exceeding those of today’s leading providers over our five-year horizon. Since then, OpenAI has announced new partnerships with competing platforms, and Alphabet has emerged as a more direct threat to OpenAI’s leadership. In our view, these developments increase the risks to Oracle’s balance sheet and call into question its ability to sustain above-average earnings growth. Given these shifts, we chose to exit the position.

BSD Analysis:
Oracle is the rare legacy tech company that actually pulled off a second act. Its database franchise remains mission-critical, and customers still pay because downtime isn’t an option. Cloud growth is real, driven by workloads that value performance and reliability over trendiness. Oracle wins by being boring and dependable while competitors chase headlines. Pricing power is significant because ripping out core systems is operational suicide. Capital allocation is shareholder-friendly, with cash flows funding buybacks and dividends. AI infrastructure demand is pulling Oracle into conversations it was never supposed to win. This is not a declining software dinosaur. It’s enterprise plumbing with renewed relevance and underestimated leverage.

Pitch Summary:
ServiceNow and Atlassian lagged growth equities and weighed on investment results in 2025. Both businesses faced persistent macro pressure on software broadly, driven by investor concerns that AI could lower barriers to entry, displace legacy platforms, or limit seat-based pricing growth through efficiency gains. Despite this, each business has delivered solid operating results and launched new AI functionality that contradicts the prevailing market view that they are likely to be disrupted. While we believe these fears are overstated, they are unlikely to be resolved in the near term and will likely continue to pressure sentiment. As a result, we exited both positions in favor of businesses with less perceived exposure to AI-related disruption.

BSD Analysis:
Atlassian owns the workflow layer for modern software teams, and once embedded, it’s painfully hard to dislodge. Jira and Confluence aren’t “nice to have” tools — they become the system of record for how work gets done. The freemium model keeps customer acquisition efficient, even as growth optics fluctuate. Cloud migration has created short-term noise, but long-term economics are better with higher ARPU and stickier usage. AI features enhance productivity rather than threatening the core platform. Competition exists, but switching costs rise exponentially once teams scale. Margins expand naturally as cloud adoption matures. This is not a hype SaaS name. It’s collaboration infrastructure compounding quietly in the background.

Pitch Summary:
ServiceNow and Atlassian lagged growth equities and weighed on investment results in 2025. Both businesses faced persistent macro pressure on software broadly, driven by investor concerns that AI could lower barriers to entry, displace legacy platforms, or limit seat-based pricing growth through efficiency gains. Despite this, each business has delivered solid operating results and launched new AI functionality that contradicts the prevailing market view that they are likely to be disrupted. While we believe these fears are overstated, they are unlikely to be resolved in the near term and will likely continue to pressure sentiment. As a result, we exited both positions in favor of businesses with less perceived exposure to AI-related disruption.

BSD Analysis:
ServiceNow is workflow infrastructure for large enterprises where experimentation is not tolerated. Once embedded, it expands horizontally across departments without needing new logos. Switching costs are operational and political, which is stronger than contractual lock-in. AI features monetize best when layered onto workflows customers already trust. Investors worry about saturation prematurely while penetration is still low. Margin expansion follows scale and platform leverage. Digital process automation remains early, not finished. This is enterprise gravity disguised as SaaS.

Pitch Summary:
Microsoft shares declined after the company reported its third-quarter results. Azure, its cloud services business, grew revenue by 39 percent year over year, exceeding management’s guidance. However, investor expectations were likely higher, particularly in comparison to recent reacceleration trends at other cloud providers. Growth remains limited by capacity constraints rather than demand across all workloads, which may have dampened the market’s enthusiasm. Microsoft plans to increase its AI capacity by 80 percent through June 2026, a move that reflects strong underlying demand. We believe this investment could help alleviate the current bottlenecks and support a reacceleration of growth in the coming quarters. This expansion also reinforces our view of Microsoft's positioning for sustained above-average growth as AI adoption broadens across industries.

BSD Analysis:
Microsoft has turned incumbency into a compounding weapon across cloud, software, and AI. Azure growth isn’t about hype cycles; it’s about enterprises standardizing mission-critical infrastructure. AI monetization works here because Microsoft owns distribution through Office, Windows, and GitHub. Switching costs are operational and cultural, not contractual. Investors obsess over capex while ignoring the stickiness of recurring revenue. Margins expand through mix, not pricing games. Microsoft doesn’t need to win every tech trend — it just needs to be unavoidable. That’s a very durable position.

Pitch Summary:
Spotify is the world’s largest subscription streaming audio platform by market share. Its valuation came under pressure in the fourth quarter as the rise of AI-generated music raised concerns about disintermediation for demand aggregators like Spotify. We view this risk as overstated. Spotify is already integrating AI capabilities across its platform, and management has made clear that AI remains a key focus. Looking beyond near-term AI concerns, we believe the setup for 2026 is attractive. We expect accelerating revenue growth alongside steady margin improvement. Spotify now has updated agreements in place with all major record labels, which should support pricing power going forward. We expect this pricing power, especially in developed markets, to strengthen in 2026 relative to 2025 and to be viewed positively by the market.

BSD Analysis:
Spotify controls global audio distribution, which is far more valuable than owning music catalogs. Scale improves negotiating leverage with labels and spreads fixed costs across a massive user base. Pricing power is finally showing up through tiering and selective increases. Podcasting reset expectations, but it also clarified where returns actually live. Discovery algorithms keep engagement sticky across cycles. Investors fear a margin ceiling that keeps drifting higher. Free cash flow changed the narrative from growth-at-any-cost to disciplined platform economics. This is media infrastructure behaving like a utility.

Pitch Summary:
Netflix is the world’s largest producer and distributor of streaming video content by subscriber count. Its stock has come under pressure amid investor skepticism over its proposed acquisition of Warner Bros Discovery’s studio and streaming assets. The deal would be Netflix’s largest to date and is expected to be funded through a mix of cash and debt. A competing bid from Paramount has added to the uncertainty. We believe the acquisition would strengthen Netflix’s business and is likely to withstand antitrust review. We have long viewed studio ownership as a strategic fit for Netflix. Combining valuable intellectual property with the company’s global distribution platform could boost overall viewership and improve pricing power. Our research suggests that the combination of leading IP and distribution leads to higher engagement. While antitrust remains a risk, we believe Netflix has a credible case based on the evolving definition of the video market, as streaming and linear content continue to converge.

BSD Analysis:
Netflix has fully crossed from growth experiment to global entertainment infrastructure with real operating leverage. Scale lets it amortize content costs better than any competitor, which is the only durable edge in streaming. The ad tier adds incremental monetization without undermining subscriptions, and early results suggest pricing power is real. Password-sharing enforcement proved demand elasticity was underestimated, not exhausted. International markets now drive most incremental growth, quietly diversifying revenue. Investors still fixate on content spend instead of free cash flow inflection. Competition fragments libraries but consolidates distribution power. Netflix doesn’t need every hit — it just needs to own the habit.

Pitch Summary:
Sea is a Southeast Asian internet platform with businesses in gaming, ecommerce, and fintech. After seven consecutive quarters of exceeding consensus expectations and raising forward guidance, management shifted its focus to investing in logistics and user engagement. These investments are expected to weigh on margins in the near term, and the stock declined in response. We believe the market is overreacting to spending that should ultimately strengthen Sea’s competitive position and long-term earnings power. Despite the increased investment, we still expect Shopee, Sea’s ecommerce segment, to grow EBITDA by more than 30 percent in 2026. Looking ahead, we believe Sea’s overall revenue and EBITDA can double and triple, respectively, by 2030. In our view, this growth potential, combined with the company’s lowest forward earnings multiple since 2023, creates an attractive risk-reward profile.

BSD Analysis:
Sea is a reminder that survival matters more than growth narratives in emerging markets. After years of burning cash, management slammed the brakes and proved the business can generate real profits. Shopee remains a dominant e-commerce player in Southeast Asia, even as competition stays brutal. Garena provides cash flow optionality when gaming cycles cooperate. SeaMoney adds a fintech layer that improves ecosystem economics over time. Currency and regulatory risk are permanent features, not temporary setbacks. The company now prioritizes unit economics over market share at all costs. This is no longer a reckless growth story. It’s an execution-and-discipline story that finally makes sense.

Pitch Summary:
Roblox is a leading gaming development and distribution platform. Shares declined in the fourth quarter after management projected a notable increase in expenses and capital expenditures in 2026 and issued a cautious growth outlook, citing potential engagement risks from new age-based communication controls. This update amplified existing concerns that growth may normalize in the coming quarters, following an extraordinary 91 percent year-over-year engagement increase in the third quarter, driven by several hit game launches. While we continue to monitor engagement trends, we believe expectations have now reset to more appropriately conservative levels. Our research suggests that expanding engagement and monetization reflects Roblox’s evolution into a platform business, rather than a dependence on individual game successes.

BSD Analysis:
Roblox is a digital platform that sits somewhere between gaming, social media, and a creator economy — which makes it hard to value and easy to misunderstand. Engagement is real and sticky, especially among younger users, and time spent continues to grow. Monetization lags engagement, which is both the risk and the opportunity. The platform model scales, but infrastructure and trust-and-safety costs are heavy. Roblox isn’t selling games; it’s selling a digital world people build and live in. Advertising and commerce remain underdeveloped levers. Profitability is not imminent, but operating leverage is real if monetization improves. This is not a traditional gaming stock. It’s a long-dated bet on virtual social spaces becoming mainstream.

Pitch Summary:
Broadcom is a key enabler of systems scalability and compute growth through ethernet networking and custom accelerators. Shares advanced in the quarter, overcoming a decline in December following the release of fourth-quarter results. AI revenue grew 74 percent year over year, with management guiding to at least $73 billion in AI revenue over the next six quarters. Despite the strong figures, investors appeared disappointed by limited visibility beyond that period and the absence of new customer announcements. Concerns were likely compounded by fears that margins could compress if Google shifts to internal tools, along with broader weakness in the semiconductor industry amid growing scrutiny around the durability of AI infrastructure spending.

BSD Analysis:
Broadcom is monopoly economics executed with zero sentimentality. Its chips are mission-critical, price-inelastic, and deeply embedded in customer systems that cannot afford disruption. AI networking, custom silicon, and infrastructure software all expand Broadcom’s leverage over customers. The VMware acquisition tightens enterprise lock-in, even if integration risk makes investors nervous. Customers complain about pricing — and then pay anyway. Free cash flow is enormous and aggressively returned to shareholders. Cyclicality exists, but the earnings floor keeps rising. This is not innovation theater. It’s control of infrastructure with discipline.

Pitch Summary:
Amazon is one of the largest internet-based retailers in the U.S. and is a growing global leader in the computing infrastructure-as-a-service (IaaS) space. Shares advanced following third-quarter results, as accelerating growth in Amazon Web Services (AWS) helped ease concerns about AI-related cloud share losses after two consecutive quarters of underperformance. In retail, sales modestly exceeded expectations, supported by steady consumer demand and continued strength in advertising. Looking ahead to 2026, our research suggests consensus expectations for AWS are overly conservative, with planned capacity additions likely to support continued acceleration. In retail, we expect sustained margin expansion, driven by fixed cost leverage, network improvements, and advertising growth.

BSD Analysis:
Amazon is finally being run like the scale monster it always was, not a startup pretending margins don’t matter. AWS remains the backbone of global cloud infrastructure and a prime beneficiary of AI workloads, even as growth normalizes. Retail profitability has quietly improved through logistics automation, regional fulfillment, and ruthless cost control. Advertising is now a high-margin cash engine layered on top of traffic Amazon already owns. Free cash flow inflection is the real story after years of reinvestment. Regulatory noise is constant, but consumer behavior hasn’t changed at all. Amazon’s moat is logistics, data, and habit — not price alone. This is no longer a growth-at-any-cost story. It’s a cash-flow compounder wearing a tech multiple.