Investment Pitches

Pitch Summary:
Southwest Gas Holdings ("SWX") is a mid-capitalization holding company with two segments: (i) Southwest Gas Corporation, a stable, regulated natural gas utility serving customers in Arizona, Nevada, and California, and (ii) a majority-owned stake in Centuri Holdings (NYSE: "CTRI"), a North American utility infrastructure services company. Our investment thesis is centered on a straightforward premise: the true value of SWX's core regulated utility business is currently obscured by Centuri's consolidated financials, which are in the final stages of being simplified. As this simplification occurs over the coming quarters, we anticipate a significant re-rating of the company's valuation, driven by several powerful catalysts. Catalyst 1: Deconsolidation. The Path to a Pure-Play Utility As of the second quarter, SWX holds a ~52% stake in Centuri, requiring the consolidation of Centuri's financials. This accounting treatment masks the financials of the core utility. We expect SWX will continue to sell down its Centuri position to below the 50% ownership consolidation threshold within the next six months. The resulting deconsolidation will be a pivotal event, clarifying the investment case for a broader universe of investors and likely triggering credit rating upgrades. The market has historically rewarded pure-play utilities with higher valuations, and we expect SWX to benefit from this migration of capital as dividend-focused funds and retail investors recognize the less-levered, streamlined enterprise. Catalyst 2: Deleveraging. Fortifying the Balance Sheet The proceeds from Centuri stock sales are being deployed in a shareholder-friendly manner. Management is systematically reducing holding company debt, which strengthens the balance sheet and mitigates the need to issue the company's equity at currently depressed prices to fund growth. Our conviction in this disciplined capital allocation strategy is reinforced by the presence of Carl Icahn's nominees on the Board of Directors (3 of 11 seats) and large equity ownership in the company, which provides strong oversight and an alignment with shareholder interests. Catalyst 3: Understated Rate Base Growth. Market-Leading Growth The core utility operates in prime service territories (Arizona, Nevada, California) characterized by robust population growth and accelerating demand for natural gas. While management has guided to a 6%-8% compounded annual growth rate (CAGR) for its rate base over the next five years, our analysis suggests this is conservative. This official guidance notably excludes the ~$1+ billion incremental rate base opportunity at SWX's Great Basin Gas Transmission Company. Factoring in this opportunity, we project a more realistic 8%-12% rate base CAGR. For a regulated utility, this level of growth is exceptional and market-leading, and is not yet reflected in the company's low valuation. As SWX's earnings are intrinsically linked to rate base growth, this represents a powerful, underappreciated driver of future income. Catalyst 4: Enhanced Profitability. Improving Regulatory Landscape Historically, SWX has been hampered by backwards-looking regulatory frameworks in Arizona and Nevada, creating a "regulatory lag" that prevented the company from earning its authorized return on equity (ROE). This headwind is shifting as recent legislative and regulatory actions in both states now permit the use of forward-looking formula rates (Arizona in December 2024, Nevada in June 2025). This structural improvement in the regulatory framework will directly address regulatory lag, helping SWX to close the gap between its achieved and authorized ROE and grow its earnings power. SWX Conclusion: in aggregate, these catalysts of corporate simplification, deleveraging, superior growth, and regulatory tailwind create a powerful case for a substantial re-rating of SWX's valuation. We believe a premium multiple of 1.6x – 1.8x EV / rate base is warranted for this high-quality regulated utility, leading to an intrinsic value of $104 – $124 per share. This represents 40%+ upside from SWX's June 30, 2025 share price.

BSD Analysis:
Silver Beech presents a compelling multi-catalyst thesis for Southwest Gas Holdings centered on corporate simplification and operational improvements. The fund's core argument revolves around the deconsolidation of Centuri Holdings, which currently obscures the value of SWX's regulated utility operations through consolidated accounting. Management expects to reduce the Centuri stake below 50% within six months, triggering deconsolidation and potentially credit rating upgrades. The deleveraging strategy, supported by Carl Icahn's board presence, should strengthen the balance sheet and eliminate dilutive equity issuances. Silver Beech identifies significant rate base growth potential of 8-12% CAGR versus management's conservative 6-8% guidance, driven by a $1+ billion opportunity at Great Basin Gas Transmission. Recent regulatory improvements in Arizona and Nevada implementing forward-looking formula rates should address historical regulatory lag and improve ROE achievement. The fund targets a premium 1.6x-1.8x EV/rate base multiple, implying $104-124 per share versus the June 2025 price. This represents a classic sum-of-the-parts value unlock story with multiple operational catalysts converging.

Pitch Summary:
Greggs is a vertically integrated food-on-the-go operator with over 2,650 shops across the UK. Greggs sells products which are low ticket, consumed immediately, and often repurchased during the day. The company's strong brand and differentiated business model have created loyal customers and long-term market share gains. Elevated cost inflation and growth investments have coincided with a demand slowdown, weighing on the near-term outlook and pressuring the stock. While sales growth and margins are likely to take a step back in the interim, given investments being made across the business (supply chain, innovation, employees, channels/partnership), we think the company has a long runway for new store openings. The company is cresting the peak of their supply chain investment cycle this year, management remains disciplined, and they are in an excellent financial position with cash flow set to inflect thereafter. We view the valuation as too low relative to their long-term prospects.

BSD Analysis:
FMI presents a contrarian view on Greggs, seeing temporary margin pressure and demand weakness as creating an attractive entry point for a dominant UK food-on-the-go operator. The investment case centers on the company's vertically integrated model, strong brand loyalty, and significant runway for store expansion across the UK market. Current headwinds from cost inflation and growth investments are viewed as temporary, with management nearing the peak of supply chain capex that should drive future margin expansion. The low-ticket, high-frequency purchase model creates defensive characteristics and customer stickiness that support long-term market share gains. FMI believes the current valuation fails to reflect the company's competitive advantages and growth potential as operational investments begin generating returns. This represents a quality growth story available at a discount due to near-term execution challenges.

Pitch Summary:
Becton Dickinson is a medical supply and device company, selling low-cost medical essentials. Products include vascular access devices, pre-fillable syringes, and catheters, to name a few. Becton is the leader in most of its product lines and often competes in oligopoly market structures. Their management team has been executing on a strategy to grow and simplify the business. This has been successful but is obscured by noise in the financials caused by the pandemic, portfolio actions, and other temporary factors, providing us with an opportunity to buy a quality business at an attractive price. We believe execution on the company's growth strategy and pending business separation will unlock value, with management targeting over 5% annual organic revenue growth and continued margin expansion in the coming years. Manufacturing scale is a key competitive advantage, with the company manufacturing billions of devices annually. Driven by healthcare utilization, the business is durable. Post their separation of biosciences and diagnostics solutions business in 2026, ~90% of revenue is recurring in nature (consumables). The valuation is attractive given the company's defensive attributes and growth potential.

BSD Analysis:
FMI identifies BD as a temporarily mispriced medical device leader trading below intrinsic value due to pandemic-related financial noise and portfolio restructuring. The investment thesis hinges on the company's dominant market positions in oligopolistic medical device categories and massive manufacturing scale advantages. Management's strategic focus on growth and simplification should drive 5%+ organic revenue growth and margin expansion as temporary headwinds subside. The pending 2026 business separation will create a more focused entity with 90% recurring consumables revenue, enhancing predictability and valuation multiples. FMI views the current valuation as attractive relative to the company's defensive healthcare exposure, durable competitive moats, and improving operational trajectory. This represents a quality compounder available at a discount due to temporary execution challenges.

Pitch Summary:
OneMain is a scale leader in nonprime personal lending. Although they have a messy corporate history, our research suggests that in most key areas they are superior to their peers. We believe with a few years of clean results and an improved macro environment, this company could be reframed as a differentiated, high-quality financial. Given organic growth opportunities in personal lending, and newer areas such as credit card and direct auto, we believe they can grow organically in the mid-single digits with operating leverage, while at the same time returning significant capital through a large dividend and episodic buybacks. Although the current macro environment has stressed their core consumer and pressured net charge offs, we believe the income statement alone provides sufficient protection from an adverse outcome in nearly all reasonable scenarios, with further protection on the balance sheet in a tail risk scenario. The macro backdrop has given us the opportunity to own this industry leading business at an attractive valuation.

BSD Analysis:
FMI presents a compelling turnaround thesis for OneMain Holdings, positioning it as a misunderstood leader in nonprime personal lending. The manager acknowledges the company's troubled past but emphasizes superior operational metrics versus peers and sees potential for multiple expansion as execution improves. The investment case centers on organic growth diversification into credit cards and auto lending, combined with mid-single digit growth and significant capital returns through dividends and buybacks. FMI views current macro headwinds as temporary, creating an attractive entry point for a market-leading franchise. The downside protection argument relies on income statement resilience and balance sheet strength in adverse scenarios. This contrarian bet requires patience for operational improvements and macro normalization to drive revaluation.

Pitch Summary:
CarGurus, Inc. is a leading online platform for automobile sales, operating both a retail marketplace and an auction-based wholesaling business. The company's competitive pricing and broad suite of ancillary services continue to attract dealers. Despite a strong quarter for its core business, the stock declined after revenue came in at the midpoint of guidance, and forward guidance was slightly below expectations. We remain constructive on the company's long-term prospects, supported by growing profitability and free cash flow from its core operations. In addition, we believe the ongoing restructuring of its wholesaling business presents upside potential. CarGurus remained one of the portfolio's top holdings at period end.

BSD Analysis:
The manager maintains a bullish stance on CarGurus despite near-term stock weakness, emphasizing the company's strong competitive position in the online automotive marketplace with dual revenue streams from retail and wholesale operations. The platform's competitive pricing and comprehensive ancillary services create value for dealer customers and drive continued market share gains in the digital automotive space. While the stock declined following revenue results at the midpoint of guidance and slightly conservative forward guidance, the manager views this as a temporary disconnect from strong underlying business fundamentals. The company demonstrated growing profitability and free cash flow generation from core operations, indicating operational leverage and sustainable business model economics. The ongoing restructuring of the wholesaling business represents a potential catalyst for future value creation and margin expansion. CarGurus maintained its position as a top portfolio holding, reflecting the manager's high conviction in the long-term opportunity. The dual marketplace model provides diversification benefits and multiple avenues for growth in the evolving automotive retail landscape.

Pitch Summary:
Tandem Diabetes Care, Inc. provides technology solutions for individuals living with diabetes in the U.S. and internationally. The company's automated insulin delivery systems are positioned to gain market share within a large and growing addressable market, where more than half of Type 1 diabetes patients still administer insulin manually. During the quarter, Tandem reported top-line growth that exceeded expectations, driven by strong performance in its international division. However, U.S. results were weaker than anticipated due to muted seasonality and shipping delays. Despite these near-term challenges, we believe Tandem's platform remains well-positioned for long-term growth across both the Type 1 and emerging Type 2 diabetes markets, with further opportunities for incremental share gains. We slightly reduced our position during the period based on a reassessment of the company's risk/reward profile.

BSD Analysis:
The manager maintains a bullish long-term view on Tandem Diabetes despite near-term execution challenges, based on the company's strong positioning in a large and underpenetrated addressable market. The significant market opportunity is highlighted by the fact that more than half of Type 1 diabetes patients still administer insulin manually, providing substantial room for automated insulin delivery system adoption. International operations demonstrated strong performance with top-line growth exceeding expectations, indicating successful geographic expansion and market penetration outside the U.S. However, domestic results disappointed due to muted seasonality and shipping delays, suggesting operational challenges that may be temporary in nature. The manager's slight position reduction reflects a reassessment of risk/reward dynamics rather than fundamental concerns about the long-term opportunity. Tandem's technology platform is well-positioned to capture share in both the established Type 1 diabetes market and the emerging Type 2 diabetes opportunity. The company's automated insulin delivery systems represent a significant advancement in diabetes care technology, offering improved patient outcomes and convenience.

Pitch Summary:
For readers in the habit of using quantitative screens to identify investment ideas, NN will likely cause you to turn the other cheek. At first glance, this business does not look pretty. Under the hood, there is a lot to like. The fact patterns here along with management efforts are very similar to our investment in Bel Fuse. Like Bel Fuse, NNBR possesses strong technical expertise, a large manufacturing footprint, and long-dated customer relationships. Also, like Bel Fuse, NN was historically mismanaged, which shows up in the areas of pricing, manufacturing overhead and new business wins. NN, Inc. is a precision parts manufacturer that specializes in the development of plastic and metal components for various end markets. The company operates through two segments, Mobile Solutions and Power Solutions. Mobile Solutions manufactures parts primarily for the automotive market in power steering, braking, and fuel systems, while Power Solutions makes parts for general industrial, electronics, and medical markets. Specifically, NNBR manufactures parts that help other machinery spin, turn, and rotate. This other machinery is made up of everything from power steering systems to surgical devices to aerospace components. The company has a history dating back to the 1980's as a manufacturer of metal balls and rollers for the oil and gas industry, and today their precision capabilities and blue-chip customer base means they manufacture a wide variety of SKUs leading to a stable base of $500mm in revenues. The performance and durability required of NNBR's parts means that they have a high cost of failure, making them critical components despite their low cost to end customers. This has led to long-standing relationships with their customers, along with many of these components being sole source, making NNBR's competitive position quite strong. This helps partially explain how, despite NN losing its way recently, the customer base has held up well, despite a history of poor acquisitions, too much leverage and an incredibly weak culture. Thankfully, our involvement is recent, following multiple positive changes that the market has yet to price in, despite the 'why now' part of the investment thesis being more evident today than at any point in the past few years. As management continues to execute, I believe NNBR is rapidly approaching a more normalized cash flow profile that will reveal the future is going to be much different than the past. As you've likely seen with good businesses that besmirch their public market reputation, the prior management team took on significant leverage to make a string of bad acquisitions that didn't contribute meaningfully to profitability nor provide any cost savings or manufacturing synergies. Companies can sometimes hide behind bad deals, but when COVID hit, NN was forced to take drastic action in the form of unfavorable capital raises along with the sale of one of their other business segments in order to pay down debt. Today is a new day at NN as there is an incredibly high-quality management team and Board in place, spearheaded by two activist funds, also the largest shareholders of the business. Current CEO Harold Bevis is an industry veteran who has been there, done that in previous roles, having spent the last twelve years at two different public companies, Xerium (XRM) and Commercial Vehicle Group (CVGI), both of which left shareholders much better off than before he arrived. In line with my comments above about people and incentives, Harold recruited some old team members to join him at NN, where each have the opportunity to earn many multiples of their base salaries if successful. In fact, Harold dumped his prior role at CVGI to take the CEO job at NN, which should bode well for us as one source described Harold as someone who will 'run you right over' if you get in his way. Since their hiring, management has laid out several key strategic pillars on which they will focus and have already made remarkable progress in a short period of time. These pillars include strengthening the leadership team, addressing unprofitable business, expanding margins, delivering consistent free cash flow, and increasing new business wins. While that sounds like a tall order, most of these initiatives only require adopting common sense operational tactics. Importantly, there is valuation upside even before new business wins take place or top line growth resumes. In other words, there is plenty of low-hanging fruit to lower costs and expand margins, the bulk of which is being undertaken as I write this letter. Some of these items include addressing unprofitable business, implementing better pricing practices, and instituting a more centralized system to purchase raw materials. If I am correct about the cost improvements for each one of these items, the permanent flow through to EBITDA would be tremendous. While there is execution risk, and NNBR is still a show me story, I'm confident that in the near-term that management's efforts will start to show up in the company's financials and reveal NNBR to have much greater earnings power than is currently being demonstrated. Management has guided to $47-55mm of EBITDA for FY24, and there is likely a significant amount of upside to that figure as early as this year. Then, as new business wins contribute to improved top line growth, operating leverage should also kick in, presenting the opportunity for increased free cash flow conversion over time. This should help change the perception of NNBR, which will be very powerful for our returns.

BSD Analysis:
Greystone identifies NN, Inc. as a classic turnaround opportunity where new management is addressing years of operational mismanagement at a precision parts manufacturer. The investment thesis hinges on CEO Harold Bevis's proven track record of value creation at Xerium and Commercial Vehicle Group, combined with activist fund backing and aligned incentive structures. Despite poor historical performance due to bad acquisitions and excessive leverage, the company maintains strong competitive positioning through mission-critical components, sole-source relationships, and high switching costs across automotive, medical, and industrial end markets. Management's strategic pillars focus on operational improvements including better pricing practices, centralized procurement, and elimination of unprofitable business segments. With $500mm in stable revenues and management guidance of $47-55mm EBITDA for FY24, the company trades at attractive valuations before considering potential upside from operational leverage and new business wins. The investment offers significant earnings power normalization as cost structure improvements flow through to EBITDA, supported by a defensible market position in precision manufacturing.

Pitch Summary:
Ziff Davis, Inc. operates in two primary segments: business cloud services and digital media. We continue to believe the company's value lies in management's demonstrated ability to generate strong returns on capital by acquiring and turning around underperforming businesses. The stock underperformed during the period due to a slight earnings miss and weaker organic growth. Looking ahead, we believe that a return to low single-digit organic growth and a continuation of strategic acquisitions could deliver future performance catalysts. We slightly trimmed our position during the period.

BSD Analysis:
The manager maintains a neutral stance on Ziff Davis, acknowledging both the company's proven acquisition and turnaround capabilities while recognizing near-term operational challenges. Management's track record of generating strong returns on capital through strategic acquisitions and business turnarounds represents a key competitive advantage and value creation driver. However, the company faced headwinds during the quarter with a slight earnings miss and weaker organic growth, indicating some operational execution challenges in the current environment. The manager's outlook remains cautiously optimistic, expecting a return to low single-digit organic growth combined with continued strategic acquisitions to serve as future performance catalysts. The position trimming reflects a balanced approach to managing risk while maintaining exposure to the company's long-term value creation potential. Ziff Davis operates across two distinct segments in business cloud services and digital media, providing some diversification benefits. The company's acquisition-focused strategy requires strong capital allocation discipline and integration capabilities to generate sustainable returns. The manager's continued confidence in management's turnaround expertise suggests belief in the company's ability to navigate current challenges.

Pitch Summary:
Innovative Food Holdings is a specialty food distributor with a niche service offering and a history of strong organic growth. The company distributes over 7,000 perishable and specialty food and food related products, with expertise in selection, sourcing, and logistics. The business was founded and run for nearly twenty years by the former CEO who was both overpaid and had a history of chasing pet projects to the company's detriment. Despite following IVFH for years and liking the core business, the company was un-investable under the prior management team. That is no longer the case. With a highly competent and experienced management team now in place, along with an aligned and incentivized Board, shareholders finally own a food distribution business that will focus on its core customer and has the opportunity for revenue growth and margin expansion. However, as the result of questionable strategic decisions, the past few years of financials reveal a business that is under-earning, with true earnings power being masked by an unnecessarily high-cost structure due to an unprofitable e-commerce segment that is in the process of being wound down. Innovative Foods has three core offerings: a direct-to-chef specialty food service platform, an asset-light drop shipping distribution business where IVFH partners with broadline distributors such as US Foods to drop ship directly to end customers, and a specialty food distribution business that serves professional chefs in the Chicago area through their subsidiary, Artisan Foods. Food distributed by IVFH ranges from familiar to completely esoteric, where they've carved out a niche for themselves due to their relationships with hundreds of small food producers, including small farms, boats, and ranches. Specialty food distributors, and IVFH in particular, serve a critical need in the food distribution ecosystem by providing an important add-on offering for broadline food distributors, sourcing quality in-demand fresh foods for professional chefs, and providing capabilities for broadline distributors to plug IVFH's offerings directly into their ordering and billing systems. Companies like IVFH and other regional specialty food distributors have often been ignored by competition given the difficulty in building out these capabilities, as it doesn't make sense from a cost or profitability standpoint for a US Foods or United Natural Foods to develop a specialty offering. As a result of this niche along with higher priced specialty items, IVFH has historically posted strong organic growth figures along with gross margins well in excess of broadline distributors. Given the asset lite nature of this business along with good incremental margins, the cash flow profile for food distribution is also strong. Unfortunately, despite the profitable food distribution business growing 20% per year from 2015 until 2020, prior management started spending more time on a direct-to-consumer e-commerce offering that was low margin and expensive to scale. This dragged down the profitability of the entire business due to elevated customer acquisition costs and bloated SG&A. Following years of disappointment and a business under-earning on its potential, members of the Board were successful in replacing the former CEO with new CEO Bill Bennett, an industry veteran who spent time with both Wal-Mart and more recently Kroger, where he oversaw their $10 billion e-commerce business. Once at IVFH, Bill's first tasks were to prioritize cash flow and reduce costs, by examining every single dollar that went out the door, including what IVFH pays to landscape the small patch of grass outside of headquarters. This is my kind of CEO. As you'll see with NN Inc., it's remarkable what Bill and the team have achieved since their hiring, winding down unprofitable e-commerce operations, divesting non-core assets, reducing SG&A, and securing additional broadline distributor relationships for the Professional Chef business. However, we are still in the first inning of management's strategic plan to stabilize the business, lay the foundation for growth, and then build and scale. Management is incentivized to do two things, above all else: increase profitability and deliver strong shareholder returns. If successful, management will own a large chunk of the business through their compensation package, and we are betting on their success. We didn't pay up for it either. Although there are a lot of moving parts, IVFH finished FY23 having generated $2.5mm in EBITDA, which is likely a trough figure. Low hanging fruit can double this number in the near term before any growth initiatives take place, and there is a mid-term goal to increase the top line to $100mm in revenues with a 10% EBITDA margin profile. While not quite there yet, as non-core assets continue to get sold, IVFH will be a $50mm market cap business with around $10-12mm in net cash on the balance sheet, a sustainable $5-6mm EBITDA profile, limited capex and high returns on capital. This is all before any new business growth. There are levers to pull to help uncover latent earnings power, and I'm betting on this management team to execute on the opportunity. A renewed focus, and various avenues for growth also means that the company can build scale in food distribution for the first time in years. If the core business returns to 20% annual growth, we will win big. Further optionality exists with IVFH being able to develop a platform for specialty food M&A, for which the industry is rife with such activity. Private equity is leaning hard into specialty food distribution M&A, and the fragmented industry provides opportunities to grow products, geographies, and customers. IVFH could find itself on the receiving end of a takeout offer as well. There will be bumps in the road on our way to success, but I'm excited to see what Bill and his team can accomplish during the next few years.

BSD Analysis:
Greystone presents a compelling turnaround story in Innovative Food Holdings, a specialty food distributor that has been hampered by poor management decisions but now benefits from experienced leadership. The manager's thesis centers on new CEO Bill Bennett's ability to unlock latent earnings power by eliminating unprofitable e-commerce operations and focusing on the core specialty food distribution business that historically grew 20% annually. The company operates in a defensible niche serving professional chefs with hard-to-source specialty items, creating competitive moats through supplier relationships and integration with broadline distributors. With $2.5mm in trough EBITDA for FY23, management believes low-hanging fruit can double profitability near-term, targeting $100mm revenues with 10% EBITDA margins. The investment offers attractive risk-adjusted returns at a $50mm market cap with $10-12mm net cash, minimal capex requirements, and potential M&A optionality in a consolidating industry. Management incentives are well-aligned through equity compensation, and the asset-light model should generate strong cash flow conversion as operational improvements take hold.

Pitch Summary:
RB Global, Inc. operates a global marketplace for salvage vehicles through its IAA subsidiary and for used industrial equipment via its Ritchie Bros. unit. With a broad international network and significant scale advantages, we believe the company is well-positioned to gain further market share. Shares advanced during the quarter on strong business performance that exceeded expectations, supported by solid incremental EBITDA margins in the mid-50% range. Integration of the IAA acquisition also appears to be progressing ahead of schedule, reinforcing expectations for improved financial performance. We reduced our position during the quarter following the stock's appreciation.

BSD Analysis:
The manager presents a bullish thesis on RB Global based on its dominant market position operating dual marketplaces for salvage vehicles and used industrial equipment with significant scale advantages and international reach. The company's strong operational performance exceeded expectations with impressive incremental EBITDA margins in the mid-50% range, demonstrating highly profitable growth and operational leverage. The successful integration of the IAA acquisition ahead of schedule indicates effective management execution and suggests meaningful synergy realization that should drive improved financial performance. The manager's position reduction following stock appreciation reflects disciplined profit-taking rather than fundamental concerns about the business. RB Global's marketplace model benefits from network effects where increased buyer and seller participation enhances liquidity and pricing efficiency. The company's broad international network provides geographic diversification and access to global demand for used equipment and vehicles. The combination of salvage vehicles through IAA and industrial equipment through Ritchie Bros creates a comprehensive asset disposition platform with cross-selling opportunities.

Pitch Summary:
Halozyme Therapeutics, Inc. is a biopharmaceutical company whose key technology platform, ENHANZE®, allows partner companies to deliver drug therapies subcutaneously rather than via traditional IV infusion. This delivery method reduces treatment burden for patients and can also help extend the commercial life of partnered drugs. Shares rose during the quarter on better-than-expected results, EBITDA margins exceeding 60%, and continued strong free cash flow generation. Additionally, the company announced it would not move forward with a previously considered acquisition, opting instead to concentrate on its core business—news that was well received by the market. We trimmed the position during the period based on our valuation discipline.

BSD Analysis:
The manager maintains a bullish view on Halozyme based on its differentiated ENHANZE technology platform that enables subcutaneous drug delivery, creating significant value for pharmaceutical partners by reducing patient treatment burden and extending drug commercial life. The company demonstrated strong operational performance with EBITDA margins exceeding 60% and robust free cash flow generation, indicating highly profitable operations and efficient capital deployment. Management's decision to abandon a previously considered acquisition in favor of focusing on core business operations was well-received by the market, suggesting disciplined capital allocation and strategic focus. The manager's position trimming reflects valuation discipline rather than fundamental concerns, indicating the stock appreciated to levels that warranted profit-taking. Halozyme's platform business model provides recurring revenue streams through partnerships with major pharmaceutical companies. The subcutaneous delivery advantage addresses a significant unmet need in healthcare by improving patient convenience and compliance. The company's strong margins and cash generation provide financial flexibility for continued platform development and partnership expansion.

Pitch Summary:
We initiated a position in Charles River Labs in Q3. CRL is a high-quality company in the drug discovery and development outsourcing space with a broad range of services from basic research to contract manufacturing. The company has operating margins of 20% or more and generates substantial free cash flow. The past few years have been challenging for companies in the drug development space, as capital has become increasingly constrained and research and development spending has remained stagnant. However, CRL has the operating history and mix of businesses to be successful over the long term. The customer base is diverse and CRL benefits from the increased dynamics of outsourcing by its biopharmaceutical clients. The company's top line has grown at a 12% compound annual rate over the last 10 years, even with the recent downturn. Management is solid, and we've known them for decades. We believe Charles River's earnings power can reach approximately $15 in 2028, assuming modest growth. We also use a sum of the parts at ~12x EBITDA (earnings before interest, taxes, depreciation, and amortization) to assess the attractiveness of CRL. This implies an intrinsic value of $228. Importantly, we think we are being conservative, as we don't build in a resumption of double-digit revenue growth in our valuation framework. However, we anticipate revenue growth of 4% from 2024 to 2028 and a modest margin recovery, aided by restructuring and cost-outs.

BSD Analysis:
Madison initiated a position in Charles River Laboratories, viewing the current downturn in drug development spending as an attractive entry point for this high-quality CRO. The manager emphasizes CRL's strong financial profile with 20%+ operating margins and substantial free cash flow generation, supported by a diverse customer base and broad service offering from basic research to contract manufacturing. Despite recent headwinds from constrained biotech capital and stagnant R&D spending, Madison highlights the company's impressive 12% compound annual revenue growth over the past decade. The investment thesis centers on CRL's structural advantages from the ongoing outsourcing trend in biopharmaceuticals and management's proven track record. Madison's valuation framework assumes conservative 4% revenue growth through 2028 with modest margin recovery from restructuring efforts, targeting $15 in earnings power by 2028. Using a sum-of-the-parts analysis at 12x EBITDA, they derive a $228 intrinsic value target, which they believe is conservative as it doesn't assume a return to double-digit growth rates.

Pitch Summary:
OKTA, Inc. is the largest independent identity software company, serving a broad array of clients including enterprises, universities, and government agencies. Its competitive advantage lies in its advanced security authentication solutions and integration with over 7,000 software vendors. The company beat market expectations across all metrics and raised its growth outlook through 2026. While we were encouraged by the performance and market reaction, we elected to reduce our position due to potential execution risks tied to a recent sales force reorganization. Despite this caution, we continue to view Okta's long-term growth opportunity as compelling and maintain a smaller position.

BSD Analysis:
The manager presents a bullish thesis on Okta based on its dominant market position as the largest independent identity software provider and strong competitive moat through extensive vendor integrations. The company demonstrated operational excellence by beating expectations across all metrics and raising forward guidance through 2026, indicating management confidence in sustained growth. However, the manager exercised prudent risk management by reducing position size due to execution risks from a sales force reorganization, showing disciplined capital allocation. The decision to maintain exposure reflects conviction in Okta's long-term secular growth opportunity in the expanding identity and access management market. The pitch highlights the manager's balanced approach of capitalizing on strong fundamentals while managing company-specific risks. Okta's broad client base across enterprises, universities, and government agencies provides diversified revenue streams and reduces customer concentration risk. The integration with over 7,000 software vendors creates significant switching costs and network effects that strengthen the company's competitive position.

Pitch Summary:
Small cap initiated on Eagle Materials, a leading U.S. manufacturer of heavy construction materials such as Portland cement, concrete, and aggregates, and light building materials such as wallboard and recycled paperboard. We view Eagle as an excellent company with very attractive financial traits. EXP aligns well with our preference for high-quality holdings, given its strong margins, high return on invested capital (ROIC), and return on equity (ROE). With the residential construction cycle in a prolonged downturn, we see this as a timely opportunity to invest in Eagle. Demand for wallboard has been declining for several years, and operating rates for the industry are in the 70s, which means they have a lot of excess capacity. Investors, while somewhat mollified by the resiliency of the business, have lost patience with many construction-exposed names. During the downturn, Eagle has gained market share due to its geographical footprint and cost-competitive wallboard assets. Further, we believe we are close to a bottom in residential construction demand, and at this price, we are willing to be patient for the cycle to turn. Management is excellent and allocates capital very judiciously with copious share buybacks. Our current intrinsic value estimate does not assume meaningful margin expansion and has relatively conservative buyback assumptions. We calculate intrinsic value at $269/share.

BSD Analysis:
Madison initiated a position in Eagle Materials, viewing the prolonged residential construction downturn as a compelling entry opportunity for this high-quality building materials manufacturer. The manager emphasizes Eagle's attractive financial characteristics, including strong margins, high ROIC, and ROE, which align with their quality investment criteria. The investment thesis is predicated on cyclical timing, with wallboard demand declining for several years and industry operating rates in the 70s, indicating significant excess capacity. Madison believes Eagle has gained market share during the downturn through its advantageous geographical footprint and cost-competitive assets. The manager expresses confidence in management's capital allocation discipline, particularly their aggressive share buyback program. With residential construction demand potentially near a bottom, Madison sees attractive risk-adjusted returns ahead. Their $269 intrinsic value target assumes conservative margin expansion and buyback assumptions, suggesting meaningful upside potential as construction markets normalize.

Pitch Summary:
Amazon.com, Inc. is a global leader in e-commerce and cloud computing, uniquely positioned to benefit from the secular growth in digital commerce and enterprise cloud adoption. Our investment in Amazon reflects its ability to compound growth through its dominant retail platform, AWS cloud infrastructure, and emerging high-margin businesses such as advertising and logistics. Amazon reported strong profitability in the quarter, achieving record operating margins and exceeding consensus estimates, driven by retail efficiencies and solid results from AWS. However, the stock declined following guidance that fell below expectations, citing foreign exchange headwinds and difficult year-over-year comparisons. Broader macroeconomic concerns likely also contributed to the stock's volatility. We remain confident in Amazon's dominant market position and long-term potential.

BSD Analysis:
The manager maintains strong conviction in Amazon despite recent stock volatility, highlighting the company's multiple secular growth drivers and improving profitability. The investment thesis is built on Amazon's dominant positions in e-commerce and cloud computing, two markets with significant long-term growth potential. The company's ability to compound growth across its retail platform, AWS infrastructure, and emerging high-margin businesses like advertising demonstrates the power of its ecosystem. Recent quarterly results showed strong execution with record operating margins and consensus-beating performance, driven by retail efficiencies and solid AWS growth. The stock's decline following guidance appears driven by temporary factors including foreign exchange headwinds and difficult comparisons rather than fundamental deterioration. The manager's confidence in Amazon's long-term potential reflects belief in the company's competitive advantages, market leadership, and ability to expand into new high-margin verticals. Amazon's scale, innovation capabilities, and customer-centric approach position it well for continued market share gains.

Pitch Summary:
The small cap team initiated a new investment position in Hexcel Corporation. Hexcel is a global leader in advanced composite materials, specializing in the production of carbon fiber reinforcements, resin systems, and honeycomb structures. These materials are critical for lightweight, high-performance applications, particularly in the commercial aerospace, space, and defense sectors. Hexcel's products are used in aircraft frames, wings, engines, and other structural components, offering strength and durability while significantly reducing weight. Major clients include aerospace giants like Airbus and Boeing. We like the duopoly market structure and deep moats of Hexcel's business. The cycle has been in a prolonged downtrend due to the COVID supply chain shocks, creating bottlenecks in engines and the struggles of Boeing and Spirit Aerosystems. We believe these headwinds are now largely behind us. The competitive moats in this business are significant. Capital intensity is relatively high, while incumbency and vertical integration provide a huge competitive advantage. Certification in wing and fuselage requires massive regulatory approval, which leads to even higher switching costs. Furthermore, the industry has a benign competitive structure, with Japanese firm Toray being the only other direct, scaled composite material competitor, having a combined share in wing and fuselage that approaches 90% and holding sole-sourced positions with original equipment manufacturers (OEMs). We believe the intrinsic value for this franchise is $85.

BSD Analysis:
Madison initiated a position in Hexcel Corporation, viewing it as a compelling opportunity in the aerospace composite materials duopoly. The manager highlights Hexcel's dominant market position alongside Toray, controlling approximately 90% of the wing and fuselage composite market with sole-sourced OEM relationships. The investment thesis centers on the company's significant competitive moats, including high capital intensity, vertical integration advantages, and substantial regulatory barriers that create switching costs. Madison believes the prolonged aerospace cycle downturn from COVID supply chain disruptions and Boeing's struggles is largely behind the company. The manager emphasizes the structural advantages of the business model, with high switching costs from regulatory certification requirements and strong relationships with major aerospace customers like Airbus and Boeing. With an intrinsic value target of $85, Madison sees attractive upside potential as aerospace markets normalize and Hexcel benefits from its entrenched competitive position.

Pitch Summary:
ACV Auctions, Inc. operates a digital marketplace that enables automotive dealerships to more efficiently and transparently buy and sell wholesale vehicles. The company connects dealers nationwide through a data-driven platform enhanced by AI-based inspection tools and complementary services such as financing and transport services. This integrated ecosystem supports high customer retention and positions the company to benefit from ongoing digitization trends within the wholesale automotive industry. Despite continued strong fundamentals—including disciplined cost management and ongoing market share gains—the stock was negatively impacted by broader uncertainty around used-vehicle demand and macroeconomic concerns. Nonetheless, we maintain confidence in ACV's management team and business model, and long-term market opportunity.

BSD Analysis:
The manager remains bullish on ACV despite recent stock underperformance, emphasizing the company's strong competitive position in automotive wholesale digitization. The investment thesis centers on ACV's data-driven platform that enhances efficiency and transparency in vehicle transactions between dealers. The AI-based inspection tools and complementary services create an integrated ecosystem that drives high customer retention and switching costs. The company continues to execute well operationally with disciplined cost management and ongoing market share gains in a large, fragmented market. Recent stock weakness appears driven by macroeconomic concerns about used-vehicle demand rather than company-specific issues. The manager's confidence in ACV's management team and business model reflects belief in the long-term digitization opportunity within the wholesale automotive industry. The combination of strong fundamentals, market share gains, and secular tailwinds makes ACV an attractive growth investment despite near-term headwinds.

Pitch Summary:
Warner Music Group. Last year, we published a report on Universal Music Group, a competitor to Warner Music Group, highlighting the power labels have in the music industry. Warner Music Group has a similar hold on the industry with artists like Prince, Madonna, and Ed Sheeran. While platforms like Spotify and Apple Music offer a platform for music listeners, record labels control the content on those platforms and, as a result, bring home the lion's share of the industry's profits.

BSD Analysis:
Broyhill's investment in Warner Music Group reflects their conviction in the structural advantages of major record labels within the music industry ecosystem. The manager leverages their previous research on Universal Music Group to identify similar value creation opportunities at Warner, emphasizing the oligopolistic nature of the music label industry. Warner's roster of iconic artists including Prince, Madonna, and Ed Sheeran provides durable competitive moats through exclusive content ownership and long-term revenue streams. While streaming platforms like Spotify and Apple Music facilitate distribution, Broyhill correctly identifies that content owners capture the majority of industry economics. This represents a classic example of identifying where value accrues in a value chain, with record labels maintaining pricing power over distribution platforms. The investment thesis centers on Warner's ability to monetize its content library across multiple channels while benefiting from the secular growth in music streaming globally.

Pitch Summary:
MGM Resorts International is a global hospitality and entertainment company primarily operating integrated casino resorts and digital gaming platforms. Its core business spans Las Vegas, U.S. regional markets, and Macau, and it is complemented by its BetMGM joint venture for online gaming and sports betting. We own MGM due to its diversified asset portfolio, strong balance sheet, and active share repurchase program. We see a pathway to profitability for its BetMGM digital venture as a driver of free cash flow growth. In the most recent quarter, MGM performed in line with expectations, primarily due to strong results in the U.S. and Macau. Las Vegas faced challenging year-over-year comparisons, however, underlying demand remained solid. Management reported a positive start to 2025 and expects segment growth for the year. While fundamentals appear to be on solid footing, the stock fell during the period on consumer health concerns and general market weakness. We continue to hold our position and look for opportunities to incrementally add.

BSD Analysis:
The manager maintains a bullish view on MGM despite recent stock weakness, citing strong fundamentals and multiple growth drivers. The investment thesis is built on MGM's diversified geographic footprint across Las Vegas, regional U.S. markets, and Macau, which provides revenue stability and growth optionality. The BetMGM digital venture represents a significant catalyst, with the manager seeing a clear pathway to profitability that could drive meaningful free cash flow growth. Recent quarterly results met expectations with strong performance in the U.S. and Macau offsetting Las Vegas headwinds. Management's positive 2025 outlook and expectation for segment growth supports the bullish thesis. The company's strong balance sheet and active share repurchase program demonstrate capital allocation discipline and management's confidence in the business. The manager views recent stock weakness as a buying opportunity, driven by temporary consumer concerns rather than fundamental deterioration.

Pitch Summary:
Cameco is the 2nd largest uranium producer in the world with ~17% market share, preceded by Kazatomprom, which has ~20% market share. Cameco offers an attractive pure-play opportunity to invest in the high-demand for nuclear energy within the safe jurisdiction of Canada. It has a diversified uranium business due to its vertically integrated business model. It provides fuel products and services across the nuclear fuel cycle from exploration, mining, milling, refining and conversion. Cameco has some of the world's best grade and lowest cost mines in the world. It operates tier 1 mines that have a licensed capacity to annually produce over 30 million pounds of uranium, which can be used to power millions of homes each year. It is the world's third largest company based on reserves with over 457 million pounds of proven and probable uranium reserves. Two of its world-class production mines are located in northern Saskatchewan. McArthur River is the world's largest high-grade uranium mine and mill that has an expected mine life of until 2043. In 2024, Key Lake mill set a new world record for annual production. Cigar Lake is the world's second largest high-grade uranium mine that has an expected mine life of until 2036. Both mines have uranium grades (concentration of uranium) that significantly surpass that of its competitors. For instance, Cigar Lake has proven grades of 16.68% and McArthur River has proven grades of 6.81%, while its next largest competitor, Kazatomprom, has average grades of only 0.04% to 0.10%. This divergence in grades demonstrates the quality of Cameco's world-class assets. To further supplement its own home-grown uranium, Cameco has partnered with Kazatomprom on a joint venture, which gives Cameco uranium production from Kazakhstan. Cameco will build long-term contracts by layering in volumes over time. Its customer contracts have a mix of base-escalated pricing and market related pricing (floor and ceilings) that enables it to benefit from increasing uranium prices, while also having downside protection when the uranium price decreases. Cameco has a strong pipeline of long-term customer commitments which provides greater visibility and predictability of the business. For instance, Cameco has commitments to provide an average of 28 million pounds of uranium per year from 2025 to 2029, in addition to ongoing discussions with existing and prospective customers to grow its contract pipeline. Cameco complements its nuclear value chain with its Fuel Services and Westinghouse Electric businesses. Cameco is the world's largest commercial uranium refinery. Its commercial refinery has about 21% of the world's uranium primary conversion capacity. The Port Hope Conversion Facility is one of only four commercial suppliers of uranium hexafluoride, which is used in uranium enrichment, in the western world. In November 2023, Cameco entered into a strategic partnership with Brookfield Renewable Partners to acquire a 49% ownership of Westinghouse Electric. Westinghouse Electric develops nuclear reactor facilities and technology. It designs and fabricates highly engineered bespoke nuclear reactors. For instance, Westinghouse develops SMR technology that uses the same technology as its larger nuclear facilities. Complementing its nuclear asset business, Westinghouse has a nice recurring revenue business by offering aftermarket products and services, such as engineering and outage and maintenance services. This enables the company to have a predictable and consistent stream of revenue and cashflow from its long-term customer relationships. For instance, 1 in 2 of the nuclear fleet in the world receives services from Westinghouse. Warren Buffet once shared that the three criteria he uses for evaluating a management are integrity, intelligence and energy - all 3 of which are characterized by Cameco's management team. Cameco has a disciplined management team with a long-term mindset that has enabled the company to persevere through the doldrums of the nuclear industry's lost years. When uranium prices are high, management had the self-restraint to not flood the market with uranium and correspondingly drive down prices. Instead, the company has been focused on long-term value creation by preserving its high grade, low-cost production assets by waiting for attractive long-term pricing. This has enabled the company to become well-positioned to take advantage of the current nuclear energy boom. Amid rising global energy demand, Cameco is well-positioned to benefit from the growing need for nuclear energy for years to come. Since Rocklinc Partners Fund initiated its position in Cameco in February 2024, the stock has risen by over 45%. We plan to increase our stake as valuations become more attractive.

BSD Analysis:
The manager presents a compelling bull case for Cameco as a pure-play uranium investment positioned to benefit from the nuclear renaissance. The thesis centers on Cameco's dominant market position as the world's second-largest uranium producer with 17% market share and exceptional asset quality, including tier-1 mines with uranium grades of 16.68% at Cigar Lake and 6.81% at McArthur River—dramatically higher than competitors' 0.04-0.10% grades. The vertical integration strategy spanning exploration through conversion provides diversified revenue streams and competitive advantages. The Westinghouse Electric partnership adds nuclear reactor technology and recurring aftermarket services, with half the world's nuclear fleet receiving Westinghouse services. Management's disciplined approach during the uranium downturn, preserving high-grade assets rather than flooding markets, positions the company well for the current supply-demand imbalance. With 28 million pounds of annual uranium commitments through 2029 and flexible pricing contracts, Cameco offers both revenue visibility and upside participation in rising uranium prices. The 45% stock appreciation since February 2024 reflects growing recognition of the nuclear energy tailwinds driven by AI data center demand and climate policies.