Investment Pitches

Pitch Summary:
Progyny is a leading benefit management company that specializes in fertility and family building benefits solutions. The company caters to an underserved, yet significant and specialized, market with unique plan design and coordinated clinical delivery. Its carefully selected provider network leads to improved patient satisfaction, cost savings, and other benefits to all constituents. The prevalence of infertility in the U.S. is high, affecting one in eight couples in the U.S. per the Centers for Disease Control and Prevention (CDC). While the company reported strong fiscal first quarter results, where revenues grew 37% year-over-year, this was below consensus estimates. Additionally, management expressed concerns about the uncertain macroeconomic environment, particularly influenced by state supreme court decisions related to in vitro fertilization (IVF), which negatively impacted the company's share price during the quarter.

BSD Analysis:
The manager acknowledges Progyny's strong market position in fertility benefits management but expresses concern about near-term headwinds. Despite the company's leadership in an underserved market with significant growth potential, execution fell short of expectations. First quarter revenue growth of 37% year-over-year, while robust in absolute terms, disappointed relative to consensus estimates. Management's cautious commentary regarding macroeconomic uncertainty and regulatory challenges presents additional concerns. State supreme court decisions affecting IVF treatments create regulatory overhang that could impact demand for fertility benefits. The combination of execution shortfall and regulatory uncertainty appears to have weighed on investor sentiment. While the long-term opportunity remains compelling given high infertility prevalence, near-term challenges suggest a more cautious outlook is warranted.

Pitch Summary:
Glaukos is an ophthalmic medical technology and pharmaceutical company targeting the large glaucoma market. As an early pioneer in minimally invasive glaucoma surgery (MIGS) with its iStent devices, Glaukos recently launched the innovative iDose technology. This device delivers medication directly to the eye over an extended period of up to three years, offering a significant advance in glaucoma treatment. During the quarter, shares contributed to performance after the company reported better-than-expected fiscal first quarter earnings. Management also raised their full-year revenue guidance, fueled by the growing adoption of the iStent products and iDose by physicians. In our view, iDose could be a transformational product in the glaucoma treatment landscape, potentially reducing the need for topical eye drops and delaying or avoiding more invasive surgeries due to its safety and effectiveness.

BSD Analysis:
The manager expresses strong conviction in Glaukos as a transformational player in the glaucoma treatment market. The company's pioneering position in minimally invasive glaucoma surgery (MIGS) with iStent devices provides a solid foundation, while the recently launched iDose technology represents a potential paradigm shift. The iDose device's ability to deliver medication directly to the eye for up to three years addresses a significant unmet need in glaucoma care. First quarter earnings exceeded expectations, prompting management to raise full-year revenue guidance based on accelerating physician adoption of both iStent and iDose products. The manager views iDose as potentially transformational, offering the prospect of reducing reliance on topical eye drops and delaying more invasive surgical interventions. This positions Glaukos to capture significant market share in the large and growing glaucoma treatment market.

Pitch Summary:
Natera is a specialty lab providing genetic testing services in the reproductive health, oncology and transplant markets. Reproductive health tests are run to screen for common genetic disorders such as trisomy 13, 18, and 21 in pregnant women - these tests are also known as non-invasive prenatal testing (NIPT). The company's oncology franchise is led by Signatera, a test used to detect minimal residual disease (MRD) - the applications of this test are primarily to monitor therapy response and detect cancer recurrence. Lastly, Natera's transplant franchise is led by Prospera, a test used to monitor transplant organ rejection. Natera's tests are all based on the company's proprietary liquid biopsy platform to detect cell-free DNA. During the quarter, shares contributed to performance as the company reported strong fiscal first quarter results, where revenues and profit margins came in above analyst estimates. Better-than-expected revenues stemmed from higher test volumes and reimbursement rates, especially for the company's Signature test which is used to monitor cancer recurrence. Additionally, management raised its 2024 revenue and profit margin guidance.

BSD Analysis:
The manager maintains a bullish stance on Natera based on strong operational execution across multiple genetic testing franchises. The company's diversified portfolio spans reproductive health (NIPT), oncology (Signatera for MRD detection), and transplant monitoring (Prospera), all leveraging a proprietary liquid biopsy platform. First quarter results exceeded expectations with revenue and margin beats driven by higher test volumes and improved reimbursement rates. The Signatera oncology franchise appears particularly strong, benefiting from increased adoption for cancer recurrence monitoring. Management's decision to raise 2024 revenue and profit margin guidance signals confidence in sustained momentum. The liquid biopsy platform provides a competitive moat and scalable foundation for expanding applications across multiple therapeutic areas.

Pitch Summary:
StepStone Group is a private markets investment firm that focuses on providing customized investment solutions and advisory and data services to clients. The company serves public and private defined benefit and defined contribution pension funds, sovereign wealth funds, insurance companies, prominent endowments, foundations, family offices and private wealth clients, which include high-net-worth and mass affluent individuals. During the quarter, shares contributed to performance following strong fiscal fourth-quarter results, with revenues and earnings beating analyst estimates. Better-than-expected revenues were attributed to higher realized carried interest and increased fees from co-mingled funds, particularly due to a favorable mix and strong growth in their high-margin Evergreen Funds. The quarter also featured robust fundraising activity, with management providing a positive forward outlook.

BSD Analysis:
The manager presents a bullish view on StepStone Group based on strong fundamental execution and positive momentum. The company delivered fiscal fourth-quarter results that exceeded analyst expectations on both revenue and earnings metrics. Revenue outperformance was driven by higher realized carried interest and increased fees from co-mingled funds, particularly benefiting from strong growth in high-margin Evergreen Funds. The favorable product mix suggests improving profitability dynamics. Robust fundraising activity during the quarter indicates strong client demand and asset gathering momentum. Management's positive forward outlook reinforces confidence in the business trajectory. The private markets investment firm appears well-positioned to capitalize on continued institutional investor appetite for alternative investments.

Pitch Summary:
ICICI Bank is India's second-largest private sector bank by assets and is one of the leaders in lending to retail and corporate clients in the country. It is a high-quality bank and one of the best positioned to gain from India's structural growth in financial services due to its strong brand and its technological capabilities that complement its wide network of more than 6,500 branches. The firm has also gone through a major cultural transformation over the last five years, reducing the hierarchy within its top management, and implementing new parameters for bonus payouts that focus on better asset quality and profitability for the bank. In addition, the bank has made changes in the last few years to improve risk management, such as reducing client concentration in its corporate banking business, reducing asset exposure to riskier corporates, and limiting exposure to its riskier overseas businesses.

BSD Analysis:
Harding Loevner added ICICI Bank as a new position, capitalizing on attractive valuations in the Indian financial sector. The manager's investment thesis highlights ICICI's market-leading position as India's second-largest private bank with strong competitive advantages in both retail and corporate lending. The bank's extensive branch network of over 6,500 locations, combined with advanced technological capabilities and strong brand recognition, positions it well to capture India's structural financial services growth. Management has implemented significant operational improvements over the past five years, including flattening organizational hierarchy and aligning compensation with asset quality and profitability metrics. The bank has also strengthened its risk management framework by reducing corporate client concentration, limiting exposure to higher-risk corporates, and curtailing overseas business risks. These operational enhancements, combined with India's favorable demographic and economic trends, should drive sustainable growth and improved returns on capital for ICICI Bank.

Pitch Summary:
The sharp sell-off in Brazilian equities this year provided us the chance to purchase Brazil's largest pharmacy chain, Raia Drogasil, at attractive valuations. The retailer's key competitive advantage is its scale of operations, allowing the company to negotiate better purchasing terms with its suppliers and operate its business with lower cost structures. Industry dynamics in Brazil are also favorable as medicines can be sold only through pharmacies, and license requirements for new entrants further limit competition. The earnings growth outlook for the company is attractive, as Brazil's rapidly aging population is fueling demand for medicines. We also think Raia Drogasil should continue taking market share from its smaller and financially weaker competitors in Brazil, potentially increasing its 16% current market share to more than 25% as this fragmented market consolidates over the next decade. The potential risk for this business is the threat of disruption from online retail. However, Raia Drogasil has been investing in its own online retail business to get ahead of the curve. It is working on speeding up deliveries to online customers, leveraging the advantage of its 3,000 pharmacy stores spread across a country where logistics is challenging. As of last quarter, close to 61% of the delivery mix for its online orders were through Click & Collect from physical stores and 92% of orders were delivered or collected within one hour of order. Its online business grew 46% in the first quarter from a year ago, now contributing close to 17% of overall revenue.

BSD Analysis:
Harding Loevner initiated a position in Raia Drogasil during the Brazilian equity sell-off, viewing the market weakness as a buying opportunity for this high-quality retailer. The manager's thesis centers on the company's scale advantages that enable superior supplier negotiations and cost structures relative to competitors. Brazil's regulatory environment creates a protective moat, as medicines can only be sold through licensed pharmacies with high barriers to entry for new competitors. The demographic tailwind of Brazil's aging population should drive sustained demand growth for pharmaceutical products. The manager sees significant market share expansion potential, projecting Raia Drogasil could grow from its current 16% market share to over 25% as industry consolidation accelerates. The company has proactively addressed e-commerce disruption risks by building a robust omnichannel platform that leverages its 3,000 physical stores for rapid delivery fulfillment. With 92% of online orders delivered within one hour and 46% online growth in Q1, the digital transformation appears successful and should support long-term competitive positioning.

Pitch Summary:
Daktronics designs and manufactures electronic scoreboards and large-screen video boards for commercial purposes. The company has a leading market share of 50% in LED displays in the United States. Its ability to provide full-service design, manufacturing and installation solutions later translates into recurring maintenance revenue and long-term customer relationships. Sales of newer optic technologies and back-end enhancements as older signage is replaced every 7-10 years are driving organic growth. Demand for its products is also supported by a strong investment cycle in live entertainment and sports as well as the transportation market and shift to electronic billboards. The business profitability has improved to a new baseline in FY 2024 and is expected to continue to increase from current levels, driven by improved manufacturing efficiencies and strong on-time delivery to customer sites resulting in higher gross and operating margins.

BSD Analysis:
THB presents a compelling bull case for Daktronics based on its dominant market position and improving fundamentals. The company's 50% market share in U.S. LED displays provides significant competitive advantages and pricing power. The full-service model creates sticky customer relationships and generates recurring maintenance revenue streams, enhancing business quality and predictability. The 7-10 year replacement cycle for signage provides a natural growth driver as older installations are upgraded with newer optical technologies. Strong secular tailwinds from increased investment in live entertainment, sports venues, and the shift to electronic billboards support demand visibility. Most importantly, the company has established a new profitability baseline in FY 2024, with management expecting continued margin expansion driven by operational improvements and manufacturing efficiencies. The combination of market leadership, recurring revenue characteristics, and margin expansion creates an attractive investment opportunity in the electronic display market.

Pitch Summary:
Brookfield Renewable Corp. operates one of the world's largest renewable power platforms with a global portfolio featuring hydroelectric, solar, and wind projects along with other assets. We became Brookfield Renewable shareholders in 2020 when the company bought a holding of ours, TerraForm Power, and the acquisition generated significant returns for the Fund. We remained shareholders post-merger because we believed Brookfield Renewable was a well-managed company with excellent assets and strong growth prospects trading at a reasonable valuation. The stock performed well during the quarter when the company signed a large, multi-year deal to provide electricity generation to Microsoft's AI-focused data centers, highlighting a long-term growth opportunity that we believe has been unappreciated by the market. We increased our position during the period as we believe the stock continues to offer attractive value.

BSD Analysis:
The manager's thesis on Brookfield Renewable evolved from an initial acquisition-driven entry through TerraForm Power to a conviction holding based on the company's operational excellence and growth prospects. The investment rationale emphasizes Brookfield's position as one of the world's largest renewable power platforms with a diversified global portfolio of high-quality assets. The recent Microsoft deal for AI data center power supply represents a significant validation of the long-term growth opportunity in renewable energy, particularly as technology companies seek clean power sources for energy-intensive operations. This contract highlights an underappreciated growth driver that the market has not fully recognized, providing upside potential beyond traditional renewable energy demand. The decision to increase the position reflects confidence in the company's attractive valuation relative to its growth prospects and asset quality. Brookfield Renewable benefits from secular trends toward decarbonization, corporate renewable energy procurement, and the growing power demands of AI and data center infrastructure. The company's experienced management team and global platform provide competitive advantages in developing and operating renewable energy projects.

Pitch Summary:
American Superconductor Corp. designs and manufactures power electronics and control systems for electricity transmission, distribution, and infrastructure. End markets include electric grids, wind power, industrial and naval. Our strategy's screening process identified the company when its largest customer at the time, a Chinese wind turbine manufacturer, stole its IP resulting in a 75% revenue decline. Our investment thesis was that the rebuilt company, following an IP litigation victory, was in a good position to resume earnings growth with significant upside potential driven by demand for electric grid upgrades, growth of wind power, and naval program wins. The stock performed well during the period on continued strong earnings and revenue growth that beat expectations. We trimmed our holdings during the quarter following strong performance as part of our normal risk management process, but maintain a position given the company's strong performance and potential upside.

BSD Analysis:
The manager's thesis on American Superconductor represents a classic turnaround opportunity following a severe business disruption caused by intellectual property theft. The investment was initiated when the company was rebuilding after a Chinese customer's IP theft caused a 75% revenue decline, creating an attractive entry point for a fundamentally sound business. The thesis centered on AMSC's recovery potential following successful IP litigation and the company's positioning in high-growth end markets including electric grid modernization, renewable energy, and naval applications. Strong recent earnings and revenue growth that exceeded expectations validate the turnaround story and demonstrate the company's successful business reconstruction. The decision to trim holdings reflects disciplined risk management following strong performance, while maintaining exposure acknowledges continued upside potential. AMSC benefits from secular tailwinds in grid infrastructure investment, renewable energy adoption, and defense spending, providing multiple growth drivers. The company's specialized power electronics and control systems technology positions it well to capitalize on the ongoing energy transition and grid modernization requirements.

Pitch Summary:
Tenet Healthcare Corp. is a top-ten U.S. operator of hospitals, outpatient surgery centers, and healthcare business process services. We initiated our position in late 2022 on the belief that the market's short-term focus on COVID-caused staffing and admissions challenges overshadowed the value of Tenet's long-term strategy of growing outpatient surgery centers. Tenet accelerated the transition of its business this year toward high-margin and higher return-on-capital surgery centers by divesting hospitals. The market rewarded the shift with a 26% return in the period. Tenet remains a top five holding with growth driven by surgery centers and a continued attractive valuation.

BSD Analysis:
The manager's thesis on Tenet Healthcare focuses on a strategic transformation from traditional hospital operations to higher-margin outpatient surgery centers. The investment was initiated when COVID-related challenges masked the underlying value of Tenet's long-term strategic pivot. The manager recognized that market concerns about staffing and admissions were temporary headwinds that obscured the company's structural shift toward more profitable business lines. Tenet's acceleration of hospital divestitures and surgery center expansion has validated this thesis, with the market recognizing the improved business mix through strong stock performance. The 26% quarterly return reflects investor appreciation for the higher-margin, higher-return-on-capital profile of surgery centers compared to traditional hospital operations. As a top five holding, Tenet represents a core conviction position benefiting from secular trends toward outpatient care and the company's successful execution of its transformation strategy. The continued attractive valuation suggests further upside potential as the surgery center growth strategy progresses and generates improved financial metrics.

Pitch Summary:
Perrigo Company plc. is the leading in-store brand for consumer wellness and self-care products. The company endured several years of declining earnings due to what we believe was poor capital allocation by its previous management team, which chased growth through acquisitions outside of Perrigo's core business. Our investment in Perrigo was inspired by a new management team that committed to pursuing realistic, steady growth rates within the core business, and delivering improved profitability and returns on capital. Despite reporting inline earnings results and maintaining annual guidance during the quarter, Perrigo stock has been weak. Market data and drug store company results have indicated a lower-than-average cough, cold, and allergy season that might be impacting short-term results. We increased our position as we believe the risk vs. reward is in our favor. In our view, Perrigo is well positioned for significant earnings growth in 2025 and beyond while trading at a current valuation of 10x current year earnings per share.

BSD Analysis:
The manager's thesis on Perrigo centers on a classic turnaround story driven by new management's strategic refocus on core operations. The previous management's value-destructive acquisition strategy outside the core consumer wellness business created the opportunity for improvement under new leadership. The investment rationale emphasizes management's commitment to disciplined capital allocation, realistic growth targets, and improved returns on invested capital. Despite recent stock weakness attributed to seasonal headwinds in the cough, cold, and allergy category, the manager views this as a temporary factor rather than a structural issue. The decision to increase the position reflects confidence in the risk-reward profile at current levels. Trading at 10x current year earnings provides an attractive entry point for anticipated earnings growth acceleration in 2025 and beyond. The consumer wellness and self-care market offers stable demand characteristics, and Perrigo's leading position in store brands provides defensive qualities with upside potential as operational improvements take hold.

Pitch Summary:
Cerence, Inc. develops human-automotive interface software that provides drivers and passengers with applications ranging from infotainment to safety and, eventually, autonomous driving. We became shareholders when the company was spun off from a previous holding and the market assigned little value to the new company. The stock performed strongly for us initially and we were able to harvest significant profits. We maintained a position despite weak results over the past two years due to our belief that Cerence's large market share, with software in over 50% of cars globally, should lead to significant growth opportunities. During the quarter the stock pulled back on missed earnings and reduced full-year and long-term forecasts. This continued poor fundamental performance convinced us that we might be wrong about the market opportunity, and we sold our entire position.

BSD Analysis:
The manager's original thesis on Cerence was built around the company's dominant market position in automotive interface software, with presence in over 50% of cars globally providing a strong foundation for growth. The investment began as a spinoff opportunity where the market initially undervalued the standalone entity. Despite early success and profit-taking, the manager maintained exposure based on the belief that Cerence's market leadership would translate into significant growth as automotive technology advanced. However, persistent weak fundamentals over two years, culminating in missed earnings and reduced guidance, forced a reassessment of the investment thesis. The complete exit reflects the manager's conclusion that the anticipated market opportunity may not materialize as expected, possibly due to competitive pressures or slower adoption of advanced automotive technologies. The automotive software market faces challenges from tech giants and changing OEM strategies, which may have undermined Cerence's competitive moat despite its historical market share.

Pitch Summary:
National Vision Holdings, Inc. is the second-largest optical retailer in the U.S. and a leader in the low-cost space with its America's Best and Eyeglass World brands. Our interest in the company began after earnings declined due to (1) tough pandemic comps (stimulus checks boosted sales and pulled ahead glasses demand) and (2) eye exam capacity constraints resulting from a challenging optometrist hiring environment. We invested based on our belief that by implementing technology to improve optometrist utilization, the company could return to its historical pattern of steady revenue and earnings growth. National Vision beat earnings during the quarter but missed sales expectations, calling into question its ability to meet expectations for annual results. We reduced our position due to evidence that the company continues to underperform the overall industry, raising suspicion that there could be problems with the business that we did not foresee. We maintain a small position as we believe it is reasonable that their improvement efforts could pay off later this year.

BSD Analysis:
The manager's thesis on National Vision was based on a turnaround story following pandemic-related headwinds and optometrist staffing challenges. The investment rationale centered on technology implementation to improve optometrist utilization and restore historical growth patterns. However, the company's recent performance has undermined this thesis, with sales misses despite earnings beats indicating potential structural issues. The manager's decision to reduce the position reflects growing concerns about the company's ability to regain market share and execute its improvement strategy. While maintaining a small position suggests some residual optimism, the overall stance has shifted bearish due to continued underperformance relative to industry peers. The optical retail sector faces ongoing challenges from online competition and changing consumer behavior post-pandemic. National Vision's struggles to meet sales expectations despite cost management efforts suggest deeper operational or competitive issues that may require more time to resolve than initially anticipated.

Pitch Summary:
Remitly Global, Inc. is a digitally native money transfer company that is taking share in the remittance market from established competitors such as Western Union and MoneyGram. The stock underperformed during the period on slightly lower than expected net new customers, though the company beat top-line EBIDTA estimates and reaffirmed positive guidance for the year. We are not concerned about the softness in net new customers in the historically slow post-holiday period and continue to have confidence in the business model and management team. As such, we maintained our position during the quarter.

BSD Analysis:
The manager maintains strong conviction in Remitly's market share capture story within the large remittance market, viewing temporary customer acquisition softness as seasonal rather than structural. The investment thesis is built on Remitly's digital-native advantage over legacy competitors like Western Union and MoneyGram, enabling superior customer experience and cost structure. Despite missing net new customer expectations, the company's ability to beat EBITDA estimates and reaffirm positive guidance demonstrates operational efficiency and margin expansion capabilities. The manager's confidence in both the business model and management team suggests strong execution against the market opportunity. The remittance market represents a large, stable addressable market with significant digitization potential, positioning Remitly for sustained growth. The post-holiday seasonal weakness appears temporary given historical patterns, supporting the manager's decision to maintain the position. Remitly's technology platform and customer acquisition capabilities create sustainable competitive advantages in the evolving financial services landscape.

Pitch Summary:
Trimble, Inc. is a leading industrial technology company that provides hardware, software, and services primarily to the construction, geospatial, transportation, and agricultural industries. Over the last several years, Trimble has been transitioning toward a subscription-based, recurring revenue model. The stock fell in the quarter when its 10K filing was delayed due to an audit that called for additional documentation of internal controls. We don't view the issue as material and the delay detracted from what otherwise was a very good quarter for its business and maintained our position in the company during the period.

BSD Analysis:
The manager demonstrates conviction in Trimble's long-term transformation story despite temporary administrative setbacks that pressured the stock price. The investment thesis centers on Trimble's successful transition from a hardware-centric model to a subscription-based recurring revenue business across construction, geospatial, transportation, and agricultural markets. This business model transformation enhances revenue predictability, customer lifetime value, and margin expansion potential. The manager's dismissal of the 10K filing delay as immaterial, while noting strong underlying quarterly performance, suggests confidence in the fundamental business trajectory. Trimble's leadership position in industrial technology solutions across multiple end markets provides diversification and growth opportunities. The recurring revenue transition creates more stable cash flows and higher valuation multiples typical of software businesses. The manager's decision to maintain the position during temporary weakness demonstrates conviction in the long-term value creation opportunity.

Pitch Summary:
Alight, Inc. is a leading cloud-based human capital technology provider of enterprise-level software that helps businesses and their employees manage critical human resources functions. Through its investments in software and automation, Alight has built a distinct advantage that allows its customers to deliver HR services at a much lower cost while providing a better experience for employees. We slightly trimmed the position early in the quarter when the stock appreciated on the announced sale of a non-strategic business unit and news that an activist investor had initiated a position. Later in the period, the stock declined when Alight announced weaker-than-expected results. We believe the softer quarter will prove to be an isolated event.

BSD Analysis:
The manager maintains a bullish stance on Alight despite recent quarterly weakness, viewing the company as a leader in cloud-based human capital technology with sustainable competitive advantages. The investment thesis is built on Alight's ability to deliver HR services at significantly lower costs while improving employee experience through software automation investments. This value proposition creates strong customer retention and pricing power in the enterprise HR market. The presence of activist investors and strategic asset sales suggest potential value realization catalysts ahead. The manager's conviction that the weak quarter represents an isolated event rather than fundamental deterioration demonstrates confidence in the underlying business model. Alight's cloud-based platform and automation capabilities position it well to capture market share in the growing HR technology outsourcing market. The combination of cost efficiency, superior user experience, and enterprise-grade solutions creates a compelling competitive moat.

Pitch Summary:
Agios Pharmaceuticals, Inc. is a leader in cellular metabolism and pyruvate kinase activation pioneering therapies for rare diseases. The stock appreciated in the quarter after it announced positive Phase 3 testing results of mitapivat, a therapy for adults with non-transfusion dependent thalassemia, an anemia blood disorder. With these results, we expect an FDA filing for the drug in the back half of this year for approval. The company also sold its 15% royalty on a cancer drug, which provided a boost to its cash position that could be used to further develop and market mitapivat. We trimmed our position in the company based on our valuation discipline as the share price appreciated.

BSD Analysis:
The manager's bull case for Agios centers on the company's leadership position in cellular metabolism and the significant clinical milestone achieved with mitapivat's positive Phase 3 results. The successful trial for non-transfusion dependent thalassemia positions the company for FDA filing and potential approval in the second half of the year, representing a major value catalyst. The strategic sale of cancer drug royalties strengthens the balance sheet and provides capital for mitapivat development and commercialization efforts. Agios' specialized focus on rare diseases through cellular metabolism creates a differentiated competitive position with significant barriers to entry. The manager's disciplined approach to trimming the position on appreciation demonstrates prudent risk management while maintaining exposure to the regulatory approval catalyst. The rare disease market offers attractive pricing dynamics and limited competition, supporting strong commercial potential for mitapivat upon approval.

Pitch Summary:
Chewy, Inc. is an online provider of pet food, supplies, and medications. The company's stock soared during COVID while customers accelerated online purchases and added pets to their families. Following a post-COVID correction, we re-established a position during the quarter at what we believe to be an attractive price. With nearly 80% of revenues recurring—a rarity for an online business—we believe Chewy is well-positioned to activate and grow its customer base. In addition, we can see its pharmacy business starting to improve net sales and margins per active customer and have high confidence in its new CFO. Both, in our view, could add significant value. The stock gained during the period as higher net sales per active customer increased almost 10%.

BSD Analysis:
The manager demonstrates opportunistic value investing by re-establishing a position in Chewy following the post-COVID correction at attractive valuations. The investment thesis is anchored on Chewy's exceptional recurring revenue profile, with nearly 80% recurring revenues being rare for online retail businesses. This provides predictable cash flows and strong customer retention metrics. The emerging pharmacy business represents a significant margin expansion opportunity while the new CFO brings additional operational expertise. The 10% increase in net sales per active customer validates the company's ability to monetize its customer base more effectively. Chewy's dominant position in the growing pet care market, combined with its subscription-like revenue model, creates a compelling long-term growth opportunity. The manager's timing appears astute, capitalizing on temporary market dislocation to establish a position in a high-quality recurring revenue business.

Pitch Summary:
Transmedics Group, Inc. is a medical technology company with a differentiated capability to facilitate organ transplants. Their Organ Care System (OCS) allows doctors to efficiently and successfully harvest and transplant more organs than traditional services, presenting a win-win for patients and surgeons alike. We believe the company's revolutionary technology and proprietary logistics network will continue to take market share while also expanding the addressable market. The company reported increased adoption and buildout of its OCS platform, strong top-line growth in the quarter, and profitability metrics which are ahead of plan. During the quarter, we trimmed our position on valuation discipline as the share price appreciated.

BSD Analysis:
The manager presents a compelling bull case for TransMedics based on the company's revolutionary Organ Care System technology that enables more efficient organ transplants. The investment thesis centers on market share gains and addressable market expansion through superior technology and proprietary logistics capabilities. Strong quarterly performance metrics including increased platform adoption, robust revenue growth, and ahead-of-plan profitability demonstrate solid execution. The manager's decision to trim the position on valuation discipline shows prudent risk management while maintaining conviction in the long-term opportunity. The organ transplant market represents a significant addressable opportunity with clear patient and surgeon benefits driving adoption. TransMedics appears well-positioned to capitalize on this growing market through its differentiated technology platform. The combination of strong fundamentals and expanding market opportunity supports the bullish investment stance.

Pitch Summary:
Amazon.com, Inc. is a global technology company that operates e-commerce, cloud computing, digital advertising, and other businesses. We own Amazon because we believe it is well-positioned to benefit from several strong secular trends, including the shift to online shopping, the growth of cloud computing, and the increasing importance of digital advertising. The company exceeded expectations in the first quarter, with cloud-computing revenue growth accelerating, driven by easing cost optimization pressures and the ramp of generative AI workloads. The North American retail segment drove record operating margins, highlighting the success of Amazon's efforts to improve efficiency and lower its cost to serve. International retail also showed promise, as emerging markets steadily progressed towards profitability. Given the strength across these key segments, we continue to hold the position in the company.

BSD Analysis:
The manager presents a comprehensive bull case for Amazon based on the company's exposure to multiple powerful secular growth trends including e-commerce adoption, cloud computing expansion, and digital advertising growth. The investment thesis emphasizes Amazon's diversified business model and market-leading positions across key segments. Strong first-quarter results validate the manager's confidence, with AWS cloud revenue growth accelerating as enterprise cost optimization pressures ease and generative AI workloads drive incremental demand. The North American retail segment achieved record operating margins, demonstrating the success of multi-year efficiency initiatives and cost structure improvements. International retail operations show encouraging progress toward profitability, particularly in emerging markets, expanding Amazon's global earnings potential. The convergence of operational excellence across all major business segments reinforces the manager's conviction in holding the position. Amazon's ability to monetize AI trends through AWS while maintaining retail market share leadership positions the company to benefit from multiple growth vectors simultaneously.