Investment Pitches

Pitch Summary:
During the quarter, we initiated a position in Equifax. Equifax is a leading provider of consumer and commercial credit information globally. Equifax is well positioned to see high single-digit revenue growth and margin expansion after technology upgrades, which should result in double-digit earnings growth for the next few years.

BSD Analysis:
Madison initiated a new position in Equifax, viewing the credit reporting giant as attractively positioned for sustained growth. The managers highlight Equifax's dominant market position as a leading provider of consumer and commercial credit information on a global scale. The investment thesis centers on the company's recent technology infrastructure upgrades, which are expected to drive operational efficiency and margin expansion. Madison projects high single-digit revenue growth supported by these technological improvements and enhanced service capabilities. The combination of revenue growth and margin expansion is anticipated to generate double-digit earnings growth over the next several years. This represents a classic technology-enabled transformation story within the financial services sector, where operational leverage should drive superior profitability metrics.

Pitch Summary:
SAIA is a leader in the less-than-truckload (LTL) freight market, characterized by reduced cyclicality, high barriers to entry, and scale advantages. Saia has capitalized on each of these characteristics through significant investments over the past decade. With its national scale now solidified and capital expenditures slowing, we believe Saia is well-positioned to benefit from structural margin expansion. Our thesis is anchored in Saia's ability to deliver over 20% EPS growth as the transport market recovers, driven by pricing gains, margin improvement, and improving returns on invested capital.

BSD Analysis:
Polen Capital initiated a position in SAIA, viewing it as a leader in the less-than-truckload freight market with compelling structural advantages. The managers highlight SAIA's reduced cyclicality, high barriers to entry, and scale benefits that the company has built through significant investments over the past decade. With national scale now established and capital expenditures moderating, Polen expects SAIA to benefit from structural margin expansion. The investment thesis centers on SAIA's ability to deliver over 20% EPS growth as transport markets recover, driven by pricing power, margin improvement, and enhanced returns on invested capital. This represents a classic Polen Capital investment in a quality business with durable competitive advantages positioned for multi-year growth acceleration. The timing appears opportunistic given current transport market conditions and SAIA's operational leverage potential.

Pitch Summary:
In addition to Starbucks, we initiated a new position in Aon, one of the leading insurance brokerage houses in the world. Aon operates in 120 countries, with most of its revenue from the Americas. Its primary stock listing is in the U.S. We like the company's competitive advantages of scale, breadth of clients and insurance partners, as well as its strong customer relationships and high switching costs. With roughly 80% of its business being non-discretionary due to the recurring nature of business insurance, the company benefits from persistent revenue streams and robust client retention. We expect a growth profile similar to that of a company like Accenture (with similar business attributes, operating as a trusted advisor in a complex and fragmented industry), with mid-to-high single-digit revenue growth and low-teens EPS growth. It should also be noted that should inflation occur, it would act as a tailwind to insurance brokerage fees and commissions, which are often based on the cost of the underlying insurance policy.

BSD Analysis:
Polen Capital initiated a position in Aon, viewing it as a leading global insurance brokerage with compelling competitive advantages. The investment thesis emphasizes Aon's scale benefits, extensive client and partner relationships, and high switching costs that create defensive moats. With 80% of business being non-discretionary and recurring in nature, the company enjoys predictable revenue streams and strong client retention. The managers expect growth similar to Accenture, projecting mid-to-high single-digit revenue growth and low-teens EPS growth, supported by Aon's role as a trusted advisor in a complex, fragmented industry. The global footprint across 120 countries provides diversification, while the inflation-sensitive fee structure offers potential upside in inflationary environments. This represents a safety-oriented addition to the portfolio during uncertain market conditions.

Pitch Summary:
We have initiated a position in Starbucks—formerly held in Focus Growth from 2010 through January 2022—now that new CEO Brian Niccol (formerly of Chipotle) has laid out a turnaround plan for the company that we view as multi-pronged, sensible, and achievable. We believe Starbucks became overly complex at the store level, which led to over-tasked baristas and a worsening customer experience. Niccol was instrumental in guiding Chipotle through its recovery from an E. coli scare several years ago, and we believe he is the best leader for Starbucks at this moment as well. He has identified many fixes for in-store operations, marketing, and customer service that we believe can be implemented and have a meaningful impact in the not-too-distant future, even though these improvements will need to be rolled out to 17,000 U.S. stores. Starbucks remains an aspirational brand with a loyal customer base. Once store operations and experience are improved, we see meaningful growth ahead through store productivity, new-store growth, and very significant margin expansion. Tariffs should not have a major impact on Starbucks' sourcing of coffee, and while a recession could dampen demand somewhat, we believe the turnaround will more than offset any economic impact.

BSD Analysis:
Polen Capital initiated a position in Starbucks under new CEO Brian Niccol's leadership, viewing his turnaround plan as comprehensive and executable. The investment thesis centers on operational improvements at the store level, where complexity has led to over-tasked baristas and deteriorating customer experience. Niccol's proven track record at Chipotle during its E. coli recovery provides confidence in his ability to execute similar improvements across Starbucks' 17,000 U.S. locations. The managers expect meaningful growth through enhanced store productivity, new store expansion, and significant margin expansion as operations improve. Despite potential tariff and recession headwinds, they believe the turnaround momentum will more than offset economic pressures. The investment leverages Starbucks' enduring brand strength and loyal customer base as foundational assets for the recovery.

Pitch Summary:
PotlatchDeltic Corp (PCH): PCH is one of three publicly traded timber REIT's. The company is vertically integrated allowing them to be one of the lowest cost providers of wood products and has the most leverage amongst peers to an improving overall lumber price environment. Lumber prices should benefit from an improving housing environment driven by peaking/lower interest rates, a lack of overall housing supply, a growing cohort of homebuyers, and an undersupplied timber market. The company pays a consistently growing dividend, maintains a strong balance sheet, has consistently generated FCF throughout economic cycles and opportunistically repurchases their stock.

BSD Analysis:
Bernzott Capital initiated a position in PotlatchDeltic, viewing it as a compelling play on the timber and lumber recovery cycle. The manager highlights PCH's competitive advantage through vertical integration, positioning it as one of the lowest-cost wood product providers with maximum operational leverage to rising lumber prices. The investment thesis centers on multiple housing market catalysts including peaking interest rates, constrained housing supply, demographic tailwinds from growing homebuyer cohorts, and an undersupplied timber market. The company's financial profile appears attractive with consistent free cash flow generation across economic cycles, a growing dividend policy, and opportunistic share repurchases. PCH's status as one of only three publicly traded timber REITs provides scarcity value in accessing this asset class. The timing appears strategic as the manager anticipates an improving housing environment that should drive lumber price appreciation.

Pitch Summary:
MercadoLibre is the leading eCommerce and digital payments provider in Latin America. After following it closely for several years, we were pleased to acquire shares at an attractive price. The company boasts a robust business model combining an "Amazon-esque" eCommerce platform—supported by a durably advantaged logistics footprint—and a leading digital wallet for LatAm on and off MercadoLibre.com. These are attractive, competitively advantaged businesses. Advertising remains a nascent opportunity for eCommerce, resembling the Amazon playbook, and we see significant room for growth. eCommerce penetration remains below 15% in LatAm but is gaining share rapidly, and MercadoLibre is expanding its leadership position. Similarly, digital payments are relatively early in their LatAM penetration but gain share due to the shift from cash and checks, whereas MercadoLibre is also gaining share. Founder and CEO Marcos Galperin, who has led the company since its 1999 founding, continues to drive robust execution. We are confident in our investment in MercadoLibre, a business we believe can grow EPS at over 25% for several years.

BSD Analysis:
Polen Capital initiated a position in MercadoLibre after following the Latin American e-commerce and digital payments leader for several years, finally acquiring shares at an attractive valuation. The fund views MercadoLibre's business model as robust, combining an "Amazon-esque" e-commerce platform with a durably advantaged logistics network and a leading digital wallet serving both on-platform and off-platform transactions across Latin America. Management sees significant growth opportunities in advertising, which remains nascent for e-commerce but follows the proven Amazon playbook for monetization. The fund emphasizes the early-stage nature of both e-commerce and digital payments penetration in Latin America, with e-commerce below 15% penetration but rapidly gaining share, while MercadoLibre expands its market leadership. Digital payments similarly benefit from the secular shift away from cash and checks, with MercadoLibre capturing increasing market share. Polen appreciates founder-CEO Marcos Galperin's leadership since 1999 and continued strong execution. The fund projects over 25% EPS growth for several years, driven by market expansion and MercadoLibre's competitive advantages in the high-growth Latin American market.

Pitch Summary:
Adyen is a Netherlands-based electronic payments platform with global reach. Since its founding in 2006, Adyen's platform has integrated a full payments stack with a common back-end infrastructure for authorizing. Unlike many of its peers who have grown through acquisition, Adyen's growth has been entirely organic—allowing a single, unified technology stack to sit at the platform's core and enabling simpler updating and more efficient operation. Adyen claims faster payment validation and acceptance than its competitors. We believe these features assure better overall payment acceptance rates and less friction than peers–a key advantage in serving an essential merchant business function. Adyen sees over 80% recurring revenues and benefits globally from secular growth in digital payments and the ongoing shift towards e-commerce and seamless omnichannel commerce. We view Adyen as an attractive, capital-light, highly cash-generative tollbooth business model with room for significant share gains in one of the business's largest TAMs (Total Addressable Market). Ayden continues to be led by founding owner-operator co-CEO Pieter van der Does, who shares our long-term time horizon view. We have always admired the business, but the valuation has been a sticking point. We believe it has reached a reasonable level more recently, and we estimate the company can sustain 20-25%+ earnings per share growth over the next five years.

BSD Analysis:
Polen Capital initiated a position in Adyen after the Dutch payments platform reached attractive valuation levels, having long admired the business model. The fund highlights Adyen's competitive differentiation through its entirely organic growth strategy, resulting in a single, unified technology stack that enables simpler updates and more efficient operations compared to acquisition-heavy peers. Management believes Adyen's superior payment validation and acceptance rates create less friction for merchants, providing a key advantage in serving essential business functions. The company benefits from over 80% recurring revenues and secular tailwinds including digital payments growth and the shift toward e-commerce and omnichannel commerce. Polen views Adyen as an attractive capital-light, cash-generative tollbooth business model with significant market share expansion opportunities in a large total addressable market. The fund appreciates founder-led management under co-CEO Pieter van der Does, whose long-term orientation aligns with Polen's investment philosophy. With valuation concerns now addressed, Polen estimates Adyen can sustain 20-25%+ earnings per share growth over the next five years, driven by market share gains and secular payment trends.

Pitch Summary:
Willis Towers Watson is a UK-based global advisory, insurance brokerage, and solutions leader. WTW benefits from robust customer relationships with high switching costs, brand recognition, and scaled distribution in a highly fragmented and durable market. Recent management updates signal a more favorable business mix, continued operational improvements, and increasingly focused capital allocation decisions. These drivers support accelerated revenue growth and margin expansion in the coming years. As a proof point on capital allocation, since regulators blocked the Aon/WTW merger in 2021, WTW repurchased more than 21% of shares outstanding over three years. At current low valuation levels, these buybacks represent low-risk, high-return allocations of capital—an approach we'd welcome more of. Sound execution in a durable growth market should enable a shareholder return profile in the low-to-mid teens.

BSD Analysis:
Polen Capital initiated a new position in Willis Towers Watson, viewing it as an attractive global advisory and insurance brokerage leader with compelling fundamentals. The fund emphasizes WTW's competitive moat through robust customer relationships characterized by high switching costs, strong brand recognition, and scaled distribution capabilities in a highly fragmented but durable market. Management highlights recent operational improvements including a more favorable business mix and increasingly focused capital allocation decisions that should drive accelerated revenue growth and margin expansion. Polen particularly appreciates WTW's disciplined capital allocation, noting the company repurchased over 21% of shares outstanding in the three years following the blocked Aon merger. At current low valuation levels, these buybacks represent attractive risk-adjusted returns for shareholders. The fund projects low-to-mid teens shareholder returns based on sound execution in a durable growth market. WTW's position in the essential insurance brokerage and advisory services market, combined with improving operational metrics and shareholder-friendly capital allocation, creates an attractive investment opportunity.

Pitch Summary:
Novo Nordisk was down over 19% during the quarter following the release of preliminary trial data related to its next-generation weight loss drug, CagriSema. The results followed an earlier December trial that was met with similar disappointment as it raised concerns about how much of a leap forward this next-generation drug would be in practice. While we would hope for a different outcome for this trial, we continue to believe CagriSema can potentially be a multi-billion-dollar drug, and we think this sell-off in the near term is overdone.

BSD Analysis:
Polen Capital maintains a bullish stance on Novo Nordisk despite a 19% quarterly decline following disappointing preliminary trial data for CagriSema, the company's next-generation weight loss drug. The fund acknowledges that the recent results, combined with earlier December trial disappointments, have raised concerns about the drug's potential breakthrough status in practice. However, management believes the market reaction is overdone and continues to view CagriSema as having multi-billion-dollar revenue potential. Polen's confidence stems from Novo Nordisk's leadership position in diabetes care and obesity treatment, with the company well-positioned to capitalize on the growing global obesity epidemic. The fund likely views the current selloff as creating an attractive entry point for a pharmaceutical leader with a strong pipeline in high-growth therapeutic areas. Novo Nordisk's established commercial infrastructure and regulatory expertise in metabolic diseases provide competitive advantages in bringing next-generation treatments to market, even if individual trial results create near-term volatility.

Pitch Summary:
Kennametal (KMT), which manufactures industrial cutting tools and components, is another new position initiated during the quarter. The company operates two businesses: a metal cutting unit that sells into a variety of end markets including aerospace and defense and energy, along with an infrastructure unit that provides earth cutting and wear solutions. The company hit a rough stretch recently, due to rising raw material costs, foreign exchange headwinds, and decreased sales volume in its infrastructure segment. KMT has also experienced contracting year-over-year EBITDA growth in six of the past seven quarters. However, the company has been undergoing extensive self-help, eliminating $200 million in structural costs, reducing its headcount by 20%, and closing six plants over the past five years. In our opinion, the heavy lifting is done. If demand remains tepid, the company should continue to optimize capacity via additional cuts and more plant consolidation. EBITDA is likely to grow on flat to moderately declining revenue. And if Kennametal sees any slight uptick in demand in its end markets, it could provide an immediate and robust boost to its operating margins. Yet the stock trades at less than 8 times EBITDA on trough earnings, a 3% dividend yield and modest net leverage of 1.7x.

BSD Analysis:
Heartland initiated a position in Kennametal, viewing it as another compelling turnaround story with significant operational improvements already implemented. The manager believes the company has completed the 'heavy lifting' of its restructuring program, having eliminated $200 million in structural costs, reduced headcount by 20%, and closed six plants over five years. Despite recent headwinds from raw material costs, foreign exchange, and infrastructure segment weakness that led to contracting EBITDA in six of seven quarters, the investment thesis focuses on the company's dual-business model serving aerospace, defense, energy, and infrastructure markets. The manager expects EBITDA growth even on flat to declining revenue due to the cost structure improvements already in place. At under 8x EBITDA on trough earnings with a 3% dividend yield and modest 1.7x net leverage, the valuation appears attractive for a company positioned for operating leverage expansion. Any demand uptick should provide immediate margin benefits given the streamlined cost base and optimized capacity structure.

Pitch Summary:
Amazon fell -13% in the quarter, stemming from weaker-than-expected first quarter guidance and concerns over the potential tariff-induced headwinds they may face, given that many third-party sellers on their e-commerce platform are based in China. However, we think their first-party and third-party commerce platform should prove fairly resilient, aided by strength in their Amazon Web Service cloud business and its bottom-of-funnel advertising business. Amazon remains our largest position, as we expect roughly 20% earnings growth over the next five years, driven by solid organic revenue growth and continued margin expansion. It remains an incredibly well-managed business with sustainable advantages and a long growth runway.

BSD Analysis:
Polen Capital maintains Amazon as their largest position despite a 13% quarterly decline, demonstrating strong conviction in the company's long-term prospects. The fund acknowledges near-term headwinds including weaker first-quarter guidance and potential tariff impacts on Chinese third-party sellers, but emphasizes the resilience of Amazon's diversified business model. Management expects the first-party and third-party commerce platforms to remain robust, supported by the strength of Amazon Web Services cloud business and the growing bottom-of-funnel advertising segment. Polen projects approximately 20% earnings growth over the next five years, driven by solid organic revenue growth and continued margin expansion across business segments. The fund views Amazon as an incredibly well-managed business with sustainable competitive advantages and a long growth runway. Despite current market concerns, Polen's position sizing reflects confidence in Amazon's ability to navigate cyclical challenges while capitalizing on secular growth trends in e-commerce, cloud computing, and digital advertising.

Pitch Summary:
In the first quarter, we initiated a position in Mohawk Industries (MHK), the leading manufacturer of flooring including carpets, tiles, and wood and vinyl products for the residential and commercial markets. In recent years, Mohawk has run into difficulties owing to rising interest rates, which affects its end markets, and inflation in source materials, which cuts into margins. Between May 2021 and October 2023, the stock lost nearly two thirds of its value. But the worst of the company's pricing pressures may be behind it. And after suffering five consecutive quarters of negative year-over-year sales comps and eight out of nine quarters of negative year-over-year EBITDA growth, Mohawk reversed the trend in the past quarter. Meanwhile, the company has been undergoing extensive self-help in recent years — for instance, it has been investing in automation to boost luxury vinyl tile production in North America and Europe. While companies usually trade at high multiples at the trough, thanks to diminishing earnings, Mohawk's shares are at their lowest valuation in recent memory. The stock trades at just 6 times EBITDA and less than 11 times trough earnings while sporting a strong balance with net leverage of 1.3x.

BSD Analysis:
Heartland initiated a position in Mohawk Industries, viewing it as a classic turnaround opportunity trading at trough valuations. The manager believes the worst of the company's pricing pressures from rising interest rates and material inflation are behind it, with the stock having lost nearly two-thirds of its value from May 2021 to October 2023. The investment thesis centers on Mohawk's extensive self-help initiatives, including automation investments in luxury vinyl tile production across North America and Europe. The company recently reversed negative trends, breaking a streak of five consecutive quarters of declining sales and eight out of nine quarters of negative EBITDA growth. At just 6x EBITDA and under 11x trough earnings with modest 1.3x net leverage, the valuation appears compelling for a market leader. The manager expects operating leverage to benefit the company significantly if demand rebounds, given the cost-cutting measures already implemented. This represents a classic value play on a cyclical recovery with strong fundamental improvements already in place.

Pitch Summary:
Globant was our largest relative detractor during the quarter, down 45%. The IT spending environment in recent years has been challenging, with perhaps some optimism that this quarter would mark an inflection point. With already muted sentiment, a weaker-than-expected 2025 revenue outlook led to an outsized reaction among investors, sending the stock down nearly 30% in one day. We maintain a positive view on Globant. Amidst a weak spending environment, they should continue growing well above their peer group, even below their longer-term trend. When the spending environment does improve, we expect them to return to ~15-20%+ top-line growth.

BSD Analysis:
Despite Globant being the largest relative detractor with a 45% quarterly decline, Polen Capital maintains a bullish long-term view on the digitally native technology services company. The fund acknowledges the challenging IT spending environment that has persisted in recent years, with the weaker-than-expected 2025 revenue outlook triggering an outsized 30% single-day selloff from already depressed sentiment levels. However, management believes Globant's competitive positioning will enable continued outperformance relative to peers even in the current constrained spending environment. The fund expects the company to grow well above its peer group despite operating below its longer-term growth trend. Polen anticipates a return to 15-20%+ top-line growth when IT spending conditions normalize, driven by Globant's digital transformation capabilities and strong client relationships. The significant selloff appears to present an attractive entry point for a high-quality technology services provider with differentiated offerings in digital transformation and software development.

Pitch Summary:
The insurance industry was among the best performers in 1Q25, and Aon—one of the world's leading insurance brokers—was no exception, rising 10%. Roughly 80% of Aon's business is non-discretionary due to the recurring nature of business insurance, driving persistent revenue streams and high client retention. Aon reported solid 4Q earnings, and their recent not-for-profit acquisition is progressing nicely. Additionally, higher inflation could provide a slight tailwind to insurance brokerage revenues in the short term if it persists.

BSD Analysis:
Polen Capital views Aon favorably as one of the world's leading insurance brokers, benefiting from the strong performance of the insurance industry in Q1 2025. The fund emphasizes Aon's defensive business model, with approximately 80% of revenues being non-discretionary due to the recurring nature of business insurance requirements. This structure drives persistent revenue streams and high client retention rates, providing stability and predictability to cash flows. The company reported solid fourth-quarter earnings and is successfully integrating its recent not-for-profit acquisition. Polen notes that higher inflation could serve as a tailwind for insurance brokerage revenues in the near term, as insurance premiums typically adjust upward with inflationary pressures. The 10% quarterly gain reflects market recognition of Aon's resilient business model and strong execution. The fund appreciates Aon's position in the essential insurance brokerage market, where switching costs are high and client relationships tend to be long-term and sticky.

Pitch Summary:
Abbott Labs was our top relative contributor, up 16% during the quarter, as the company has largely moved past COVID-related headwinds that hampered growth in recent years. Despite progressively improving performance in recent quarters, NEC-related litigation in their infant formula business created an overhang on the stock for most of 2024. It appears to us that the stock is turning the corner in 2025, allowing the share price to reflect the compelling underlying fundamental performance of the business. We expect low-teens EPS growth for the next several years as we view Abbott Labs as among the world's most durable MedTech companies.

BSD Analysis:
Polen Capital maintains a bullish stance on Abbott Laboratories, viewing it as one of the world's most durable MedTech companies. The fund highlights that Abbott has successfully navigated past COVID-related headwinds that previously hampered growth, with the business showing progressively improving performance in recent quarters. While NEC-related litigation in their infant formula business created a stock overhang throughout 2024, management believes the company is turning the corner in 2025. The fund expects low-teens EPS growth over the next several years, driven by the compelling underlying fundamental performance of the diversified healthcare business. Abbott's position as a top relative contributor with 16% quarterly gains demonstrates the market's recognition of the company's recovery trajectory. Polen's confidence stems from Abbott's durable competitive position across multiple healthcare segments including medical devices, diagnostics, pharmaceuticals, and nutrition products. The fund views the current valuation as attractive given the company's long-term growth prospects and operational improvements.

Pitch Summary:
Zoetis detracted from portfolio performance in the quarter, despite a solid U.S. launch of Librela, a drug to treat osteoarthritis in dogs, in the U.S. Management addressed safety concerns on Librela, citing extremely low incidences of Ataxia in dogs. We believe that concerns about these safety issues negatively impacted Zoetis in the quarter. Shares now trade at a discount to five-year average valuation multiples and continue to benefit from increase pet ownership and increasing protein demand in the company's livestock business.

BSD Analysis:
Aristotle Atlantic maintains a bullish stance on Zoetis despite temporary setbacks from safety concerns surrounding Librela, its osteoarthritis treatment for dogs. The fund views the market's reaction as overblown, noting management's clarification that Ataxia incidences are extremely low. The successful U.S. launch of Librela demonstrates Zoetis's innovation capabilities in companion animal health, a high-growth market segment. The manager highlights attractive valuation metrics, with shares trading below five-year average multiples, creating an opportunistic entry point. Zoetis benefits from two powerful secular trends: increasing pet ownership driving companion animal spending and growing global protein demand supporting livestock health investments. The company's diversified portfolio across companion animals and livestock provides balanced exposure to both defensive and cyclical end markets. The fund expects the safety concerns to subside as real-world data validates Librela's safety profile, allowing the stock to re-rate higher.

Pitch Summary:
Darling Ingredients detracted from portfolio performance in the quarter, as shares were weak following an in-line quarterly earnings report in which Darling refrained from providing full-year guidance due to low fat prices and its view that fat prices had bottomed. Rather than attempting to predict where fat prices might go during the year, management explained that it wanted to wait until the first quarter earnings call to provide more color. The company did talk about a soft floor for EBITDA in the $1.45 billion to $1.55 billion range for the year should fat prices remain depressed. Darling Ingredients remains confident in the discussions it is having with global cargo and passenger air carriers about takeaway agreements for its planned sustainable aviation fuel production, and any announcement could prove to be a catalyst given the depressed valuation currently. We believe shares should re-rate as investors gain confidence in the long-term cashflow generation ability of the company's unique assets.

BSD Analysis:
Aristotle Atlantic maintains a bullish long-term view on Darling Ingredients despite near-term headwinds from depressed fat prices. The fund views the current weakness as temporary, with management providing EBITDA guidance of $1.45-1.55 billion even under stressed commodity pricing scenarios. The manager highlights Darling's strategic positioning in sustainable aviation fuel (SAF) production, with ongoing discussions with global airlines for takeaway agreements representing a significant catalyst opportunity. The fund emphasizes the company's unique asset base and long-term cash flow generation capabilities, suggesting current valuations are attractive. Darling's integrated business model in rendering and renewable fuel production provides defensive characteristics during commodity cycles. The manager expects shares to re-rate higher as investors gain confidence in the sustainability of cash flows and the potential for SAF contract announcements. The company's ESG-aligned business model positions it well for the energy transition.

Pitch Summary:
Tencent Music Entertainment is China's leading online music streaming service, with over 575m active users and 100mm subscribers, giving it ~ 70% share of the China market. It is a subsidiary of Tencent, which owns 53% of the equity and controls 93% of the voting rights. The company benefits from many of the same trends that drive Spotify today, including rising revenue per user, low churn, and rising profitability. With low prices in China (~ $1.30 / month) and low subscription penetration (<20%), we see significant opportunity for ongoing increasing revenue per user. One key advantage is its position as the largest music label in China, which allows for higher profitability than its Western peers. We believe Tencent Music can grow earnings at a mid-teens rate annually over the next five years, making the current valuation of 20x earnings attractive.

BSD Analysis:
Polen Capital initiated a position in Tencent Music Entertainment, attracted by its dominant market position in China's music streaming market with 70% market share and 575 million active users. The manager draws parallels to Spotify's success drivers while highlighting unique advantages specific to the Chinese market. The investment thesis centers on significant monetization upside given low subscription prices (~$1.30/month) and penetration rates below 20%, suggesting substantial room for revenue per user expansion. Polen emphasizes Tencent Music's competitive advantage as China's largest music label, which enables higher profitability margins versus Western streaming peers. The manager projects mid-teens annual earnings growth over five years, viewing the current 20x earnings multiple as attractive given the growth prospects. The Tencent parent company's majority ownership provides strategic backing while the low churn rates support the recurring revenue model.

Pitch Summary:
Apple contributed to portfolio performance in the first quarter due to the strategy's underweight relative to the benchmark. Investors continue to be concerned about weak handset sales globally, as well as declining market share and competitive dynamics in the Chinese market, as Huawei has returned to the market with a more competitive premium-priced handset. Apple has yet to demonstrate a competitive AI product, which could present further competitive headwinds for the company.

BSD Analysis:
Aristotle Atlantic maintains a bearish outlook on Apple, implementing an underweight position that contributed positively to performance during Q1 2024. The fund identifies multiple structural headwinds facing the company, including weak global handset sales and deteriorating competitive positioning in China. Huawei's return to the premium smartphone market poses a direct threat to Apple's market share in one of its most important regions. The manager highlights Apple's lack of a competitive AI product offering as a significant strategic gap that could create additional competitive pressures. This AI deficiency is particularly concerning given the industry's rapid shift toward AI-integrated devices and services. The fund's underweight positioning reflects skepticism about Apple's ability to maintain its premium pricing and market leadership amid these mounting challenges. Apple's traditional innovation cycle appears to be lagging behind emerging technology trends.

Pitch Summary:
Nvidia contributed to portfolio performance in the first quarter, as the company continues to see accelerating demand for its GPU semiconductors from hyperscalers and enterprises. Nvidia's GPU semiconductors continue to be the industry-leading building blocks of the accelerated computing data-center architecture to drive AI compute and applications.

BSD Analysis:
Aristotle Atlantic maintains a bullish stance on Nvidia, highlighting the company's dominant position in AI infrastructure. The fund emphasizes Nvidia's accelerating demand from hyperscalers and enterprises for GPU semiconductors, which serve as critical building blocks for AI compute applications. The manager views Nvidia's technology as industry-leading in accelerated computing data-center architecture. This positioning aligns with the broader AI transformation trend, where Nvidia's specialized chips are essential for training and deploying large language models and other AI applications. The fund's positive attribution from Nvidia during Q1 2024 reflects the market's recognition of the company's strategic importance in the AI ecosystem. Nvidia's pricing power and technological moat in high-performance computing continue to drive strong financial performance and market leadership.