Investment Pitches

Pitch Summary:
Rivian Automotive, Inc. is a US-based electric vehicle manufacturer focused on the design, development, and production of electric adventure vehicles, pickup trucks, and commercial delivery vans. We own Rivian because we believe the company is a future leader in the growing electric vehicle market with a strong brand, compelling products, and a vertically integrated business model. During the quarter, Rivian's stock price was driven by its progress on cost reduction initiatives and management's stated confidence in achieving positive gross margins by the end of 2024. The recent announcement of a joint venture with Volkswagen, involving up to $5 billion in investment, also significantly boosted Rivian's financing outlook and validated its technology. We trimmed our position in Rivian given the strong performance in the quarter.

BSD Analysis:
The manager maintains a bullish outlook on Rivian Automotive, positioning the company as a future leader in the rapidly expanding electric vehicle market. The investment thesis emphasizes Rivian's differentiated approach through adventure-focused vehicles, strong brand identity, and vertically integrated manufacturing model. Key operational progress includes meaningful advancement on cost reduction initiatives and management's confidence in achieving positive gross margins by year-end 2024, representing a critical profitability milestone. The transformative Volkswagen joint venture, worth up to $5 billion, provides substantial validation of Rivian's technology platform while significantly strengthening the company's financial position and funding runway. This partnership reduces execution risk and provides access to Volkswagen's global manufacturing expertise and scale. The manager's decision to trim the position following strong quarterly performance demonstrates disciplined profit-taking while maintaining conviction in the long-term electric vehicle adoption trend and Rivian's competitive positioning within the adventure vehicle segment.

Pitch Summary:
Vistra Corp. is an integrated retail electricity and power generation company with operations across 20 U.S. states and Washington D.C. We identified Vistra as a likely beneficiary of the projected growth of power-hungry data centers, spurred by the rise of generative AI, increasing electricity demand, and higher power prices. The stock performed well after the company delivered stronger than expected earnings. Management also provided forward guidance that exceeded investors' expectations and reaffirmed shareholder-friendly plans for sizable share repurchases through 2025. We trimmed our position in the quarter following the strong performance and continue to see strong long-term prospects for the company.

BSD Analysis:
The manager presents a compelling bull case for Vistra Corp. centered on the company's positioning to benefit from the artificial intelligence-driven surge in data center electricity demand. The investment thesis capitalizes on the intersection of generative AI growth, increasing power consumption, and favorable pricing dynamics in electricity markets. Vistra's integrated model across retail and generation provides exposure to both volume growth and margin expansion opportunities. The company's strong quarterly performance, with earnings exceeding expectations, validates the manager's thesis about demand trends. Management's guidance raise and commitment to substantial share repurchases through 2025 demonstrates confidence in cash flow generation and shareholder-friendly capital allocation. The decision to trim the position following strong performance suggests disciplined portfolio management while maintaining conviction in long-term prospects. The AI-driven electricity demand theme positions Vistra as a beneficiary of a multi-year secular growth trend.

Pitch Summary:
U.S. Bancorp provides banking, payments, investment, trust, and mortgage services to consumers, businesses, and institutions. We own the company because of its historically strong profitability and consistent dividend payouts. The stock underperformed in the quarter due to a downward revision in net interest income guidance, driven by the ongoing shift from non-interest-bearing deposits to higher-cost interest-bearing accounts. To help mitigate the lower net interest income, management is focused on expense control initiatives. We are holding our position in U.S. Bancorp as we monitor the trajectory of net interest income and the success of these expense reductions.

BSD Analysis:
The manager maintains a bullish stance on U.S. Bancorp based on the bank's historically strong profitability metrics and consistent dividend distribution track record. The investment thesis appears grounded in the company's operational excellence and shareholder-friendly capital allocation policies. However, the bank faces near-term margin pressure from deposit mix shift, as customers migrate from non-interest-bearing accounts to higher-yielding alternatives in the current rate environment. This dynamic has forced management to revise net interest income guidance downward, creating headwinds for profitability. Management's response includes implementing expense control initiatives to partially offset the margin compression. The manager's decision to hold the position demonstrates confidence in management's ability to navigate the challenging operating environment through cost discipline. The strategy suggests patience with the cyclical nature of banking while maintaining conviction in the company's fundamental quality and long-term earnings power.

Pitch Summary:
The Walt Disney Company operates a diversified entertainment business with theme parks, media networks, and streaming services. We own Disney because we believe its strong brand, valuable IP, and expanding streaming offerings will drive sustainable long-term growth. The company's stock, however, underperformed in the quarter due to concerns about a slowdown in growth at its theme park division. While park revenue still grew by 10% year-over-year, management's commentary suggested a moderation in post-pandemic demand and rising costs, leading to a disappointing outlook for park operating income in the second half of the year. This overshadowed the positive news that the company's streaming segment, driven by strong subscriber growth at Disney+, reached profitability ahead of schedule. We held our position and will continue to monitor the performance of the theme park division.

BSD Analysis:
The manager maintains a bullish view on Disney despite quarterly underperformance, citing the company's strong brand equity, valuable intellectual property portfolio, and expanding streaming capabilities as key long-term growth drivers. The investment thesis appears focused on Disney's ability to monetize its content across multiple platforms and distribution channels. Near-term concerns center on the theme parks division, where management indicated a moderation in post-pandemic demand recovery and rising operational costs, leading to disappointing guidance for park operating income. However, the manager highlights a significant positive development with Disney's streaming segment achieving profitability ahead of schedule, driven by strong Disney+ subscriber growth. This milestone validates the company's streaming strategy and demonstrates progress in the competitive direct-to-consumer market. The decision to hold the position suggests confidence that streaming profitability can offset theme park headwinds over time.

Pitch Summary:
Liberty Sirius XM Group is a tracking stock that mirrors Liberty Media's ownership of Sirius XM Holdings, a leading provider of satellite radio and audio entertainment in North America. We own the stock because we believe Sirius XM possesses a durable business model with a stable subscriber base and a robust free cash flow profile. Furthermore, the stock has historically traded at a significant discount to its net asset value, providing an opportunity to acquire a substantial stake in Sirius XM at a lower price. The stock underperformed in the quarter as investor sentiment was dampened by concerns over slowing subscriber growth and competition from streaming services. We continue to have conviction in the company's competitive position and long-term value and held our position in the company.

BSD Analysis:
The manager maintains a bullish stance on Liberty Sirius XM Group despite recent underperformance, viewing it as an attractive way to gain exposure to Sirius XM Holdings at a discount to net asset value. The investment thesis centers on Sirius XM's durable business model characterized by a stable subscriber base and robust free cash flow generation. The manager acknowledges near-term headwinds including slowing subscriber growth and increased competition from streaming services, which pressured the stock during the quarter. However, they express continued conviction in the company's competitive positioning and long-term value proposition. The tracking stock structure provides an opportunity to acquire exposure to Sirius XM at what the manager believes is a meaningful discount. The decision to hold the position despite quarterly underperformance demonstrates confidence in the fundamental thesis and suggests the manager views current weakness as temporary rather than structural.

Pitch Summary:
PlayAGS, Inc. is a designer and supplier of slot machines and other gaming hardware for the gaming industry. Among the many things we like about this company are its seasoned management team, extensive gaming hardware design experience, and the recurring revenue generated through the gaming devices it sells to customers. The stock jumped on news that it would be acquired by private equity at approximately 40% above the prior 90-day average share price. We trimmed our position in PlayAGS during the quarter and will trade opportunistically as the transaction date comes into focus.

BSD Analysis:
The manager highlights PlayAGS's attractive business model characteristics including experienced management, proven gaming hardware design capabilities, and recurring revenue streams from device sales. The investment thesis was built on the company's competitive position in gaming equipment manufacturing with predictable cash flows. The private equity acquisition at a 40% premium validates the quality of the business model and management execution. The manager's neutral stance reflects the M&A situation rather than operational concerns, with tactical position management around deal timing. The premium paid suggests private equity recognition of the recurring revenue model's value and potential for operational improvements. The gaming industry's equipment replacement cycle provides steady demand for innovative slot machine designs.

Pitch Summary:
Silk Road Medical, Inc. is a medical technology and device company that has pioneered a minimally invasive approach to the treatment of carotid artery disease. The firm's transcarotid artery revascularization (TCAR) procedure has only a low double-digit share of a ~$1.2 billion market currently dominated by carotid endarterectomy (CEA), a more invasive procedure that carries a higher risk of procedural complications and death. The stock rose when it announced that it would be acquired by Boston Scientific at a 38% premium over its prior 60-day average share price. We trimmed the position on the news and will opportunistically liquidate as the transaction closing date approaches.

BSD Analysis:
The manager outlines Silk Road Medical's compelling market opportunity in carotid artery disease treatment through its minimally invasive TCAR procedure. The investment thesis was based on market share gains in a $1.2 billion market dominated by more invasive CEA procedures with higher complication rates. The low double-digit market penetration suggested significant runway for growth given the superior clinical outcomes. However, the Boston Scientific acquisition at a 38% premium validates the strategic value and technology differentiation. The manager's neutral stance reflects the M&A situation rather than fundamental concerns, with tactical position management around deal closure timing. The acquisition premium demonstrates the value of innovative medical device technologies that improve patient outcomes in large addressable markets.

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 its revolutionary Organ Care System technology that improves organ transplant success rates. The investment thesis highlights both market share gains in existing transplant procedures and market expansion through enabling previously unusable organs. The proprietary logistics network creates a sustainable competitive moat in this specialized healthcare niche. Strong quarterly results showing increased platform adoption, robust revenue growth, and ahead-of-plan profitability metrics validate the commercial execution. The manager's disciplined approach to trimming on valuation appreciation demonstrates risk management while maintaining conviction in the long-term opportunity. The "win-win" value proposition for patients and surgeons supports sustainable adoption and pricing power in this critical healthcare application.

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 conviction in Alight's cloud-based HR technology platform despite recent earnings disappointment. The investment thesis centers on the company's competitive advantage through software automation that delivers cost savings and improved employee experience for enterprise clients. The manager's tactical trading approach demonstrates portfolio discipline, trimming on strength from asset sale news and activist involvement, then holding through weakness. The characterization of weak results as an "isolated event" suggests confidence in the underlying business model and long-term growth trajectory. Alight's enterprise-focused SaaS model provides recurring revenue visibility and scalability. The human capital management market continues expanding as companies digitize HR functions, supporting the structural growth opportunity.

Pitch Summary:
Byrna Technologies, Inc. is a leading at-home self-defense company that designs, manufactures, and sells non-lethal alternative defense solutions for consumers and law enforcement. Primarily sold through Byrna's e-commerce store and Amazon storefront, Byrna's non-lethal handheld and shoulder-fired personal security devices do not require a background check or firearm license. We believe the company's innovative solutions have an expansive opportunity for growth. While the company continues to execute well and fundamentals remain strong, the stock price softened in the quarter as a result of relatively low trading volumes and subsequently, we trimmed our position.

BSD Analysis:
The manager presents a bullish case for Byrna Technologies based on its differentiated non-lethal defense solutions targeting both consumer and law enforcement markets. The investment thesis highlights the regulatory advantage of products that bypass background check requirements, creating a broader addressable market than traditional firearms. The direct-to-consumer distribution strategy through e-commerce and Amazon provides scalable growth potential with attractive margins. Despite strong fundamental execution, the manager acknowledges position trimming due to liquidity concerns reflected in low trading volumes. The "expansive opportunity for growth" suggests early-stage market penetration in a large total addressable market. The company's innovative approach to personal security addresses growing safety concerns while avoiding regulatory friction.

Pitch Summary:
LegalZoom.com Inc. is a leading online platform providing small businesses with legal, compliance, and tax services that allow them to start and operate within the required regulations. The stock underperformed during Q2 on weak guidance from management that indicated its small businesses, the company's core customers, were under pressure. We believe that the company will continue to gain share due to its strong brand and network effects which will allow them to sell on a broad range of services to small businesses. We also see room for significant operating leverage as the expanded range of products and services begins to generate revenue after several years of investment. We added to our position during the period on share price weakness.

BSD Analysis:
The manager maintains a bullish stance on LegalZoom despite Q2 underperformance driven by weak guidance reflecting pressure on small business customers. The investment thesis centers on the company's competitive moat through strong brand recognition and network effects, enabling cross-selling opportunities across an expanding service portfolio. The manager sees significant operating leverage potential as multi-year product investments begin monetizing. The decision to add to the position during weakness demonstrates conviction in the long-term value proposition. This contrarian approach suggests confidence that current small business headwinds are temporary while the structural growth opportunity remains intact. The platform's regulatory compliance focus provides defensive characteristics in an increasingly complex business environment.

Pitch Summary:
FIVN was a top detractor in the quarter after reporting better-than-expected first quarter earnings accompanied by revenue guidance for the second quarter that was slightly below expectations. The 2Q24 shortfall is related to the pace at which some large deals will realize revenue through the year, while the company kept its full year 2024 guidance the same. FIVN reported $247 million of revenue, 13% year-over-year revenue growth and $7 million higher than estimates, and $0.48 of EPS, 17% growth and $0.10 better than estimates. Five9 is a leader in providing cloud-based software to contact centers. The company's suite of applications provides contact center agents with a unified communication platform (voice, email, text, chat, web, social) and a desktop of tools to help agents engage customers more quickly and effectively. FIVN is well-positioned as contact centers transition to the cloud and has high customer retention (112% net revenue retention last quarter). The company doubled its strategic sales team over the past year and signed new partnerships with AT&T, CDW and Microsoft. We believe the company can grow its top line in the high teens, while improving on its 1Q 61% gross margin and 11% operating income margin, leading to 20%+ EPS growth for the foreseeable future.

BSD Analysis:
The manager maintains a bullish outlook on Five9 despite near-term guidance concerns, focusing on strong underlying fundamentals and secular cloud migration trends. Q1 results demonstrated solid execution with 13% revenue growth to $247 million, exceeding estimates by $7 million, and EPS of $0.48 beating by $0.10. The slight Q2 guidance miss relates to large deal timing rather than fundamental demand weakness, with full-year guidance unchanged. Five9's leadership position in cloud-based contact center software benefits from the ongoing digital transformation of customer service operations. The unified communication platform spanning voice, email, text, chat, web, and social channels provides comprehensive solutions for modern contact centers. Strong customer retention metrics with 112% net revenue retention indicate high customer satisfaction and expansion opportunities. Strategic investments including doubling the sales team and partnerships with AT&T, CDW, and Microsoft should accelerate growth. The manager projects high-teens revenue growth with margin expansion from current 61% gross margins and 11% operating margins, targeting 20%+ EPS growth driven by operating leverage.

Pitch Summary:
ADYEN was a top detractor in the quarter following a 1Q24 trading update that included higher than expected volumes (+46% year-over year growth versus 37% expected), but with lower-than-expected take rates (147 basis points versus 155 basis points). This resulted in revenue that was slightly below consensus estimates. Payment volume growth was strong across all segments with digital leading the way at +51%. The 3-basis-point decline in take rate was attributed to existing customers growing rapidly and hitting price reduction tiers. We believe that volume growth is more important than near-term take rate movements. The company operates a global payments platform, integrating the full payments stack to serve modern global merchants. Unlike many of its legacy peers, Adyen's roots are in technology designed specifically for multi-platform sellers. The company's platform was fully built in-house on a single code base and operates as a single, integrated end-to-end network, giving it an advantage over competitors that have separate platforms for gateway, risk management, processing, issuing, acquiring and settlement. The company's single platform also allows its merchant customers to use one payment service provider globally across all commerce channels (in-store, on the web, and on mobile devices), providing them lower payment costs, a single back end, a single contract and better visibility of end customers. We believe that the transition to next-generation, single-provider, omni-channel payment processing is in its infancy, and we believe the company will continue to take market share against its competitors. The company should have healthy revenue growth in the coming quarters as it rolls out more products and features, and we expect margins to expand as it leverages its fixed cost infrastructure.

BSD Analysis:
Despite being a detractor due to take rate compression, the manager maintains conviction in Adyen's superior technology platform and long-term growth trajectory. Payment volumes exceeded expectations with 46% year-over-year growth versus 37% expected, demonstrating strong underlying demand. Digital segment leadership with 51% growth highlights Adyen's competitive positioning in high-growth channels. The manager correctly prioritizes volume growth over near-term take rate fluctuations, as existing customers hitting price reduction tiers indicates successful client expansion. Adyen's technological differentiation through a single, integrated platform built in-house provides significant advantages over legacy competitors using multiple disparate systems. The unified global platform offers merchants lower costs, operational simplicity, and enhanced customer visibility across all commerce channels. The manager views the transition to next-generation omni-channel payment processing as early stage, positioning Adyen to capture market share. Expected margin expansion through fixed cost leverage and new product rollouts should drive healthy revenue growth despite temporary take rate headwinds.

Pitch Summary:
DIS was the top detractor in the quarter following a mixed earnings report, with operating income, EPS, and free cash flow all roughly in line, but weakness in segment revenue and operating income. The Entertainment segment saw slightly weaker than expected revenue and operating income due to lighter Content Sales and Licensing partially offset by stronger Linear Networks and Direct-to-Consumer (DTC). The DTC business grew, with Disney+ Core adding more subscribers than expected (+6.3m v +5.8m) and generated $47 million of operating income versus expectations of breakeven. The Sports segment generated revenue below expectations, but operating income was better than expected, both driven by ESPN. The Experiences segment beat both revenue and operating income expectations on the back of strong international parks results, price increases at Walt Disney World and cruises, but Disneyland unexpectedly had negative growth in the quarter. In addition, guidance for slightly weaker Experiences revenue and operating income growth as visitor growth normalizes post-Covid also weighed on the stock. DIS is blessed with a deep library of unique content that includes both live sports (providing large, non-time shifted audiences) and incomparable brands, including Disney, Marvel, Pixar and Lucasfilm, as well as the ABC network, which make it among the best-positioned media companies in the new landscape to combine multi-channel and DTC distribution. In addition, its theme park, cruise and theatrical businesses continue to be generational rites of passages for children and young adults around the world. We think CEO Bob Iger is doing a steady job rationalizing investments in each of the company's segments, which should lead to higher and more consistent profitability at the theme parks, better value realization in the linear assets, and consolidation of the company's DTC assets leading to higher profitability sooner. We therefore expect DIS to grow its free cash flow significantly over the next 3-4 years, from its depressed $1 billion in 2022, to more than double 2023's $4.9 billion, exceeding its previous $10 billion peak in 2018.

BSD Analysis:
Despite being a top detractor, the manager maintains a constructive bull thesis on Disney based on unique content assets and operational improvements under CEO Bob Iger. The mixed earnings showed resilience with Disney+ Core exceeding subscriber expectations by adding 6.3 million versus 5.8 million expected, while achieving $47 million operating income against breakeven expectations. The manager emphasizes Disney's unparalleled content library including live sports, Disney, Marvel, Pixar, and Lucasfilm brands that provide competitive advantages in the evolving media landscape. Theme parks demonstrated strength internationally with successful price increases, though Disneyland faced unexpected headwinds. The investment thesis centers on Iger's strategic rationalization across segments driving margin improvement and cash flow recovery. The manager projects significant free cash flow growth from the depressed $1 billion in 2022 to potentially exceeding the previous $10 billion peak by 2026-2027. Disney's multi-generational appeal and diversified revenue streams across parks, streaming, and content licensing provide defensive characteristics during the streaming transition.

Pitch Summary:
Apple shares were a top contributor in the quarter after a difficult start to the year. The stock was down nearly 11% in the first quarter, driven by factors we discussed in last quarter's update, including an antitrust case, an Apple Watch patent dispute, and slowing China iPhone sales. Ultimately the company's fiscal 2Q24 earnings report delivered a slightly better than expected quarter on both the top and bottom lines and guidance that was also better than investor expectations. Better 2Q24 revenue and gross margins were driven by stronger than expected Services revenues, which grew 14% year-over-year, continuing a multi-quarter trend of accelerating growth. Gross margins of 46.6% expanded from last quarter's decade high of 45.9%. Guidance of $90 billion of revenue for 3Q24 was roughly in line with published expectations, reassuring investors. The stock also got a boost from research reports suggesting that iPhone sales may see a boost from an upgrade cycle driven by the upcoming rollout of Apple's AI assistant. Although near-term trends are a bit muted, Apple is carrying lean inventory into an iPhone refresh cycle later this year and easing comps in the rest of its portfolio. With an installed base of 2.2 billion active devices and significant growth in the company's recurring revenue Services segment, we believe that Apple remains one of the most innovative, best positioned and most profitable companies in the mobile technology industry.

BSD Analysis:
The manager presents a recovery story for Apple following a challenging first quarter decline of 11% due to antitrust concerns, patent disputes, and China headwinds. The Q2 earnings demonstrated resilience with better-than-expected results across revenue and margins, restoring investor confidence. Services revenue growth of 14% year-over-year represents accelerating momentum in the high-margin recurring revenue segment. Gross margins expanded to 46.6% from the previous decade high of 45.9%, showcasing operational efficiency improvements. The manager highlights Apple's massive installed base of 2.2 billion active devices as a competitive moat driving Services growth. Upcoming iPhone refresh cycle with AI integration could catalyze an upgrade supercycle, supported by lean inventory positioning. Despite near-term headwinds, the combination of margin expansion, Services acceleration, and AI-driven product innovation reinforces Apple's position as a dominant mobile technology franchise. The Q3 guidance of $90 billion revenue meeting expectations provides stability for the recovery narrative.

Pitch Summary:
GOOG was a top contributor in the second quarter following strong first quarter earnings driven by better-than-expected Search and YouTube revenues and a reacceleration in the company's Cloud business. AI advances helped improve targeting and measurement in the company's advertising businesses, including in YouTube's fast growing Shorts segment. Google Search revenue was $46 billion, YouTube revenue was $8 billion, and Cloud revenue was $10 billion, 3%, 5% and 2% better than expected respectively. Margins in both operating segments, Services and Cloud, were also ahead of expectations leading to $1.89 of EPS, 25% higher than estimates. With its high margin business model (42% EBITDA margins last quarter), continued strength across its core Search and YouTube franchises, and continued growth and expanding profitability in its still relatively small Cloud business, we continue to view Alphabet as among the best-positioned secular growth franchises in the market. Additionally, GOOG shares trade at a compelling 19x the Street's 2025 EPS estimate, a discount to the Russell 1000 Growth Index.

BSD Analysis:
The manager maintains a strong bull thesis on Alphabet based on robust fundamentals across all business segments and attractive valuation. The company delivered impressive Q1 results with Search, YouTube, and Cloud revenues all exceeding expectations by 3%, 5%, and 2% respectively. AI integration is driving improved targeting and measurement capabilities, particularly benefiting YouTube's rapidly growing Shorts segment. The manager emphasizes Alphabet's exceptional profitability with 42% EBITDA margins and diversified revenue streams providing stability. Cloud business reacceleration demonstrates progress in the competitive enterprise market while maintaining expanding profitability. EPS of $1.89 came in 25% above estimates, reflecting operational excellence across segments. The valuation argument is compelling at 19x 2025 EPS estimates, trading at a discount to growth indices despite superior fundamentals. The combination of secular growth positioning, margin expansion, and reasonable valuation makes Alphabet an attractive long-term holding.

Pitch Summary:
NVDA shares were our top contributor in the quarter following blowout 1Q results and guidance driven by strong data center sales (+427% year-over-year). The company reported revenue of $26 billion, up 262% year-over-year, and EPS of $6.12, up 462% year-over-year and 9% ahead of expectations. Revenue guidance for 2Q of $28 billion was 5% above very high expectations. The artificial intelligence arms race kicked-off by ChatGPT and Alphabet's Bard, among others, has generated tremendous demand for Nvidia's next generation graphic processors. NVDA is the leading designer of graphics processing units (GPU's) required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming-focused chip vendor to one of the largest semiconductor/software vendors in the world. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. Following recent results, Jensen Huang, founder and CEO of NVIDIA stated in the company's press release, "a trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process."

BSD Analysis:
The manager presents a compelling bull case for NVIDIA driven by the AI revolution and exceptional financial performance. The company delivered extraordinary Q1 results with 262% revenue growth and 462% EPS growth, significantly beating expectations. NVIDIA's dominant position in GPU technology positions it as the primary beneficiary of the AI infrastructure buildout, with data center sales surging 427% year-over-year. The manager highlights NVIDIA's successful transformation from a gaming-focused company to a diversified semiconductor leader with over 20% revenue CAGR over the past decade. The asset-light business model generates substantial free cash flow while expanding operating margins. CEO Jensen Huang's vision of a trillion-dollar infrastructure transition from general purpose to accelerated computing validates the massive addressable market opportunity. The strong Q2 guidance of $28 billion revenue, exceeding high expectations, demonstrates continued momentum in AI demand.

Pitch Summary:
EPAM Systems: The company provides digital platform engineering and software development services worldwide. Slowing demand has pressured the stock, and shares declined further after management significantly reduced its revenue guidance. This allowed us to purchase a cash generative business at an attractive valuation.

BSD Analysis:
The manager positions EPAM Systems as a high-quality technology services company available at a compelling valuation following recent operational challenges. The company specializes in digital platform engineering and software development services for global clients. Weakening demand conditions have created headwinds for the business, culminating in management's decision to significantly reduce revenue guidance. This guidance cut triggered additional selling pressure, creating what the manager views as an attractive entry opportunity. The investment thesis emphasizes EPAM's strong cash generation capabilities and proven business model in digital transformation services. The manager appears confident that current demand weakness is cyclical rather than structural, making the current valuation particularly attractive for a business of this quality. This represents a classic value play on a temporarily distressed but fundamentally sound technology services provider.

Pitch Summary:
Endava: Endava is a UK-based technology consulting firm that provides a variety of IT services –including infrastructure, artificial intelligence, cloud-based software and payment services – to businesses worldwide. After robust IT spending during the pandemic, Endava has experienced slowing client demand more recently, leading to a decline in the stock price. However, we believe the long-term trend toward digitization is a strong tailwind, and we used this opportunity to purchase the stock at a significant discount.

BSD Analysis:
The manager presents Endava as a compelling technology services play experiencing temporary cyclical headwinds. The UK-based firm operates across multiple high-growth IT verticals including AI, cloud infrastructure, and payment services for global enterprise clients. Following the pandemic-driven IT spending boom, the company has faced a natural deceleration in client demand, pressuring shares lower. The manager views this as a temporary cyclical downturn rather than a structural impairment to the business model. They emphasize the secular digitization trend as a powerful long-term catalyst that should drive sustained demand for Endava's services. The investment thesis relies on the company's positioning in high-value technology consulting segments and the expectation that current demand weakness will prove transitory. This represents a growth-at-a-reasonable-price opportunity in the technology services sector.

Pitch Summary:
Globe Life: The company provides insurance services such as whole and term life insurance, supplemental health policies and annuities to lower- and middle-income customers. Globe Life declined in April following news of an informal SEC investigation into allegations of unethical business practices. This gave us an opportunity to purchase the stock at a deep discount to intrinsic value. We believe the current controversy is overblown, and we expect the stock to recover.

BSD Analysis:
The fund manager views Globe Life as an opportunistic value play following regulatory concerns. The company operates in the life and supplemental health insurance space, serving lower- and middle-income demographics. An informal SEC investigation into alleged unethical business practices created significant downward pressure on the stock price in April. The manager believes this regulatory overhang is temporary and overblown relative to the company's fundamental business quality. They capitalized on the market dislocation to acquire shares at what they consider a substantial discount to intrinsic value. The thesis centers on a recovery trade as regulatory concerns subside and the market refocuses on the company's underlying insurance operations. This represents a classic contrarian value investment where temporary negative sentiment creates an attractive entry point.