Investment Pitches

Pitch Summary:
Lonza Group is a Switzerland-based contract development and manufacturing organization (CDMO) that serves pharma and biotech companies globally, focusing on biotech drugs. Lonza fits our framework for service-based businesses that add value through scale and efficiency. Making biotech drugs is technologically challenging, capital-intensive, and highly regulated. Outsourcing these functions to a specialized partner like Lonza offers clients significant advantages. Today, Lonza manufactures more than 55 approved biotech drugs and supports another 600 in various stages of development. As these drugs gain approval, Lonza will support their commercialization. We believe the company is poised to grow earnings at a mid-teens rate for the next five years.

BSD Analysis:
Polen Capital added Lonza Group as a new position, viewing it as a high-quality contract development and manufacturing organization (CDMO) with strong competitive positioning in biotech drug manufacturing. The manager's thesis emphasizes Lonza's value proposition in an outsourcing model where the technical complexity, capital intensity, and regulatory requirements create significant barriers to entry. The company's scale advantages are evident in its manufacturing of over 55 approved biotech drugs while supporting 600+ drugs in development, creating a robust pipeline for future growth. Polen highlights the secular trend toward outsourcing in pharmaceutical manufacturing as a key tailwind. The manager projects mid-teens earnings growth over the next five years, suggesting confidence in Lonza's ability to capitalize on the growing biotech drug market and benefit from the commercialization of its development pipeline.

Pitch Summary:
Adyen is a Netherlands-based electronic payments platform with global reach. Since its 2006 founding, 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 enable simpler updating and more efficient operation. Adyen claims faster payment validation and acceptance than its competitors. In our view, 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 continued shift towards e-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 largest Total Addressable Markets. They are led by founder 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 Adyen can sustain 20-25%+ earnings per share growth over the next five years.

BSD Analysis:
Polen Capital initiated a position in Adyen, viewing it as a premium payments platform with significant competitive advantages. The manager emphasizes Adyen's organic growth strategy and unified technology stack as key differentiators versus acquisition-heavy competitors, enabling superior payment acceptance rates and operational efficiency. The investment thesis centers on Adyen's capital-light tollbooth model with over 80% recurring revenues, positioned to benefit from secular tailwinds in digital payments and e-commerce growth. Polen highlights the founder-led management team's long-term orientation as aligned with their investment approach. The manager projects 20-25%+ annual EPS growth over five years, suggesting confidence in the company's ability to gain market share in the large addressable payments market. The timing of the investment appears opportunistic, with Polen noting that valuation concerns previously prevented investment but have now reached acceptable levels.

Pitch Summary:
Sweco is the leading architecture and engineering consultancy company based in Sweden and has diversified to become a business with international reach across a number of Western European markets. Sweco specialises in sustainable buildings, efficient infrastructure and clean water access. In total, the company works on around 120,000 projects annually, so it is not overly exposed to any single contract. Management targets top-line growth of 12% per annum (compared with a consensus of around 6%).

BSD Analysis:
The manager's investment in Sweco reflects confidence in the company's market-leading position and diversified business model within the European engineering consultancy space. The thesis centers on Sweco's specialization in high-growth, sustainability-focused sectors including sustainable buildings, efficient infrastructure, and clean water access, which align with long-term European environmental initiatives. The company's scale advantage is evident through its 120,000 annual projects, providing significant diversification and reducing single-contract risk. Management's ambitious 12% annual growth target substantially exceeds consensus expectations of 6%, suggesting either superior execution capabilities or untapped market opportunities. The international diversification across Western European markets provides geographic risk mitigation while maintaining exposure to developed market infrastructure spending. This positioning should allow Sweco to capitalize on the ongoing European green transition and infrastructure modernization trends. The company's leadership position and project diversification create a defensive moat while the sustainability focus provides secular growth tailwinds.

Pitch Summary:
Elite Material Corporation (EMC) is a Taiwanese producer of copper clad laminate (CCL), a key component used in printed circuit boards. Looking ahead, EMC should benefit from its substantial exposure to high-end CCL, where the total addressable market is expected to grow at a compound rate of over 28% per annum over the next three years. M8 – the highest-end CCL – has an average selling price around two and a half times higher than the previous-generation M7 and is approximately five times more expensive than the industry average. Therefore, as demand for high-end CCL increases, EMC should experience meaningful revenue growth and operating leverage.

BSD Analysis:
The manager presents a compelling growth thesis for Elite Material Corporation based on its strategic positioning in the high-end copper clad laminate market. The investment case centers on EMC's substantial exposure to premium CCL products, particularly the M8 generation, which commands significantly higher pricing than legacy products. With the total addressable market for high-end CCL expected to grow at over 28% annually over the next three years, EMC is well-positioned to capture this growth through both volume expansion and pricing premiums. The M8 product's 2.5x price premium over M7 and 5x premium over industry averages demonstrates the company's ability to monetize technological advancement. As demand shifts toward higher-end applications, EMC should benefit from meaningful operating leverage as fixed costs are spread across higher-margin revenue streams. This positions the company for both top-line growth and margin expansion in a rapidly evolving electronics market.

Pitch Summary:
We also initiated REV Group, a manufacturer of fire engines, ambulances and other specialty vehicles. We believe operational improvements underway could strengthen the company's leading position and support continued margin expansion.

BSD Analysis:
The manager initiated a position in REV Group based on the company's market-leading position in specialty vehicles and ongoing operational improvements driving margin expansion. The investment thesis focuses on REV Group's dominant market share in critical emergency vehicles, including fire engines and ambulances, which provides stable demand from government and municipal customers. The company's leading market position creates competitive advantages through scale economies, established customer relationships, and specialized manufacturing capabilities that are difficult to replicate. Ongoing operational improvements are expected to enhance manufacturing efficiency, reduce costs, and improve product quality, directly translating to margin expansion. These operational enhancements should strengthen REV Group's competitive moat and pricing power in the specialty vehicle market. The manager's bullish stance reflects confidence in management's ability to execute operational improvements while maintaining market leadership. The combination of stable end-market demand and improving operational metrics creates an attractive value creation opportunity with visible margin expansion potential.

Pitch Summary:
We initiated Mueller Water Products, a leading supplier of fire hydrants, valves and other products used to deliver clean drinking water. We believe the company can benefit from secular growth drivers, such as the repair of aging water infrastructure, and that the approaching completion of a multi-year capital investment programme could potentially improve profitability.

BSD Analysis:
The manager initiated a new position in Mueller Water Products based on compelling secular growth drivers and improving operational fundamentals. The investment thesis centers on the company's leadership position in critical water infrastructure products, including fire hydrants and valves essential for clean water delivery systems. The secular tailwind from aging water infrastructure repair represents a multi-decade growth opportunity, as municipalities across the United States face significant capital expenditure requirements to upgrade deteriorating water systems. The approaching completion of Mueller's multi-year capital investment program is expected to drive margin expansion and improved profitability through enhanced operational efficiency and manufacturing capabilities. This capital cycle completion should translate into higher returns on invested capital and stronger free cash flow generation. The manager's bullish stance reflects confidence in both the long-term infrastructure replacement cycle and the company's improving cost structure. The combination of secular demand growth and operational leverage creates an attractive risk-adjusted return profile.

Pitch Summary:
Meanwhile, Workiva's shares fell after reports indicated that the corporate sustainability reporting directive may be simplified, which could potentially affect demand for the company's ESG reporting software.

BSD Analysis:
The manager expresses concern about Workiva's growth prospects due to potential regulatory changes affecting demand for ESG reporting solutions. The investment thesis faces headwinds as reports suggest the corporate sustainability reporting directive may be simplified, which could reduce compliance requirements for companies. This regulatory simplification poses a direct threat to Workiva's ESG reporting software revenue, as reduced compliance complexity typically leads to lower demand for specialized reporting tools. The potential policy change creates uncertainty about the addressable market size for Workiva's sustainability reporting solutions, which likely represents a significant revenue stream. Simplified reporting requirements could enable companies to use less sophisticated internal tools rather than comprehensive third-party platforms like Workiva's. The manager's bearish stance reflects concerns about regulatory risk and its impact on the company's growth trajectory in the ESG compliance market. This development highlights the regulatory dependency inherent in compliance-focused software businesses.

Pitch Summary:
Steven Madden's shares also underperformed as incremental tariffs were expected to weigh on earnings. Meanwhile, we sold Steven Madden to reduce the portfolio's exposure to stocks that could be negatively affected by tariffs.

BSD Analysis:
The manager adopted a defensive stance on Steven Madden due to significant tariff-related headwinds impacting the company's cost structure and earnings outlook. The investment thesis deteriorated as incremental tariffs were expected to materially pressure the company's profitability, given its reliance on imported footwear and accessories manufacturing. These tariff increases directly impact Steven Madden's gross margins by raising input costs, which may be difficult to fully pass through to consumers in a competitive retail environment. The manager proactively reduced portfolio risk by selling the position to minimize exposure to trade policy uncertainty and potential earnings compression. This defensive action reflects concerns about the company's ability to maintain profitability amid rising import costs and potential supply chain disruptions. The sale demonstrates prudent risk management in anticipation of challenging operating conditions for import-dependent consumer discretionary companies. The manager's bearish view is justified by the direct negative impact of trade policies on the company's business model.

Pitch Summary:
Conversely, Vertex' shares underperformed as internal growth investments for the company's tax management solutions were expected to lead to margin compression and lower free cash flow generation.

BSD Analysis:
The manager expresses concern about Vertex's near-term financial trajectory due to significant internal growth investments impacting profitability metrics. The investment thesis faces headwinds as the company's strategic investments in tax management solutions are expected to compress operating margins in the short term. This margin compression indicates higher operating expenses relative to revenue growth, potentially pressuring profitability ratios and return on invested capital. The anticipated reduction in free cash flow generation is particularly concerning as it affects the company's ability to fund operations, return capital to shareholders, and pursue additional growth opportunities. While these investments may position Vertex for long-term growth in tax technology solutions, the near-term financial impact creates execution risk and uncertainty about the timing of returns on invested capital. The manager's bearish stance reflects concerns about the investment cycle's impact on financial performance and cash generation capabilities.

Pitch Summary:
Meanwhile, Stride's shares outperformed after the company highlighted strong execution and market share gains, leading to an earnings beat and an increase in full-year guidance.

BSD Analysis:
The manager maintains a bullish stance on Stride based on the company's demonstrated operational excellence and market expansion. The investment thesis is supported by strong execution metrics and successful market share gains, indicating effective competitive positioning in the education services sector. The company's ability to exceed earnings expectations demonstrates robust financial performance and management's capability to deliver on operational targets. The increase in full-year guidance signals management confidence in sustained business momentum and visibility into continued growth. This guidance raise suggests improving fundamentals and potentially accelerating revenue growth trends. The market share gains indicate Stride is successfully capturing demand in the digital education market, which could drive long-term sustainable growth. The combination of earnings beats and raised guidance typically reflects strong underlying business fundamentals and effective strategic execution.

Pitch Summary:
H&E Equipment Services' shares also gained after news of the company's acquisition was released. We sold H&E Equipment Services after peer United Rentals announced its agreement to acquire the company.

BSD Analysis:
The manager held a positive view of H&E Equipment Services, which was validated when the company became an acquisition target. The investment thesis was proven successful as United Rentals announced an agreement to acquire H&E Equipment Services, driving significant share price appreciation during the quarter. This acquisition represents strategic value recognition by a larger industry peer, suggesting H&E's business model, market position, and operational capabilities were attractive. The manager capitalized on this corporate action by selling the position following the acquisition announcement, likely capturing substantial gains from the takeover premium. The successful exit demonstrates effective stock selection in identifying an undervalued company that became an attractive acquisition target. This outcome validates the manager's ability to identify quality companies trading below their strategic value to industry consolidators.

Pitch Summary:
Vestas, now Vestas Wind Systems, was founded as the Second World War was ending and started out as a general manufacturer of steel goods, from household appliances to cranes and hydraulic equipment. After a quarter of a century, during the energy crises of the 1970s, the company produced its first wind turbine. The company decided to exclusively manufacture wind turbines from the 1980s and today stands as the largest western producer of wind turbines, with a cumulative 177 GW of wind power installed across the world. This is ahead of GE (120 GW), Siemens Gamesa (114 GW), and China's Goldwind (~113 GW). Today, wind makes up just 10% of our global electricity mix and just 1.5% of the global energy mix, with almost 1,050 GW of worldwide installed capacity. However, this is growing quickly as we try to decarbonise our energy system. Based on announced pledges by governments, wind capacity will need to grow by 6.8% a year to almost 6,000 GW by 2050, equivalent to adding 187 GW per year over the next 26 years. To get to Net Zero, Vestas estimates that wind capacity will need to grow to 7-8,000 GW by 2050. One important feature of the wind market is the extent of Chinese isolation thus far. China is building a considerable amount of wind capacity – with two thirds of global new capacity being built in the country – and yet is being built almost exclusively by Chinese companies like Goldwind, Envision and Windey. For context, less than 5% of Vestas' global installed capacity is built in China. Vestas is a classic industrial in that it comprises two distinct but related businesses. Firstly, the 'original equipment' business, in which Vestas builds, delivers and installs wind turbines for clients around the world. Today, this business makes up the greater part of Vestas' revenues and accounted for over three quarters of revenues in 2023. The remainder of Vestas' business is in servicing these wind turbines to ensure they remain in good condition. However, the 'original equipment' business is a difficult one. The production and installation of massive equipment in remote locations across the world can be challenging, and Vestas – like other wind turbine producers – has faced a number of challenges over the last few years. These include exploding costs of steel, logistics services and energy, which the company struggled to immediately pass onto customers. Vestas saw the cost associated with each delivered MW of wind turbine power increase by 35% from the summer of 2021 to the end of 2023, while the average revenue per MW delivered didn't increase meaningfully until the second half of 2023, when, after almost two years of losing money, the original equipment business became profitable again. If this all sounds like more trouble than it's worth, it's important to realise that the real prize for Vestas lies within the long-term contracts it signs to maintain and service those turbines it has installed. At present, the servicing business accounts for a minority share of revenues as Vestas focuses on the vast market opportunity in the installations market. However, we expect the payoff in the future to be high, as this business is more profitable, less resource-intensive, and much more stable. If Vestas were to stop growing today – that is, stop installing new equipment – the business would look more like an annuity-like set of recurring revenues with stable and high margins. In our view, this business has great competitive advantages and is where a significant portion of Vestas' value lies. Vestas has a number of components to its economic moat which has allowed it to generate pre-tax returns on capital of 23% over the last two decades. This includes scale (as the largest non-Chinese developer of turbines) and know-how as a producer with a long history in the business which has invested almost EUR 2 billion in R&D in the last five years alone. As with all heavy industry, there are cyclical factors and other structural worries that long-term owners will have to endure. We will always need to be wary of Chinese competition, but so far western governments have been keen to stop the Chinese entering the market. If Vestas can continue to invest in its products, manage the intricacies of the installation business, and execute on its servicing business, the company should continue to produce attractive economic returns well into the future.

BSD Analysis:
Mayar Capital presents a compelling long-term thesis for Vestas Wind Systems, positioning the company as the leading Western wind turbine manufacturer with 177 GW of cumulative installed capacity. The fund emphasizes the massive secular growth opportunity, with wind capacity needing to grow 6.8% annually to reach 6,000 GW by 2050 according to government pledges. The investment case centers on Vestas' dual business model, where the current equipment installation business (75% of revenues) serves as a foundation for the higher-margin, recurring service business. While acknowledging near-term challenges including cost inflation that compressed margins through 2023, the fund highlights that the equipment business returned to profitability in H2 2023. The key value driver is the service business, which offers annuity-like recurring revenues with stable margins from long-term maintenance contracts. Vestas' competitive moat includes scale advantages as the largest non-Chinese producer, deep industry expertise, and substantial R&D investment of EUR 2 billion over five years, enabling 23% pre-tax returns on capital over two decades. The fund views Chinese competition as manageable given Western government protections and sees Vestas well-positioned to capitalize on the global energy transition.

Pitch Summary:
At the stock level, Corcept Therapeutics' shares outperformed after the company's key drug achieved positive study results for the treatment of a new condition, significantly increasing its addressable market.

BSD Analysis:
The manager highlights Corcept Therapeutics as a positive contributor to portfolio performance during the quarter. The investment thesis centers on the company's successful clinical trial results for its key drug in treating a new medical condition. This clinical success represents a significant catalyst as it substantially expands the drug's addressable market opportunity beyond its current indications. The positive study results likely validate the drug's efficacy and safety profile in the new therapeutic area, potentially accelerating regulatory approval timelines. This market expansion could drive meaningful revenue growth and improve the company's long-term commercial prospects. The manager's bullish stance appears justified given the clinical milestone achievement and its implications for future market penetration. The outperformance during the quarter reflects investor optimism about the expanded commercial opportunity.

Pitch Summary:
Korea's Samsung Electronics is perhaps best known for its high-end OLED TVs, audio equipment, popular Galaxy smartphones, and wide array of home appliances. A part of the business that consumers don't see—memory chips—drives the bulk of the conglomerate's earnings, but it is also what has been weighing on the stock's valuation. A memory downcycle has impacted Samsung's profitability, while investors worry its competitors have an insurmountable lead in a specific type of high-end memory required for AI applications. We expect the characteristically cyclical memory market to ultimately normalize, as supply and demand come back into balance, while Samsung should maintain its dominance in conventional chips. With shares trading at a low double-digit earnings multiple despite 15% projected annual earnings growth, we believe investors are underappreciating Samsung's scale and financial strength, moderating growth capex, and dominant smartphone, display, and consumer electronic franchises, while overreacting to its technological gap with peers on next-generation memory chips. While memory is the main driver of Samsung's expected earnings improvement, roughly a third of the company's estimated normal earnings power—representing approximately $147bn in FY24 sales—is derived from its other segments. Its 58,000-employee, $20bn revenue subsidiary, Samsung Display, designs and manufactures OLED display panels for devices such as smartphones, laptops, and TVs. This business has a leading 50% global market share, and makes up ~10% of Samsung's companywide revenue. Samsung's semiconductor foundry business, though relatively subscale, is still the second largest chip manufacturer in the world behind TSMC, generating $18bn in annual sales. This business has been in the red for the past two years, though losses are expected to narrow by way of yields improving or capacity reductions, and we are only assuming breakeven profitability in our model. Samsung's mobile unit is a global juggernaut, responsible for 223 million smartphone sales last year (behind only Apple), translating to $7bn in operating profit. This segment, which we estimate makes up about 20% of normal operating income, has acted as an earnings ballast for the company, with stable volumes, low-double-digit margins that are rangebound, and steadily rising ASP driven by high-end popular models like its foldable Galaxy Z phone. Through its massive consumer electronics arm, Samsung sold 31 million PCs last year (fifth most sold globally), is a leading manufacturer of refrigerators, microwaves, washing machines, and other appliances, and is the largest TV-maker in the world—a position it has held for 19 consecutive years. Dynamic random access memory, or DRAM, is a type of memory that provides a CPU or GPU with fast access to temporary data storage for programs to run efficiently. It is a crucial component in increasingly powerful electronic devices, such as smartphones, PCs, tablets, and servers. Since 2007, DRAM demand has grown at a nearly 26% CAGR, with industrywide revenue reaching $100bn in 2024. DRAM typically makes up less than 10% of a system's total cost, but it is essential for modern CPUs to function, meaning volumes should continue to grow with computing power. The industry is structured as an attractive oligopoly, with Samsung's leading 39% market share followed by Korean peer SK Hynix and US-based Micron. These three companies collectively supply nearly 94% of the market. Samsung's historical dominance in conventional DRAM is a result of its scale and superior technology, affording it a discernable unit cost advantage over Hynix and Micron. High-bandwidth memory (HBM) is a type of non-conventional DRAM enabling extremely high-bandwidth data transfer needed for artificial intelligence and other emerging technologies. While not a major part of the memory stack today, HBM is expected to become an increasingly larger piece of the profit pool over time, making it an important growth driver. While it is a much smaller portion of their overall memory business, Samsung also maintains a leading ~29% market share position in NAND flash, a type of storage technology used in portable memory devices such as thumb drives and SD cards. The NAND industry is roughly half the size of DRAM, but it is similarly concentrated, with the largest 6 players controlling 90% of the supply. The surge in consumer spending during the early months of the COVID-19 pandemic was particularly acute for consumer electronics, with unit sales of notebooks and tablets up 44% and 81% respectively in the fourth quarter of 2020. Memory suppliers, assuming sustained peak demand, boosted capacity throughout 2021/22 just before end demand started to normalize; as a result, conventional DRAM prices collapsed, sinking industrywide profitability in 2023, and the market is still digesting the oversupply today. NAND, similarly affected by oversupply, also entered a downcycle, with prices falling nearly 50% year-over-year in 2023, exacerbating the profit decline in Samsung's core memory unit. Samsung shelled out billions of dollars to boost production of conventional, more lagging-edge memory chips whose demand was waning due to inventory destocking. For context, Samsung's DRAM capex between 2021 and 2023 accounted for 51% of total industry investment, while its DRAM sales only represented 43% of global industry revenue. Its cash return on DRAM, which incorporates both operating costs and capex, plummeted to 3% in 2023 after averaging over 30% pre-COVID. With the stock down roughly 50% from its early 2021 high, we significantly increased our stake in late 2024. Samsung's management is focusing on what they can control to improve profitability in their core memory business. The company is pulling back capex on wafer expansion and redirecting spending towards node migration and HBM capacity. This should result in a memory mix that's less exposed to lagging-edge nodes in oversupply, and more in line with Hynix and Micron's leading-edge skew. Investors have unsurprisingly been fixated on HBM, given its long-term growth potential and importance in powering the AI revolution. To that end, Samsung has thus far lagged both Hynix and Micron in qualifying for high-end HBM used in AI GPUs—specifically NVIDIA's—eliciting some concern from investors. Based on our research, we believe that Samsung's lack of qualification is more a result of being caught off guard by how quickly AI demand has exploded versus it having an insurmountable technology gap with peers on HBM chips. We therefore believe Samsung will ultimately participate in the anticipated demand wave, potentially capturing market share nearly proportional to its conventional DRAM share. It's also worth noting that Samsung has $63bn in net cash on its balance sheet, whereas its two competitors—Hynix and Micron—are both levered. The tech giant clearly has the financial wherewithal to return capital to shareholders, and management has been doing just that. Since 2018, when Samsung enhanced its capital return policy, the company has paid out nearly $67bn in cumulative dividends to shareholders, which equates to 34% of aggregate net income. Encouragingly, for the first time since 2017, Samsung started buying back its stock, and we expect the company to continue returning more of its war chest to shareholders going forward. It's easy to envision a more electrified, connected, and technologically advanced world in the near future. DRAM—particularly leading-edge nodes and, increasingly, HBM—will undeniably play a critical role in enabling such an environment. Memory content per device has steadily risen over the past two decades, with server DRAM exhibiting exponential growth (driven, in part, by AI servers), as computing power continues to expand. After a period of somewhat short-sighted overinvestment, Samsung is, in our view, well-positioned to capitalize on an anticipated memory upcycle. Regarding the U.S. tariff risk, smartphones, PCs, and other electronics - including memory chips themselves - are currently exempt from reciprocal levies, so the direct impact on Samsung is minimal. Regardless, we are closely monitoring the situation, and our model reflects a wider range of outcomes reflecting U.S. trade policy uncertainty. Even in the unlikely scenario that Samsung proves to be structurally behind its peers at the leading edge in HBM, and the company's historical competitive dynamic in conventional DRAM deteriorates, resulting in commodity-like returns in perpetuity—none of which we've seen any evidence of—we believe the stock is fairly valued today, implying the HBM downside scenario is largely priced in. In a concentrated, three-player market, we believe the gains from DRAM growth should largely accrue to Samsung in the years ahead, which the market, by ascribing a 8.2x multiple on our estimate of normal earnings, isn't appreciating, in our view.

BSD Analysis:
Pzena presents a compelling contrarian case for Samsung Electronics, viewing the current memory downcycle as a temporary headwind masking the company's structural advantages. The manager emphasizes Samsung's dominant market position across multiple segments, including a 39% share in DRAM memory, 50% in OLED displays, and leadership in smartphones and consumer electronics. Samsung's diversified revenue base provides earnings stability, with non-memory segments contributing roughly one-third of normal earnings power. The firm believes Samsung's perceived lag in high-bandwidth memory (HBM) for AI applications is overstated, arguing the company was simply caught off-guard by rapid AI demand rather than facing insurmountable technological gaps. Samsung's fortress balance sheet with $63bn in net cash provides significant financial flexibility for capital returns and strategic investments. The manager sees attractive risk-reward at current valuations, with shares trading at 8.2x normal earnings despite 15% projected annual earnings growth, suggesting the market is overreacting to cyclical headwinds while underappreciating Samsung's scale, diversification, and long-term positioning in the growing memory market.

Pitch Summary:
Glass House has come to an interesting crossroads. The company will soon determine whether to not only to expand their cannabis flower production, but also to expand into hemp flower production. Hemp flower, if it follows 2018 Farm Bill guidelines, is federally legal and can be shipped across state lines. The whole potential of Glass House is that one day they may be able to ship product across state lines and utilize the full capacity of their Ferrari of greenhouses. I recently had the chance to interview the management team and talk to them about the future. We are staying laser focused to see what happens as it could be a major unlock in value for the company and shareholders.

BSD Analysis:
The manager views Glass House as positioned at a critical inflection point with significant optionality through potential hemp flower expansion. The key investment thesis centers on the company's ability to leverage its high-quality greenhouse infrastructure, described as a "Ferrari of greenhouses," for interstate commerce opportunities. Hemp flower production under 2018 Farm Bill guidelines would enable federal legality and cross-state shipping capabilities, dramatically expanding the addressable market beyond current state-limited operations. This strategic pivot could unlock substantial value by allowing Glass House to utilize full greenhouse capacity rather than being constrained by single-state demand. The manager's direct engagement with management through recent interviews demonstrates active monitoring of this strategic decision. The investment represents a call option on regulatory arbitrage and operational leverage, where successful hemp expansion could transform the company's economics. The manager maintains a bullish outlook contingent on management's strategic execution of this expansion opportunity.

Pitch Summary:
Driving some of our recent downside performance was Grown Rogue, which previously had been wildly outperforming other cannabis stocks. The stock sold off after their Q4 earnings confused some investors and, in an environment where most cannabis stocks are down 40-50% for the year, the reaction from some investors was to shoot first and ask questions later. We think all of this was a big misunderstanding as to the long-term value of Grown Rogue and are still quite bullish. We took advantage of the selloff and bought more shares. You can read more about our thoughts about what happened and watch our interview with the CEO, Obie Strickler as well. In summary, we continue to believe in Grown Rogue's unit level economics and its business model. And I believe this model can be replicated in many new states for phenomenal ROIC for investors to enjoy. Part of growing up is realizing that not all investors may understand your story. Sometimes quarters are noisy and there are a lot of moving parts that create confusion. And it's important to tell your story and tell it in a way that investors will understand. Luckily for investors, Grown Rogue is starting to flex its growth muscles and start to really grow, and there should be tangible evidence of this when they report Q1 in about a month. With the company poised to double its cash flow this year, the stock after its recent decline trades at about 4 times my estimate of EBITDA. The company, when it hosts its first conference call is about to get its awkward teenage braces off and the company's growth should shine for all to see.

BSD Analysis:
The manager maintains a bullish stance on Grown Rogue despite recent underperformance, viewing the selloff as a misunderstanding of the company's long-term value proposition. The fund took advantage of weakness to add to their position, demonstrating conviction in the investment thesis. The manager emphasizes Grown Rogue's superior unit economics and low-cost production model, which provides competitive advantages during market downturns and positions the company to gain market share as competitors struggle. The business model's replicability across new states offers significant return on invested capital potential for future expansion. At current levels, the stock trades at approximately 4x estimated EBITDA despite expectations for doubled cash flow this year, suggesting attractive valuation metrics. The upcoming Q1 earnings and first conference call are viewed as catalysts that will provide tangible evidence of the company's growth trajectory. The manager's confidence stems from the belief that Grown Rogue's competitive positioning as a low-cost producer will drive market share gains and profitability expansion.

BSD Analysis:
Ensemble Capital positions IDEX as a potential next-generation serial acquirer comparable to successful companies like TransDigm and Heico. The fund's investment thesis rests on IDEX's three-decade track record of disciplined acquisitions in niche industrial markets, generating 15% annualized returns since its 1989 IPO versus 10.5% for the S&P 500. The company's strategy focuses on acquiring #1 or #2 market share businesses in small, fragmented markets selling mission-critical components where failure costs are high, creating natural switching costs and pricing power. IDEX's decentralized management approach allows subsidiary general managers operational autonomy while applying the company's proven 80/20 optimization system inherited from successful acquirers like Danaher and Illinois Tool Works. With over $600 million in free cash flow and capacity for additional debt, IDEX has significant capital deployment potential for larger acquisitions. The company's diversified portfolio across healthcare, industrial, and fire safety markets provides stability, while its focus on higher-growth areas like medical applications and optical devices positions it for continued expansion. Management's minimum 25% EBITDA margin targets and disciplined return thresholds demonstrate capital allocation discipline that has driven consistent outperformance.

Pitch Summary:
Ferrari: Ferrari has had a very successful run since we first bought shares in the company in 2017. It has been one of our most successful investments since, with shares rising over five times, and understandably so given how phenomenal this business is and how well it has been managed. Initially spun out of Fiat (now Stellantis) in 2015, it was a rare jewel within the parent company, where its value was hidden among more standard and premium cars sold under brands such as Fiat, Alpha Romeo, Maserati, Chrysler, Jeep, and others. Under the leadership of the astute business manager Sergio Marchionne, who had run Fiat since 2004, Ferrari came to be recognized as the undervalued and unique asset that it was within its parent. It was being run below its potential, perhaps because of over-conservatism in reverence to its legacy – a legacy of offering products that were highly desired by many and undersupplied to only a limited set of privileged customers, who built up their relationship with Ferrari buying nearly two-thirds of its annual output. This allowed them to continue getting access to the most desirable, collectible models Ferrari built in the future. "Build one less car than the market demand" is a quote attributed to founder Enzo Ferrari, yet where that line stands is more art than science. Conservatism on the supply/demand balance is generally a healthy strategy in protecting the value and exclusivity of the brand. But being too conservative results in too much unrealized value left on the table. After the company went public in 2015, it reported revenue of just under €3 billion for the year while shipping less than 8,000 cars at an average selling price (ASP) of €270,000 per car. EBITDA margins were 25%. Importantly, by our calculation, its return on invested capital (ROIC) was over 100%. Ferrari was demonstrating economics more in line with digital and luxury businesses and deserving of a much higher valuation, more like a Hermes or Apple, rather than a typical auto company. In 2024, the company expects to generate over €6.7 billion in revenue in 2024 with EBITDA margins exceeding 38%. We expect over 14,000 cars to be shipped with an ASP over €400,000 – that is an ASP increase of €100,000 over the past 5 years! There were two important things we recognized that the market did not appear to fully back in 2017 that made this an attractive investment for us. When we did our first deep dive into the business in 2016, we estimated there were 2-3 million potential high net worth customers who could afford to buy a Ferrari. Consequently, selling less than 8,000 cars meant a customer capture percentage of less than 0.1% in any given year. Even this year, when the company will likely sell 14,000 cars, we believe it is still selling to less than 0.1% of its potential market. That seemed a very conservative ratio, albeit limited by the appeal of its 2-door, 2-seat ultra-high performance sports car form factor. But we came to believe that Ferrari could increase its appeal to a broader set of customers (increase demand) by widening its form factors to 4-door cars and SUVs. In addition, its ASP had only risen at a slightly higher than inflation rate of 4% per year over the prior decade. And the company had long wait lists at those prices that sometimes surpassed 18 months. Meanwhile, the wealth of customers in this segment grows at something like 5-10% per year from returns on their assets and businesses. We realized there was a growing gap between the wealth of their customer base and the pricing that Ferrari captured. For a material proportion of the customer base, Ferrari's appeal as a Veblen good, means that the more people who could afford one, the less desirable the product because its value comes from its differentiation from the ordinary. A Veblen good is one where demand increases with price precisely because they are so hard or expensive to attain. Ferrari's current CEO Benedetto Vigna has succinctly described Veblen good's relevance to Ferrari saying: "The client is giving a value to our cars because they are unique, because they are limited, because they are exclusive. We could make more, but that does not make sense. We will offend our clients." Our view was that Ferrari would be required to raise prices at a rate that kept pace with their customers' wealth to continue delivering to customers the Veblen expectations of the product, with shareholders disproportionately benefiting from the increased pricing growth. It was clear to us that there was a large gap between market expectations priced into Ferrari's stock and the higher fair value implied by our analysis. Interestingly the large gap persisted for years even after Ferrari began to confirm our thesis when it revealed its 2022 financial targets at the 2018 Investor meeting. Under Sergio Marchionne, Ferrari began to push the envelope on volumes but in an intelligent manner that included leveraging its core assets to build new form factors that would expand the appeal of its cars to new customers. For example, the Ferrari Roma has been a much bigger hit with women than the traditional style of the 488, F8, or 812. The recently launched Purosangue appears to have every sign of success with those that might have the means to buy a Ferrari but would rather it come with the utility of four doors that can also bring three passengers and some gear along for a weekend. Ferrari also rolled out the SF90 and 296 GTB/GTS plug-in hybrid models that appealed to a younger segment of its market while making strides towards the global trend of cleaner emissions, but without sacrificing the performance and driving dynamics of Ferrari. These hybrids are likely to also do well in the Chinese market over time, a large fast-growing market for high net worth (HNW) individuals. These new form factors have increased the appeal of Ferrari across new HNW customer segments without necessarily oversupplying Ferraris within each model line thereby preserving its exclusivity. We see evidence of this from the fact that nearly all models are sold out through 2025 with average selling prices approaching a record €400,000. This also confirms our initial thesis that Ferrari's customers would accept higher prices while driving margins and profits benefiting shareholders. With the launch of the Icona design-oriented collector cars such as the SP1, SP2 and SP3, Ferrari was able to effectively sell high value limited cars more often per decade than when it was strictly reserved for hypercars like the LaFerrari, the Enzo, or the F40. These cars sold for more than €1MM, while the SP3 now surpasses €2MM. Ferrari also opened up the €500,000+ pricing tier with its higher priced SF90 and Purosangue for the normal production, non-collector cars, which sell in higher volumes further supporting the brand's higher pricing strategy. The result of this more aggressive (and in our view more customer aligned) pricing strategy has resulted in faster revenue growth and higher margins. The market has taken notice in recent quarters and for the first time substantially closed the gap we persistently saw with our own fair value estimates. In conclusion, we believe that management at Ferrari has built one of the strongest luxury brands and customer bases in the world with a complimentary robust business model that uniquely plays to these strengths. They have indeed succeeded in polishing the rough diamond that Fiat spun out 8 years ago. Having recognized the jewel of a business that it was early on, as shareholders we were richly rewarded as the company executed a value enhancing strategy and as the market came to recognize its pricing and earnings power over time.

BSD Analysis:
Ensemble Capital presents a compelling bull case for Ferrari based on the company's exceptional transformation since its 2015 IPO. The fund's thesis centers on Ferrari's ability to operate as a luxury Veblen good where higher prices actually increase demand among ultra-high net worth customers. The manager highlights Ferrari's remarkable financial evolution from €3 billion revenue with 25% EBITDA margins in 2015 to expected €6.7 billion revenue with 38% EBITDA margins in 2024, while increasing average selling prices from €270,000 to over €400,000. The investment case is strengthened by Ferrari's strategic expansion into new form factors like the Purosangue SUV and Roma, which broaden customer appeal without diluting brand exclusivity. Management's disciplined approach to maintaining scarcity while capturing more value from a growing wealthy customer base has resulted in over 100% return on invested capital. The fund emphasizes Ferrari's unique positioning as a luxury brand with digital-like economics rather than a traditional automaker, justifying premium valuations similar to Hermès or Apple. With all models sold out through 2025 and successful launches of million-euro collector cars, Ferrari demonstrates sustainable pricing power in an expanding market of high net worth individuals.

Pitch Summary:
PetIQ, Inc. is a United States based generic pet medication, supplements, and wellness services company. The Company operates as a value-added intermediary between club, big box retail, and ecommerce companies; pet pharmaceutical companies; and the consumer. PetIQ consists of two reportable business segments: product and services. The products segment, which constituted their original business, is a distribution operation that distributes over-the-counter and prescription pet pharmaceuticals to retailers. Subsequently, the organization has expanded to include a proprietary products business that manufactures PetIQ-branded generic and over-the-counter pharmaceuticals and supplements for distribution to pharmacies and retail stores. The services segment offers veterinary services at retail establishments. This segment is instrumental in stimulating consumer demand for high-profit, per-square-foot pet items and generates rental income for associated retailers. Notably, 50% of their customers have never visited a veterinarian prior to seeking services from a PetIQ facility. Underlying industry trend: Pet adoption increased significantly during Covid. After society reopened, the rest of the pet industry has suffered from a lull in pet spend and slowing growth in categories associated with the purchase of a new pet. Pet destruction has not increased, however. I believe, as pets age, medications and supplements and Primary care-like vet services, PetIQ's businesses, will continue to prosper. Over the past couple quarters, two more acute dynamics are occurring. More affluent customers continue to humanize their pets and spend on premium goods and services. Less than affluent customers are more acutely feeling the effect of inflation and are still spending on their pets, but are trading down. This dynamic favors PetIQs more cost effective products and services. Near/Medium Term PT: $45+ (Curr Price, $17.50). While many companies in the pet sector over-earned during Covid lockdowns, PETIQ benefits from a pet's continued existence - not just the initial purchase. The Company's growth algorithm is for 10% revenue growth, and 15% EBITDA growth. Whether valued as a distributor or as a branded merchandiser, the products division should be re-rated higher. The services business has under-earned since Covid, but that should end in the near term, resulting in improving ROIC and a better deserved valuation.

BSD Analysis:
White Brook Capital presents a compelling bull case for PetIQ, targeting a $45+ price from the current $17.50, representing 157% upside potential. The manager's thesis centers on PetIQ's defensive positioning in the pet healthcare market, benefiting from aging pet demographics rather than new pet adoption cycles that have pressured other pet companies post-COVID. The company operates two complementary segments: a products division manufacturing generic pet medications and supplements, and a services division providing veterinary care through retail partnerships. The investment rationale emphasizes PetIQ's cost-effective positioning during inflationary periods, as consumers trade down while maintaining pet spending. Management guides for 10% revenue growth and 15% EBITDA growth, with the services segment expected to recover margins from 13% to historical 20% levels as lower-margin wellness centers are replaced by higher-margin community clinics. The manager believes current street estimates are conservative, particularly for the tick/flea treatment business which represents 25% of product sales and shows strong early 2024 indicators.

Pitch Summary:
Weir Group PLC (WEIR LN) – International Weir is a focused mining technology company. Key products include slurry pumps and ESCO ground engaging tools. The company has undergone a simplification program since Jon Stanton became CEO in 2016. Jon sold Weir's Flow Control business in 2019 and its Oil & Gas business in 2021 in order to focus on the mining end market. Today, the business employs a razor/razor blade business model, enjoys high barriers to entry, and is highly resilient. The company's core value proposition to customers is lowest total cost of ownership, which it achieves by manufacturing products that operate more efficiently (using less energy and water) and last longer than alternatives. The cloud hovering over the stock revolves around mining end market concerns, particularly the dearth of large capex projects. We believe these concerns reflect a misunderstanding of Weir's business model. Weir's revenue and profitability are driven by the aftermarket, and the aftermarket is largely insensitive to mining capex cycles as evidenced by Weir's more than 7% aftermarket revenue compound annual growth rate (CAGR) from 2011-2023. Weir targets a mid-to-high single digit organic revenue growth CAGR through the cycle, driven by a favorable ore production backdrop and growing installed base. There is also an opportunity to improve the margin as management executes on its Performance Excellence program and generates operating leverage. All in, we believe double-digit EPS growth through the cycle is an attainable target. The valuation at just over 16 times forward earnings does not reflect the quality of the transformed Weir and through-cycle EPS growth potential.

BSD Analysis:
FMI identifies Weir Group as a transformed mining technology company with a misunderstood business model that creates an attractive investment opportunity. Under CEO Jon Stanton's leadership since 2016, the company has simplified operations by divesting non-core businesses to focus on mining equipment and aftermarket services. The razor/razor blade model provides recurring revenue streams through aftermarket services, which demonstrated resilience with 7% CAGR from 2011-2023 despite mining capex volatility. Market concerns about mining capex cycles appear overblown given the aftermarket-driven revenue base and growing installed base. Management targets mid-to-high single-digit organic growth with margin expansion through operational excellence initiatives. The 16x forward earnings multiple appears attractive for a business capable of double-digit EPS growth through the cycle, suggesting significant re-rating potential as investors recognize the transformation.