Investment Pitches

Pitch Summary:
Waste Management (WM) is the largest integrated waste collection, transfer, and disposal company in North America. Its large active weight in the Fund reflects our confidence in the business. WM’s unmatched landfill and transfer station network creates formidable barriers to entry, supporting durable pricing power and steady cash flows. We view the company as uniquely positioned to enhance returns through landfill gas capture and automation investments that improve efficiency, margins, and long-term profitability.

BSD Analysis:
Waste Management is one of the purest examples of a legal monopoly hiding in plain sight. Landfills are impossible to permit, politically toxic to approve, and absolutely essential — which gives WM extraordinary pricing power. Trash volumes track population and economic activity, not consumer sentiment. Route density and scale advantages make competition irrational at the margin. Inflation is a feature here, not a bug, because pricing resets annually. Capital intensity is high, but returns are protected by regulation and barriers to entry. Recycling noise comes and goes, but landfill economics dominate the model. This is not a growth stock — it’s a cash-flow fortress. WM compounds because society has no alternative.

Pitch Summary:
Copart (CPRT) operates a leading global online auction platform for vehicle remarketing, anchored by a dominant North American auto salvage business. The investment case is supported by a rational duopoly industry structure, ownership of strategically located real estate assets, and a strong balance sheet with consistent free cash flow generation. Shares underperformed in 2025 due to normalization in salvage volumes and tempered insurance loss trends. We reduced the position late in the year to fund investments in more attractive opportunities.

BSD Analysis:
Copart owns the digital marketplace for salvage vehicles, a niche that compounds better the worse things get. Total-loss rates rise with repair costs and vehicle complexity, feeding auction volume. The asset-light marketplace model throws off extraordinary margins. Geographic expansion extends the runway without breaking the model. Investors worry about used-car cycles and miss the structural drivers. Data, scale, and logistics create brutal barriers to entry. Every insurance claim Copart touches reinforces the network. This is disruption already completed. Ugly assets make beautiful economics.

Pitch Summary:
Marsh McLennan (MMC) is a leading global professional services firm with dominant positions in insurance brokerage, risk management, and investment consulting. The business is supported by strong competitive advantages, stable end- market demand, high client retention, and consistent free cash flow generation supporting reinvestment and returns. Shares underperformed in 2025 amid valuation compression, modest organic growth deceleration, and rotation favoring higher-beta investments. We reduced the position during the year, but it remains a core portfolio holding.

BSD Analysis:
Marsh & McLennan is risk infrastructure masquerading as a consulting and brokerage firm. As regulation, climate exposure, cyber risk, and litigation complexity increase, demand for advice and placement only grows. Insurance brokerage economics are quietly powerful, with pricing tied to premiums rather than claims risk. Switching costs are cultural and operational, not contractual. Investors treat MMC as slow-growth professional services and miss the embedded recurring revenue. Scale matters enormously when negotiating with carriers and serving multinationals. Capital-light cash flow supports steady reinvestment and returns. This is complexity monetized, not cyclical consulting.

Pitch Summary:
Accenture (ACN) is a global management consulting, technology services, and outsourcing (BPO) company. The company benefits from entrenched positions with large businesses around the world, implementing key technology transitions such as Enterprise Resource Planning (ERP) systems, cybersecurity, and cloud migrations. While it remains a quality business, Accenture is exposed to meaningful AI risk relating to their core consulting business model, and we sold the position in favor of companies with strengthening competitive advantages and accelerating growth prospects.

BSD Analysis:
Accenture is the professional-services firm companies call when change is unavoidable and failure is expensive. Its scale, talent density, and client relationships create a moat few consultancies can replicate. Digital transformation, cloud migration, and AI adoption drive multi-year demand, not one-off projects. Growth can slow when clients hesitate, but Accenture rarely loses relevance. Margins are protected by offshore delivery and process discipline. Cash flow supports buybacks and acquisitions. This is not a consulting hype story. It’s execution at enterprise scale. Accenture compounds by being indispensable.

Pitch Summary:
Eli Lilly and Co (LLY) is a leading global pharmaceutical company with a broad portfolio spanning diabetes, obesity, oncology, and immunology. The investment case reflects a market-leading position in diabetes and weight loss therapeutics addressing significant unmet need, a deep pipeline aimed at sustaining this leadership position, and a strong execution track record. Eli Lilly shares rallied since we initiated the position in June 2025 due to strong financial results from its current portfolio and encouraging pipeline developments.

BSD Analysis:
Eli Lilly is rewriting the playbook for large-cap pharma by delivering real growth, not just defensive stability. Its obesity and diabetes drugs have created demand that outstrips manufacturing capacity. Pricing power is enormous, but political scrutiny is part of the trade. Unlike one-hit wonders, Lilly backs blockbusters with a deep pipeline. Margins expand as scale catches up to demand. Capital is being reinvested aggressively, not hoarded. This is not a short-cycle pharma trade. It’s a structural earnings reset. Lilly’s success has changed expectations for the entire sector.

Pitch Summary:
Amphenol (APH) is a designer and manufacturer of interconnect systems, sensors and broadband cable. In our view, the company benefits from a strong competitive position across a diverse range of end markets. In 2025, Amphenol shares rallied in response to accelerating financial results in its data center end market, fueled by AI-related demand. We trimmed shares throughout the year and ultimately sold the position due to heightened stock price valuation. We continue to closely monitor the stock and could reestablish a position should its valuation improve.

BSD Analysis:
Amphenol is a masterclass in how boring industrial components can generate exceptional returns. Its connectors sit inside everything from data centers to aircraft to medical devices. Design wins last for years, creating annuity-like revenue streams. The company thrives on fragmentation, acquiring small niche players and improving execution. Margins are steady because value comes from reliability, not commoditization. AI, EVs, and defense all increase connector content per system. Capital allocation is disciplined and relentless. This is not a cyclical gamble. It’s an industrial compounder hiding in plain sight.

Pitch Summary:
KLA Corporation (KLAC) is a leading global semiconductor production equipment manufacturer, specializing in process control tools that detect and reduce defects in advanced chip manufacturing. The share price advance in 2025 reflects growing investor recognition of KLA’s pricing power, structural growth, and mission-critical role in advanced semiconductor fabrication. We reduced the position during the year in order to capture strong gains, but the company remains a core portfolio holding.

BSD Analysis:
KLA is the quality-control gatekeeper of the semiconductor industry — if chips can’t be inspected, they can’t be sold. As chip geometries shrink and complexity explodes, inspection and metrology become non-negotiable. AI, advanced packaging, and leading-edge nodes all drive KLA’s relevance higher. The business enjoys exceptional margins because its tools are differentiated and irreplaceable. Cyclicality exists, but the baseline demand curve keeps rising. Service revenue from the installed base smooths downturns. Customer concentration is high, but switching costs are brutal. This is semiconductor infrastructure at its cleanest. KLA wins as long as physics keeps getting harder.

Pitch Summary:
In recent years, Deutsche Bank has benefited from dramatically improved operating performance and a growing appreciation of its ability to generate attractive returns on capital. The bank has made substantial progress in escaping its long-standing reputation as a low-quality, low-return institution. Today, Deutsche Bank is increasingly seen as profitable, well-managed, and excessively capitalized. Management is positioned to ramp shareholder returns as capital continues to build and regulatory pressure moderates. These improvements have led to a meaningful re-rating of the stock.

BSD Analysis:
Deutsche Bank is the ultimate comeback story investors never fully trust — for good reason. Years of restructuring have stripped out risk, shrunk the balance sheet, and refocused the franchise on areas where it can actually win. Fixed income trading and corporate banking have quietly stabilized earnings. Litigation overhangs have faded, freeing up capital and management attention. That said, this is still a leveraged institution in a volatile macro environment. Execution must remain boring to keep credibility intact. Upside comes from consistency, not ambition. This is not a heroic turnaround anymore. It’s a prove-it bank trading at a skepticism discount.

Pitch Summary:
In recent years, Bank of Ireland has benefited from dramatically improved operating performance, leading to growing appreciation of its ability to generate attractive returns on capital. The company has escaped its former reputation as a low-quality, low-return bank burdened by regulation. Today, it is viewed as highly profitable, well-managed, and excessively capitalized. Capital continues to accumulate, enabling increased shareholder returns as regulatory burdens ease. This reputational shift has driven valuation improvement more commensurate with the company’s fundamentals.

BSD Analysis:
Bank of Ireland is a domestic banking franchise that has benefited enormously from higher interest rates and tighter cost discipline. The balance sheet today is far cleaner than in prior cycles, with capital levels that finally look conservative rather than fragile. Earnings power has reset higher thanks to deposit repricing, even as competition inches back. Credit quality remains solid, but Ireland’s small, open economy makes macro sensitivity unavoidable. Management has shifted from survival mode to shareholder returns, which matters. This is not a growth bank — it’s a normalization and capital-return story. The stock still trades with crisis-era skepticism. If credit stays contained, that discount narrows. Bank of Ireland rewards investors who believe the cleanup actually stuck.

Pitch Summary:
During the quarter, the Fund initiated a position in T.S. Lines Ltd., a container shipping company focused on Asia-Pacific routes. Trade between China and Southeast Asia is expected to grow faster than other global shipping lanes due to changing trade patterns. The company operates smaller vessels well-suited to shallow ports, providing flexibility unavailable to owners of very large ships. Limited newbuild supply of smaller vessels contrasts with oversupply risk in larger container ships. T.S. Lines trades at a discount to replacement value, generates strong operating cash flow, and maintains a dividend policy that should result in a double-digit yield.

BSD Analysis:
T.S. Lines is a regional container shipping operator exposed to brutal freight cycles. Pricing power evaporates quickly when capacity loosens, and leverage amplifies pain. Investors mistake short-term rate spikes for sustainable economics. Niche routes provide some insulation but not immunity. Asset intensity limits flexibility in downturns. Timing dominates fundamentals in shipping equities. This is not a compounder. It’s a cycle trade where entry and exit matter more than the story.

Pitch Summary:
Harbour Energy has been a very eventful holding period since our initial investment. A significant part of our thesis revolves around a highly competent management team executing a counter-cyclical acquisition strategy. Over a short period, Harbour has dramatically reduced its exposure to the U.K. North Sea, expanded into capital-friendly jurisdictions, and become one of the world’s largest independent offshore producers. Management has executed asset sales, tax-advantaged acquisitions, and a transformative U.S. deepwater acquisition, all while remaining well-financed and generating significant free cash flow. We believe the company’s valuation continues to suffer from legacy U.K. association despite a materially improved asset mix and strategic positioning.

BSD Analysis:
Harbour Energy is a cash-flow-driven upstream producer built for capital discipline rather than growth theatrics. Its North Sea exposure brings political noise, but also high-margin barrels and infrastructure leverage. Investors reflexively discount UK energy assets, ignoring the free cash flow reality. Decline rates are manageable and reinvestment needs are modest. Capital returns matter more than production growth here. Balance-sheet repair has shifted the equity math meaningfully. Commodity prices drive earnings, but discipline determines outcomes. This is E&P without empire building, where cash actually reaches shareholders.

Pitch Summary:
During the fourth quarter and full-year 2025, Capstone Copper provided one of the Fund’s largest contributions to performance. When we initiated the investment years ago, copper miners were deeply out of favor amid fears of slowing Chinese growth and a global equity obsession with asset-light quality businesses. Since then, appreciation has grown for how copper-intensive renewable energy systems, electric vehicles, and data center infrastructure truly are. At the same time, supply growth has been constrained by aging mines, long permitting cycles and capital discipline. We continue to believe high-quality copper mines are indispensable assets whose value is not fully recognized by the market.

BSD Analysis:
Capstone is a copper producer positioned for scale as assets transition from build to operate. Near-term execution and ramp risk dominate sentiment more than geology. Investors focus on cost volatility and ignore rising throughput potential. Copper demand doesn’t need to explode for economics to improve meaningfully. Operating leverage is significant once steady-state production is reached. Balance sheet stress is the gating factor. This is development risk tied to a favorable commodity. Execution decides the outcome.

Pitch Summary:
During the fourth quarter and full-year 2025, Lundin Mining provided one of the Fund’s largest contributions to performance. We have been optimistic, over a long holding period, that the indispensable nature of copper to modern economies and the exceptional difficulty of maintaining current global supply would become better appreciated. Copper demand has become increasingly linked to electrification, renewable energy, electric vehicles and, more recently, data center and power infrastructure build-outs. Meanwhile, copper supply growth has proven elusive due to declining ore grades, scarcity of new discoveries, and decade-long timelines required to bring new mines into production. We believe ownership of scarce, high-quality copper assets represents an underappreciated form of long-term quality.

BSD Analysis:
Lundin Mining is leveraged to copper and base metals where supply scarcity matters more than spot price noise. Asset quality and mine life separate it from promotional miners. Electrification and infrastructure spending support long-term demand even through cyclical drawdowns. Investors trade copper sentiment and miss portfolio durability. Capital discipline reduces downside risk relative to peers. Balance sheet flexibility enables opportunistic growth. When copper tightens, quality producers rerate first. This is mining with restraint.

Pitch Summary:
Regarding Warrior Met Coal (“Warrior”), in our preceding shareholder letter we commented upon Warrior’s progress towards the construction of a third metallurgical coal mine called Blue Creek. Very shortly after we published that letter in October 2025, Warrior unexpectedly disclosed that the company had been able to begin commercial-scale mining at Blue Creek roughly eight months ahead of schedule, resulting in an immediate positive impact on revenue and cash flow and an upgrade to 2025 production estimates. Those developments helped propel Warrior shares during this most recent quarter. Going forward, the completion of Blue Creek ultimately portends far higher coal production, much lower capital spending and a likely return to significant cash distributions to shareholders.

BSD Analysis:
Warrior Met is a pure-play metallurgical coal producer supplying an input steelmaking still can’t replace at scale. ESG narratives don’t change blast furnace realities. Supply discipline and high-quality reserves give Warrior pricing torque when markets tighten. Earnings are volatile, but cash generation can be enormous at the top of the cycle. Investors price terminal decline while steel demand quietly persists. Capital returns matter more than expansion here. This is scarcity economics, not growth investing. Ugly assets can still be extremely profitable.

Pitch Summary:
During the quarter, the Fund initiated a new position in Flagstar Bank following significant balance sheet restructuring. The bank has reduced exposure to stressed New York rent-regulated multifamily loans through asset sales, write-downs, and restructurings. A $1 billion capital infusion, leadership changes, and asset divestitures have strengthened the institution. Despite these actions, shares trade at a large discount to tangible book value due to lingering regulatory and political concerns. The Fund believes Flagstar has a credible path toward normalized profitability by 2027.

BSD Analysis:
Flagstar is a balance-sheet story still digesting strategic missteps and industry stress. Mortgage exposure adds cyclicality, but credit quality matters more than volume in this environment. Deposit stability and funding costs are the real swing factors investors watch closely. The franchise isn’t broken, but confidence has been. Investors price in lingering systemic risk aggressively. Any normalization in rates and housing activity improves earnings optics quickly. Execution discipline now matters more than growth ambition. This is banking math with sentiment overhang.

Pitch Summary:
UniFirst is controlled by its founding family through a dual-class share structure and has delivered mediocre operating performance over the past several years. Despite ambitious operational improvement plans, execution has been slow and shareholder returns have lagged peers such as Cintas. The company has repeatedly rebuffed takeover attempts from Cintas, including a December 2025 offer at a substantial premium. The Fund believes the current offer represents superior present value compared with management’s uncertain multi-year turnaround plan. Failure to engage meaningfully with the bidder would, in the Fund’s view, indicate poor alignment with minority shareholders.

BSD Analysis:
UniFirst is industrial services masquerading as a uniform company, and that distinction matters. Once a customer outsources uniforms, safety gear, and facility services, switching becomes operationally annoying and rarely worth the effort. Route density and scale quietly drive margin stability through cycles. Demand is tied to employment levels, but churn stays low because the service is embedded in daily operations. Investors overlook UniFirst because it lacks a growth narrative. Yet pricing power exists through service reliability, not branding. Cash generation is consistent and underlevered. This is boring services compounding the hard way.

Pitch Summary:
Specialty finance company Encore Capital Group provided an important contribution on the back of better-than-anticipated financial performance. Improved collections and disciplined underwriting supported stronger-than-expected results. Management has navigated a volatile credit environment with conservatism and focus on returns. The company continues to benefit from scale advantages in the debt recovery industry. The Fund believes Encore is positioned to compound value as credit normalization unfolds.

BSD Analysis:
Encore Capital operates in debt purchasing and collections — an industry nobody loves but one that thrives in economic stress. Consumer credit deterioration is a tailwind, not a threat. Returns depend on underwriting discipline and collection efficiency, not volume. Regulatory scrutiny is constant, but scale and compliance investment create barriers to entry. Earnings can be volatile quarter to quarter, but long-term economics are attractive. Capital deployment timing matters more than macro forecasting. This is not a feel-good business. It’s countercyclical cash generation. When consumers struggle, Encore tends to outperform.

Pitch Summary:
U.S. pain medication specialist Collegium Pharmaceutical generated a strong performance contribution in the quarter after producing record quarterly revenue. The company disclosed improved operating income guidance alongside a new share repurchase authorization. Management’s execution continues to demonstrate the durability of its abuse-deterrent pain portfolio. Cash flow generation has enabled both balance sheet strength and shareholder returns. The Fund views Collegium as a well-managed specialty pharma business with attractive capital allocation discipline.

BSD Analysis:
Collegium is a specialty pharma company built around abuse-deterrent pain medications — a niche shaped as much by regulation as by medicine. Its portfolio throws off strong cash flow despite limited pipeline excitement. Capital allocation has been disciplined, focusing on debt reduction and shareholder returns. Growth is modest, but margins are real. Patent life and pricing pressure remain the main risks. This is not innovation-driven pharma. It’s cash-flow pharma with regulatory protection. Investors get paid for stability, not breakthroughs. Collegium works as long as discipline holds.

Pitch Summary:
Fourth quarter performance was led by North American aluminum manufacturer Kaiser Aluminum following strong quarterly financial results and progress on its multi-year investment to upgrade and expand production capacity in aerospace and packaging. Management’s ongoing capital investments are designed to enhance higher-margin aerospace output and improve operational efficiency. The company has been executing on a long-term strategy to reposition its asset base toward more value-added products. These initiatives have begun to translate into improved earnings power and investor confidence. The Fund views Kaiser as a beneficiary of disciplined capital allocation and end-market recovery.

BSD Analysis:
Kaiser Aluminum is a specialty aluminum producer focused on value-added products rather than commodity tonnage. Aerospace, packaging, and automotive exposure provide differentiated demand drivers. Pricing power comes from processing complexity, not raw aluminum prices. Cyclicality remains, but margins are more resilient than commodity peers. Energy and input costs add noise, but contracts offer partial insulation. Capital intensity is manageable relative to cash generation. This is not a metal price lottery ticket. It’s a manufacturing execution story. Kaiser wins by staying specialized and disciplined.

Pitch Summary:
We bought a new position in H.U. Group, a Japanese diagnostics company. Its base business is the provision of central lab services to Japanese hospitals and the manufacturing of diagnostics equipment and reagents. What attracted us most was its pioneering position in blood-based biomarkers for Alzheimer’s disease testing. Clinical practice in Alzheimer’s diagnostics is moving to blood tests, a cheaper, less intrusive, but no less precise option, and H.U. Group has a strong first mover advantage. This segment of the business has grown multi-fold in the past year, and we expect that fast pace of growth to continue.

BSD Analysis:
H.U. Group is Japan’s leading diagnostics and laboratory testing platform, embedded deeply in healthcare workflows. Routine testing demand is non-discretionary, providing resilience across economic cycles. Scale and logistics matter more than branding in diagnostics, and H.U. has both. Investors fixate on reimbursement pressure and demographic headwinds. Yet aging populations increase test volumes over time. Margin expansion depends on automation and mix, not price hikes. This is healthcare infrastructure disguised as a services business. Slow growth, high durability.