Investment Pitches

Pitch Summary:
Walt Disney's latest financial results displayed considerable progress, leading to an increase in stock price. The most noteworthy factor was the improved performance of its streaming business. With media profitability recovering, management is optimistically guiding for 20% earnings growth in 2024. This positive outlook is also supported by lower costs and robust performance from its parks division. Walt Disney's streaming service is on track to become profitable by its fiscal fourth quarter. This aligns with our original investment thesis, which expected the direct-to-consumer (DTC) business to move from a loss of $2 billion to a profit of $1 billion. Even after the recent stock price increase, Walt Disney remains undervalued relative to Netflix. We expect this gap to shrink as its streaming business matures and becomes increasingly profitable over the next few years.

BSD Analysis:
Mar Vista maintains a bullish stance on Disney, highlighting the company's streaming turnaround as the primary catalyst. The fund's thesis centers on Disney's direct-to-consumer business transitioning from a $2 billion loss to $1 billion profit, with streaming profitability expected by Q4. Management's guidance for 20% earnings growth in 2024 reflects operational improvements across streaming and parks divisions. The fund views Disney as undervalued relative to Netflix, expecting valuation convergence as streaming margins improve. Lower cost structure and strong parks performance provide additional earnings support. The investment thesis appears well-positioned given Disney's progress toward streaming profitability and diversified revenue streams. Mar Vista's confidence in the streaming transformation suggests they view current headwinds as temporary.

Pitch Summary:
Novonesis is the new name for the recently merged Novozymes and Chr. Hansen. The combined company is a dominant leader in biosolutions, notably enzymes and cultures, for more than thirty different industries and wields a broad biological toolbox to develop innovative solutions across various domains. Half of Novonesis' portfolio focuses on enabling better lives and foods while the other half is dedicated to a better environment such as reducing chemical use and promoting climate-neutral practices. The company enjoys durable competitive advantages due to switching costs, intellectual property, and scale advantages. We project revenues will grow mid-to-high single digits on the strength of innovation, secular demand for safer, cleaner solutions and improved pricing power. Returns on invested capital should march higher as stronger revenue growth and operating leverage drive double-digit profit growth.

BSD Analysis:
Mar Vista initiated a position in Novonesis, the merged entity of Novozymes and Chr. Hansen, viewing it as a dominant biosolutions leader with significant competitive advantages. The fund highlights the company's broad biological toolbox serving over thirty industries with solutions focused on better living and environmental sustainability. Novonesis benefits from switching costs, intellectual property protection, and scale advantages that create durable competitive moats. Mar Vista projects mid-to-high single-digit revenue growth driven by innovation and secular demand for cleaner, safer solutions. The investment thesis centers on the company's ability to improve pricing power and achieve operating leverage as the merger synergies materialize. The fund expects returns on invested capital to improve as revenue growth accelerates and operational efficiency gains drive double-digit profit growth. This represents a play on the secular trend toward sustainable industrial solutions and biotechnology innovation.

Pitch Summary:
Apple's stock was pressured in the quarter as investors fretted over softening demand for smartphones, regulatory action from the US Department of Justice, and the Chinese government mandates restricting iPhone use by government officials. Despite these near-term headwinds, we continue to believe the company remains competitively advantaged and benefits from the Apple ecosystem, which has an installed base of over 2 billion devices and over 1 billion paying subscribers. We believe the Apple ecosystem will support a more predictable cash flow stream, which should grow intrinsic value high-single-digits over our investment horizon.

BSD Analysis:
Mar Vista maintains a bullish stance on Apple despite multiple near-term pressures including smartphone demand concerns, DOJ regulatory action, and Chinese government restrictions. The fund emphasizes Apple's competitive advantages through its ecosystem of over 2 billion devices and 1 billion paying subscribers. The investment thesis centers on the predictable cash flow generation from Apple's services and ecosystem lock-in effects. Mar Vista projects high-single-digit intrinsic value growth, suggesting confidence in Apple's ability to navigate current challenges. The fund views temporary headwinds as disconnected from Apple's long-term competitive positioning and cash generation capabilities. The ecosystem's scale and subscriber base provide revenue stability and growth visibility beyond hardware cycles. This represents a long-term value perspective that looks through cyclical smartphone demand and regulatory uncertainties to focus on Apple's durable competitive advantages.

Pitch Summary:
GXO Logistics experienced a setback this quarter. Customer volumes dropped 9%, stalling any organic growth. This slump was primarily driven by weakness in the omnichannel retail and consumer packaging sectors. As a result, the company's 2024 forecasts fell short of analyst expectations, leading to a drop in share price after the announcement. Despite cyclical headwinds, there are signs of a turnaround for GXO. Management indicated that customer volumes in January have already begun to improve. Additionally, they expect easier comparisons in the later half of 2024 to further aid recovery. To us, this suggests that the first half of 2024 may be the cyclical low point, with a rebound on the horizon. Over the next few quarters, GXO should get back on track towards achieving its long-term financial goals.

BSD Analysis:
Mar Vista views GXO's current weakness as cyclical rather than structural, maintaining a bullish long-term outlook despite near-term headwinds. The fund acknowledges the 9% volume decline and weakness in omnichannel retail and consumer packaging but emphasizes early signs of recovery. Management's indication of improving January volumes and easier second-half comparisons supports the cyclical trough thesis. Mar Vista believes the first half of 2024 represents the cyclical low point for GXO's business. The investment thesis centers on the company's ability to return to its long-term financial targets as customer volumes normalize. The fund appears confident in GXO's market position and operational capabilities despite temporary demand weakness. This represents a contrarian view that current challenges are temporary and that GXO will benefit from eventual demand recovery in logistics and e-commerce fulfillment.

Pitch Summary:
Despite underperforming during the quarter, Adobe remains a powerful player in the creative professional market. We believe the company is well-positioned to capitalize on two key trends: the ongoing shift towards digital commerce and the rise of generative AI. Adobe stands out as an early leader in generative AI, offering both standalone solutions like Firefly and integrated features within established products like Photoshop. This puts them ahead of the curve, attracting both creative professionals and marketing teams within corporations. As a result, Adobe is experiencing strong bookings growth in the mid-teens, which ultimately translates to healthy revenue, earnings, and cash flow. Based on these factors, we project continued intrinsic value growth for Adobe in the low-to-mid-teens range over our investment horizon.

BSD Analysis:
Mar Vista maintains conviction in Adobe despite quarterly underperformance, viewing the company as a leader in generative AI integration. The fund highlights Adobe's dual positioning in digital commerce transformation and AI innovation through products like Firefly and AI-enhanced Photoshop. Strong mid-teens bookings growth demonstrates customer adoption of Adobe's AI-enhanced creative tools across both professional and corporate segments. The investment thesis centers on Adobe's ability to monetize AI capabilities within its established creative software ecosystem. Mar Vista projects low-to-mid-teens intrinsic value growth, reflecting confidence in Adobe's competitive moat and AI leadership. The fund views temporary underperformance as disconnected from strong underlying fundamentals and customer demand. Adobe's early mover advantage in generative AI positions the company to capture significant value from the AI transformation in creative workflows.

Pitch Summary:
Amazon is experiencing a surge in profitability, reflected in significantly higher retail profit margins. Strategic cost reductions in headcount and fulfillment have materialized into financial gains. While the unexpected pandemic-driven demand surge necessitated a rapid expansion of fulfillment infrastructure, this initially impacted operating profits. However, current unit sales growth has effectively reached equilibrium with fulfillment capacity. This balance is leading to positive adjustments to both earnings and intrinsic value estimates. Should the economic climate continue to improve, we believe Amazon's investment potential aligns with its projected 15-20% intrinsic value growth trajectory.

BSD Analysis:
Mar Vista highlights Amazon's operational leverage story as fulfillment capacity utilization normalizes post-pandemic expansion. The fund emphasizes how strategic cost reductions in headcount and fulfillment operations are driving significant retail margin improvement. Amazon's ability to balance unit sales growth with existing fulfillment capacity represents a key inflection point for profitability. The investment thesis centers on the company's transition from growth-at-all-costs to profitable growth, with operating leverage driving earnings expansion. Mar Vista projects 15-20% intrinsic value growth, suggesting confidence in Amazon's ability to monetize its infrastructure investments. The fund views the current environment as favorable for Amazon's margin expansion story. This represents a maturation of Amazon's retail business model, where scale advantages and operational efficiency drive sustainable profitability growth.

Pitch Summary:
TransDigm delivered another impressive quarter, exceeding analyst expectations on both earnings and profitability. Its gross and EBITDA margins widened significantly, driven by strong performances in commercial aerospace and defense. Revenue growth in commercial aerospace aftermarket parts (+27%) and new defense orders were key contributors to this outperformance. Management responded by raising full-year 2024 forecasts for revenue and profitability. Continued growth in both defense and commercial aftermarket should be fueled by recovering passenger traffic, higher aircraft utilization, and a strong bookings backlog. With domestic travel exceeding pre-pandemic levels and international travel nearing full recovery, TransDigm appears well-positioned for continuous growth. This, combined with its efficient operations, should drive long-term stock price appreciation.

BSD Analysis:
Mar Vista views TransDigm as a beneficiary of the aerospace recovery cycle with strong execution driving margin expansion. The company's 27% growth in commercial aerospace aftermarket parts demonstrates the strength of its high-margin, mission-critical components business. Management's raised 2024 guidance reflects confidence in sustained demand from both commercial and defense segments. The fund highlights TransDigm's positioning in the aftermarket cycle, where recovering passenger traffic and higher aircraft utilization drive parts demand. Strong bookings backlog provides revenue visibility, while the company's efficient operations leverage fixed costs for margin expansion. Mar Vista expects the combination of travel recovery momentum and TransDigm's operational excellence to drive continued stock appreciation. The investment thesis centers on the company's exposure to secular aerospace growth trends and its ability to generate superior margins through its specialized product portfolio.

Pitch Summary:
Walt Disney's latest financial results showcased significant progress, leading to an increase in stock price. The most noteworthy factor was the improved performance of its streaming business. With media profitability recovering, management is optimistically guiding for 20% earnings growth in 2024. This positive outlook is also supported by lower costs and strong performance from its parks division. Walt Disney's streaming service is on track to become profitable by its fiscal fourth quarter. This aligns with our original investment thesis, which expected the direct-to-consumer (DTC) business to move from a loss of $2 billion to a profit of $1 billion. Even after the recent stock price increase, Walt Disney remains undervalued relative to Netflix. We expect this gap to shrink as its streaming business matures and becomes increasingly profitable over the next few years.

BSD Analysis:
Mar Vista maintains a bullish stance on Disney, highlighting the company's streaming turnaround as the key catalyst. The fund's original thesis of a $3 billion swing from losses to profitability in the DTC segment is materializing, with streaming profitability expected by Q4. Management's guidance for 20% earnings growth in 2024 reflects operational improvements across streaming, parks, and cost management. The fund views Disney as undervalued relative to Netflix, suggesting significant upside as the streaming business matures. Strong parks performance and media profitability recovery provide additional earnings support. The investment thesis centers on Disney's transformation from a traditional media company to a profitable streaming competitor. Mar Vista expects the valuation gap with Netflix to narrow as Disney's streaming margins improve over the next few years.

Pitch Summary:
ASIRO (TSE:7378) also reported its 1st quarter 2024 result with revenue +40.7% on the prior year. Profit was negative due to a minor impairment of the Bikkore business, which funny enough was the one I was not sold on in our write up, so I am not mad to see focus shifted away from it. Free cash flow amounted to ¥96m and pre-investment EBIT was ¥208m, up 19.3% on the prior year. Overall, the progress is very sound and the trust remains a satisfied shareholder. Interestingly, the group has a target of ¥5.5B in revenue and ¥1.1B in EBIT by October 2025, but has also outlined a 2028 plan which the CEO has quoted in the 1Q transcript: 'Regarding the investments we are currently making, the main focus is on increasing medium- to long-term growth potential rather than short-term performance. We believe that even if we stop investing in FY25, we will be able to concentrate resources on existing businesses and that our growth will not stop.' This therefore implies that the group will be able to generate a drastically improved return on its invested capital over time. Whether that is true or not, it is still exciting to think that it may be possible. Unfortunately, however, after an email I was informed that the company is ceasing it's English disclosures…bad timing.

BSD Analysis:
The manager remains bullish on ASIRO despite mixed Q1 2024 results, viewing the 40.7% revenue growth as validation of the investment thesis. While profits were negative due to Bikkore business impairment, this was viewed positively as the manager had previously expressed skepticism about that division. Strong operational metrics include ¥96M free cash flow and ¥208M pre-investment EBIT (up 19.3% year-over-year), demonstrating underlying business health. Management's ambitious targets of ¥5.5B revenue and ¥1.1B EBIT by October 2025 suggest significant scale potential. The 2028 strategic plan indicates current investments prioritize long-term growth over short-term performance, with management confident that growth momentum will continue even after investment spending moderates in FY25. This implies substantial improvement in return on invested capital as the business matures. The cessation of English disclosures represents a communication challenge but doesn't alter the fundamental investment case. The manager's characterization as a 'satisfied shareholder' despite disclosure changes suggests strong conviction in the operational trajectory and management's capital allocation strategy.

Pitch Summary:
Getbusy (LSE:GETB) released its full year 2023 report which I viewed as somewhat of a disappointing year. Revenue was up 10% in constant currency terms which was 'fine' but the group suffers most from a change in UK R&D tax credit rules which will likely halve their claim (~£0.3m less WC benefit) and a shift towards Smartvault resale partners which pay monthly, diluting the group's proportion of annual renewals. Obviously, this is intended to be worthwhile but this and the R&D claim have resulted in a free cash outflow of (£1.0m) for the year, meaning that the business will likely have to reduce its reinvestment rate to self-fund in the short-medium term future. On a positive note, the group shifted away from non-accountant subscribers in favour of larger firms which has assisted both ARPU (£281 up from £256) and monthly churn (reducing from 0.9% to 8%). Although if you take out the run-rate from the Virtual Cabinet unlimited upgrade that came in in the 1st half, the 2nd half ARR only grew 3% which is far from where I would like it to be. Nevertheless, the group trades at 1.7x EV/Sales and 5.4x their 'standstill EBITDA' and management are heavily incentivised to realise a divestment of some kind at a substantial premium.

BSD Analysis:
The manager expressed mixed sentiment on GetBusy following a 'disappointing' 2023 performance that revealed both operational challenges and strategic positioning issues. Revenue growth of 10% in constant currency was deemed merely 'fine,' while structural headwinds emerged from UK R&D tax credit rule changes (reducing benefits by ~£0.3M) and a strategic shift toward monthly-paying resale partners that dilutes annual renewal concentration. These factors contributed to negative £1.0M free cash flow, likely forcing reduced reinvestment rates and constraining growth funding. However, positive developments include improved customer quality through focus on larger accounting firms, driving ARPU from £256 to £281 and dramatically improving churn from 0.9% to 8% monthly. Excluding Virtual Cabinet upgrades, second-half ARR growth of only 3% remains concerning for a SaaS business. The valuation appears attractive at 1.7x EV/Sales and 5.4x 'standstill EBITDA,' with management incentives aligned toward value realization through divestment at a premium.

Pitch Summary:
Orchard Funding (LSE:ORCH) once again updated the market with the detection of a small case of fraud in their loan book from a specific introducer. This introducer has current loans amounting to £0.5m with the business of which Orchard is raising a full provision for and is reviewing the entire loan book for any further fraudulent introducers. The market reacted in kind with an intraday decline of 33.9% on the date of announcement. The provision was 55% of the company, a purchase of the Gresham stake of ~15% could get them ample voting power force a take private (atleast this is the view of a certain ex-shareholder), so there is a hesitancy to go 'too' heavy on Orchard. It is so cheap that there is a risk that the Takhar family acts on crystallising that.

BSD Analysis:
The manager aggressively added to Orchard Funding following a 33.9% market overreaction to fraud disclosure, viewing it as an exceptional value opportunity. The fraud case involves only £0.5M from one introducer, requiring a provision of less than 3% of book value - a manageable impact that the market dramatically overweighted. Orchard's track record since 2015 IPO demonstrates strong cash generation, with cumulative dividends exceeding the current market price, indicating sustainable profitability. The company trades at approximately 20% of book value despite historically generating high single-digit to low double-digit ROE, creating a compelling risk-adjusted return profile. Majority shareholder Ravi Takhar and the Takhar family's 55%+ ownership provides governance stability and alignment. However, position sizing is constrained by takeover risk - if the Takhars acquire Gresham's 15% stake, they could force a privatization at current depressed valuations. The manager views the stock as 'so cheap' that crystallization of value through a take-private represents both an opportunity and a risk management consideration.

Pitch Summary:
Some of the proceeds were used to participate in the AF Legal (ASX:AFL) entitlement offer after the announcement of the acquisition of the Armstrong Contested Wills & Estates (ACWE) business from GTC Legal, which if you have been following AF Legal you would recognise as the failed acquisition attempt from 2022 under previous management. The ACWE business is complementary to the existing family law business for obvious reasons being an area of law which involves a highly strung family group in a different stage of life, but with many of the same motives as a family law case. On the other hand, ACWE often requires going through the courts in a time-consuming manner and this type of law is often billed near the end of a dispute, meaning that there is substantial working capital demands relative to the average mediation settled family law case. Fortunately, the acquisition includes all the current lockup of the ACWE business, which is the same as the purchase price of the business, meaning that there is little goodwill being acquired (provided that the remaining net assets being acquired are in a neutral position). With this business growing from $2m to $3.1m in revenue over the prior 3 years, not paying a dollar for the business is a great allocation of capital and I am happy to have received double the trust's full entitlement by the acceptance of all applied shortfall shares.

BSD Analysis:
The manager participated aggressively in AF Legal's rights offering to fund the acquisition of Armstrong Contested Wills & Estates (ACWE), viewing it as exceptional value creation. The acquisition represents a strategic retry of a failed 2022 transaction under previous management, suggesting improved execution capability. The ACWE business complements AF Legal's family law practice by serving similar client demographics at different life stages, creating cross-selling opportunities and operational synergies. While contested wills require more court time and have different working capital dynamics than mediated family law cases, the acquisition structure mitigates risk significantly. The purchase price equals the business's current work-in-progress lockup, essentially acquiring the business for free assuming neutral net assets. Revenue growth from $2M to $3.1M over three years demonstrates solid organic expansion. The manager's decision to accept double the trust's entitlement allocation and all available shortfall shares indicates strong conviction in the value proposition and management's capital allocation skills.

Pitch Summary:
Finexia Financial Group (ASX:FNX) was an admission of error and I have sold in full during the month after what I believe was an incredibly amateur showing for their inaugural results call from Neil Sheather who was unable to answer simple questions about significant changes in the balance sheet. The direction of the group is to lean further into private credit which I have doubts of their ability to underwrite and subsequently carry significant leverage. This lean included selling down what I believe was the crown jewel of the group, the co-investments into Stayco and Childcare funds. In addition to this, the group lost Scott Beeton to Arc Funds (ASX:ARC) impairing their ability to expand distribution. After discussion with several people who have been involved with the services and people involved in this business, this brought into question the aptitude of those running the business. The trust lost 18% on this investment over an average holding period of ~5 months, and it represented ~5% of the portfolio for the life of the investment.

BSD Analysis:
The manager completely exited Finexia after identifying multiple red flags that undermined confidence in management's competence and strategic direction. The catalyst was an 'amateur' earnings call where CEO Neil Sheather couldn't address basic balance sheet questions, raising concerns about financial transparency and management quality. The strategic pivot toward private credit was viewed negatively due to doubts about the team's underwriting capabilities and leverage management skills. The sale of high-quality assets (Stayco and Childcare fund co-investments) to fund this pivot was seen as destroying value by disposing of the 'crown jewel' assets. The departure of key distribution executive Scott Beeton to Arc Funds further impaired growth prospects. Due diligence conversations with industry contacts reinforced concerns about management aptitude. The 18% loss over five months on a 5% portfolio position demonstrates the manager's willingness to cut losses quickly when the investment thesis deteriorates.

Pitch Summary:
A relatively small position in Pensionbee (LSE:PBEE) was purchased during the month after their announcement of an expansion into the US, backed by a larger partner who intends to provide substantial marketing spend and know-how. In addition to the already well-oiled UK market there is substantial optionality on the US working out as well. An optically expensive price of ~7x EV/ARR was paid, but I expect the business to be an order of magnitude higher in the next 5 to 10 years.

BSD Analysis:
The manager initiated a position in PensionBee following their US expansion announcement, viewing it as a compelling growth opportunity despite paying a premium valuation of 7x EV/ARR. The investment thesis centers on the company's proven UK operations providing a foundation for US market penetration, supported by a strategic partner offering marketing expertise and capital. The manager expects significant scale expansion over the next 5-10 years, suggesting confidence in the digital pension platform's ability to capture market share in both geographies. The 'optically expensive' valuation is justified by the substantial optionality the US market represents. This appears to be a growth-oriented investment betting on geographic expansion and market disruption in the pension management space. The manager's willingness to pay a premium suggests strong conviction in the long-term growth trajectory. The position sizing as 'relatively small' indicates prudent risk management while maintaining exposure to the upside potential.

Pitch Summary:
APi is the global leader in life and safety services, helping businesses navigate the increasing and complex web of health and safety regulations. Despite its short life as a public company, APi has a long and storied history. The company was founded in 1926 by Reuben L. Anderson in St. Paul, Minnesota. It began as a small insulation contracting and distribution business focused on consolidating companies in order to provide a full suite of services for their customers. After graduating from West Point in 1961, Reuben's son Lee Anderson, bound for a career in the military, returned to Minnesota to lead the company after his father suffered a heart attack. Lee was appointed president in 1964 and immediately began acquiring firms in the construction and fire-protection fields where he saw substantial growth opportunities. Since 2005, APi has completed over 100 acquisitions, adding several quality companies to their portfolio of brands, such as Chubb Fire & Safety, SK FireSafety Group, and International Fire Protection Inc. These acquisitions has allowed them to take significant market share from competitors while expanding their presence into new global markets. In 2019, Lee sold his interest in APi Group for $2.9 billion to J2 Acquisition Limited, a SPAC (Special Purpose Acquisition Company) led by Sir Martin Franklin, James Lille and Ian Ashken. The company went public through the SPAC and all three men serve as board members. Now headquartered in New Brighton, 15-miles north of St Paul, Minnesota, APi operates through two segments: Safety services, which account for approximately 70% of revenues and Specialty services, which represent approximately 30% of revenues. In the Safety segment, the company designs, installs, inspects, and services various fire protection solutions, life safety equipment, and HVAC systems for a wide array of customers. Inspections are required by regulatory bodies (i.e. fire marshals, US government), to be done at least once a year, creating a recurring fee based revenue for the firm. Currently, inspection, service and monitoring fees comprise approximately 50% of the firm's revenues. The target is to reach at least 60% by 2025. As the percentage of service income increases, gross margins are expected to increase by an additional 10-20%. In the Specialty segment, the company provides maintenance, repair and retrofitting services to critical infrastructure such as underground electric, gas, water, sewer, and telecommunications infrastructure to ensure proper functionality. Customers in the segment vary from private and public utilities, healthcare, education, transportation, manufacturing, and government. The two segments complement each other nicely and will often encompass the same customers due to cross-selling capabilities, enabling APi to service the entire facility life cycle. Buildings require inspection and monitoring of their infrastructure across their entire premises, from storm drain and sewer pipes underground, all the way up to fire sprinkler heads and security cameras on the ceiling. APi stands apart from competitors due to its go-to-market strategy of targeting smaller-ticket work to existing facilities and offering quality inspection services first. Management believes on average, $1 of core inspection work leads to $3-4 of future non-inspection service work, ultimately creating very sticky and strong relationships with customers. In contrast, competitors pursue winning bids for higher-ticket installations on new builds, then sell their inspection services once approximately 95% of the construction work is complete. APi's strategy seems to be working well with customer retention rates of over 90% and a large untapped market ahead of them. Currently, the company holds a 10% market share in the US inspection and service market, and is the market leader, with a 5% market share, in the >$60 billion global fire protection systems market. Given APi's size, they have the scale to continue investing in leading technology allowing them to win larger enterprise customers and drive their market share even higher. For example, APi's technology was the first to provide their clients with the ability to generate same-day inspection deficiency reports for customers, ensuring they're compliant with local regulations and up to date on their insurance requirements each year. Since the great financial crisis in 2008, management has directed its focus towards shifting the business away from cyclical, capital-intensive projects and installation work to more defensive, asset-light service work, driving APi into a stable, higher margin, recurring revenue business with greater pricing power. Inspection and service work increased from 15% of revenue in 2008 to 53% at the end of 2023 and continues to grow quickly. Part of this growth is due to increased regulatory requirements in recent years, which have become more onerous for businesses. The NFPA, has more than 300 requirements and codes for new construction, including the installation of sprinkler systems, national fire alarms, signaling codes, etc., which are on average updated every 3-5 years. Meanwhile, the US government is continuously reviewing expanded regulations and essential safety mandates along with state and local governments. These trends have created a meaningful tailwind for APi Group with inspection and service monitoring revenues growing by double-digits every quarter since 2020! Another significant contributor to APi's transition towards a more service and inspection-oriented company was the acquisition of Chubb Fire and Security, a global market-leading safety and security business. In its long history of acquiring comparable companies, APi had never undertaken an acquisition as transformative as Chubb, which management described as a 'center of the fairway' transaction. APi announced the acquisition in July of 2021, from Carrier Global for $3.1 billion which closed at the beginning of 2022. Under Carrier's safety services arm, Chubb was largely a neglected asset that suffered years of decline due to significant underinvestment and mismanagement. For context, Chubb operates in 17 countries, serving over 1.5 million customer sites through 200 branches. Their top 6 markets comprise 90% of their revenue, with over 60% of revenue coming from high-margin recurring services, making it a perfect target for an APi takeover. Since the acquisition, APi has been busy with integration, which has led to more than $40 million in cost savings to date, with expectations of an incremental $80-85 million in savings over the next two years. Over the last decade, the company has built itself into a defensive, non-cyclical, asset-light, service-oriented, recurring-revenue focused business. This positioning has clearly established APi as the dominant leader in a highly fragmented market, ripe for consolidation. We're also pleased with the quality management team. Russ Becker, the company's veteran CEO, is committed to creating a culture of leadership across the organization, whereby everyone in the APi family is known and recognized as a leader, from the field-service inspector all the way up to senior management. Russ and the co-chairman have aligned themselves with the the company and together own approximately 15% of the company. Most importantly, the company generates significant free cash flow for shareholders. With the integration of Chubb and the ongoing growth in the business, the stock increased by 86% in 2023, and at the time of writing is up almost 20% year-to-date. Moving forward, the free cash flow will be used for bolt-on acquisitions, share buybacks, and reinvesting back into their business. As a new addition to our client accounts, we are excited with the future of APi and will continue to add to our position in both client portfolios and our ROCKLINC Partners Fund.

BSD Analysis:
ROCKLINC presents a compelling bull case for APi Group, positioning it as the global leader in life safety services with significant competitive advantages. The manager emphasizes APi's successful transformation from cyclical installation work to a defensive, recurring revenue model, with inspection and service work growing from 15% of revenue in 2008 to 53% by 2023. The company's unique go-to-market strategy of targeting smaller-ticket inspection work first creates sticky customer relationships, with $1 of inspection work generating $3-4 of future service work and customer retention rates exceeding 90%. The transformative $3.1 billion Chubb Fire and Security acquisition has accelerated this transition while providing substantial cost synergies of $40 million realized and $80-85 million expected over the next two years. APi benefits from strong regulatory tailwinds, with increasingly stringent NFPA codes and government safety mandates driving double-digit growth in inspection revenues every quarter since 2020. The company holds a dominant 10% market share in the US inspection market and 5% globally in the $60+ billion fire protection market, providing significant runway for expansion. Management quality is strong with CEO Russ Becker and leadership owning 15% of shares, aligning interests with shareholders. The stock's 86% gain in 2023 reflects the successful execution of this strategy, with strong free cash flow generation supporting future acquisitions, buybacks, and reinvestment.

Pitch Summary:
The Hong Kong and Shanghai Hotels Limited (0045.HK) (THKSH) has been around since 1866, was one of the first companies listed on the local stock exchange and has a colourful history - given its multi-national prime properties - which is scrupulously documented on its website. However, THKSH shares have been rather less exciting than the company itself. Recent prices have seen them trading at levels last seen in 2009; indeed the current price is roughly equivalent to the level (HK$5.80 per share) in a general offer by the then 35% shareholding Kadoorie family to ward off a takeover offer from Lo Yuk Sui; including various trusts in which the family has some entitlement, the "locked" shareholding was around 55% in 2007 and had crept up to 60% by end 2021. In January 2022, the Kadoorie's agreed to purchase 12% of the company – after shareholder agreement not to force a takeover offer was obtained – at HK$12.80 per share to take their holding to 72%. Sino Holdings (1221.HK) owns 5.1% of HKSH as a "long term investment". These appear to the foundation stones for a classic "value trap". That can't be ruled out but we see scope for a significant uptick in earnings, gradual improvement in cash flow and the potential to see a closing of the enormous gap between stated NAV and share price of these amazing trophy assets, for which Middle Eastern interests are currently ravenous. THKSH owns and operates 10 hotel properties with at least 50% ownership across four regions for a total of 2400 attributable rooms. In addition, THKSH owns four retail arcades attached to hotels in the same proportional ownerships, two commercial office buildings in Hong Kong, two mainly residential complexes in Hong Kong and Saigon, a retail tower in Hong Kong and a mixed-use building in Paris. It also owns the Peak Tram in Hong Kong and a golf course in Carmel, California. THKSH also owns 20% of the property and operations in Peninsula Paris and Beverly Hills. At face value, THKSH looks extraordinarily cheap. At end March with the shares at HK$5.95 (market capitalisation HK$9,811million), this compares to the 31 December 2023 "fair value" net assets per share of HK$24.95 – a 76% discount; if we adjust for the net debt of HK$15,033 the notional asset level discount against assets of ~HK$55.65billion is about 55%.

BSD Analysis:
East72 presents Hong Kong and Shanghai Hotels as a deeply discounted opportunity to own trophy ultra-luxury hotel assets trading at a 76% discount to stated net asset value. The company owns and operates the prestigious Peninsula Hotels brand across 12 properties globally, representing some of the world's finest luxury accommodations. The manager identifies significant earnings leverage from the post-COVID recovery, with room rates rising substantially across all regions and new properties in London and Istanbul contributing full-year revenues. The analysis suggests investors are effectively getting the core hotel portfolio for free when accounting for the value of non-hotel assets including prime Hong Kong real estate. Recent transactions in the luxury hotel sector at US$1,176k per room support the company's asset valuations, while THKSH trades at an implied US$642k per room with a 50% haircut on non-hotel assets. The 72% Kadoorie family control provides stability but also potential value realization catalysts through partnerships with Middle Eastern investors who are actively acquiring trophy hotel assets globally.

Pitch Summary:
BIAL is Bangalore International Airport Limited, operator of Kempegowda International Airport located 40km from the centre of Bengaluru, India's third largest – but fastest growing city – with 14million people in its metro area, up from 6.5million twenty years ago. BIAL has a monopoly within a 150km radius until 2033 and has a 30 year concession with a further 30year option to operate Kempegowda. The airport has an estimated catchment area of 250million people (it's worth noting when you read the next section, how long any competing facility may take to be planned, let alone built when the monopoly expires). The dynamics and analysis of Kempegowda are identical to most other "greenfield" airports – gradual expansion and use of adjoining vacant land to add non-airport revenues over time. It's a model seen elsewhere around the world in recent years, but for one exception: the numbers here are far bigger than anywhere outside the Middle East – and it is predominantly a domestic operation for the time being. Dare to dream of the word "hub" sometime down the track. BIAL is now 13% owned by each of Karnataka State Industrial & Infrastructure Development Corporation and Airports Authority of India 13% - two Government instrumentalities. The remaining 74% is 20% owned by Siemens Project Ventures – part of the €134billion market cap Siemens AG – and through two entities by Fairfax India Holdings (FIH-U.TO). Fairfax India - a specialist holding company managed by the Toronto based Fairfax Financial Holdings (FFH.TO) chaired by the ex-patriate Indian, Prem Watsa. FIH has a gross asset base of US$3.82billion (including cash of $175million) with borrowings of $500million and creditors of $120million, to make a pre-tax equity base attributable to unit holders of ~$3.06billion. FIH's equity holding in BIAL is by far its largest asset, valued at 31 December 2023 at a carrying value of $1.6billion. There are twelve other assets of which five are listed companies. The two most significant of these are IIFL Finance and CSB Bank, each accounting for ~11% of assets at 2023 year end. Based on the 31 December 2023 NAV of US$21.85 per share, FIH-U trades at a 32% discount to this stated figure.

BSD Analysis:
East72 identifies Fairfax India Holdings as an attractive vehicle to access BIAL (Bangalore International Airport), which operates a monopolistic airport serving India's fastest-growing major city. The investment thesis centers on BIAL's exceptional growth profile, with Bengaluru's metro area expanding from 6.5 million to 14 million people over twenty years and a catchment area of 250 million people. The airport benefits from a monopoly within 150km until 2033 and substantial expansion plans to increase capacity from current levels to 90 million passengers annually by 2037. The manager highlights the regulated revenue structure that provides visibility, with aeronautical charges set to increase significantly in FY2025, and strong growth in non-aeronautical revenues as passenger volumes recover. FIH trades at a 32% discount to NAV, providing discounted access to this high-quality infrastructure asset. The implied entry multiple of 10.2x EV/EBITDA for BIAL appears reasonable compared to other listed airports, with significant upside potential from an eventual IPO as the asset matures.

Pitch Summary:
Belron – a staggering compounder in vehicle glass repair and replacement. Belron is one of the premier global businesses we have come across, but it's really only in the past five years that a confluence of factors have come together to enable it to earn the returns commensurate with its global positioning. Belron has virtually every beneficial attribute outside of an IT growth or natural monopoly business you could wish to find. Market leadership in every one of its major markets, pricing power, network effect, a material technology advantage in an industry where technological change – in vehicle glass - becomes a moat of vast significance. The company produces prodigious cash flow which has facilitated generous dividends and capital returns to the equity owners via private equity-style financial engineering and debt refinancing. Since late 2021, Belron has been owned by four shareholder groups: Staff and management with 11%; The private equity group Clayton, Dubilier and Rice (CD+R) via an SPV (20.5%); An investor group of San-Francisco based Hellman & Friedman, Singapore's GSIC and Blackrock (18.2%); and The Belgian listed, family-controlled conglomerate, D'Ieteren Group (DIE.BR) with 50.3% and which is equity accounted in D'Ieteren's books. Hence, D'Ieteren is the only realistic avenue for public investment in Belron. Moreover, since D'Ieteren is 63% controlled by the eponymous family whose predecessors incorporated the company as a coach builder in 1805, and is only listed in Brussels, plus there are other assets within the holding company, the vast majority of investors seem happy to let the opportunity pass by. Dynasty Trust started acquiring shares in D'Ieteren in the third quarter of 2023 at an implied valuation of Belron (on our maths) 58% lower than the November 2021 transaction where the investor group acquired their shares from CD+R. D'Ieteren shares are up about 31% since then, but the ongoing performance of the holding company's largest asset by far, continues to more than justify the Top 10 position in our portfolio, despite the four-fold run up in the shares since late 2020. That came after a fifteen-year period where the shares did very little at all.

BSD Analysis:
East72 presents a compelling case for D'Ieteren as a discounted entry point into Belron, a dominant global vehicle glass repair and replacement business. The manager highlights Belron's exceptional competitive positioning with market leadership across all major markets, significant pricing power, and technological advantages in ADAS (Advanced Driver Assistance Systems) that create substantial moats. The explosion in profitability since 2019, with operating margins expanding from 6% to over 20%, demonstrates the structural tailwinds from increasing value-added services and technological change in windscreens. D'Ieteren's 50.3% stake in Belron provides the only public avenue to access this exceptional business, trading at an implied 25% discount to the December 2021 private equity transaction value. The manager calculates an effective entry multiple of 15.8x after-tax earnings for 2024, which appears attractive for a business with strong structural growth drivers. The potential for a Belron IPO within 2-3 years, driven by private equity shareholders' typical holding periods and upcoming debt maturities, could provide significant value realization catalysts.

Pitch Summary:
We opened a new position in EssiLux in Q1. We have been following the business through the merger of Essilor with Luxottica, and the subsequent prolonged integration period. We think the challenges of integration have now been largely overcome, with the new company uniquely positioned as the dominant and only completely vertically integrated player in the large and growing global eye-care industry. For instance, we estimate EssiLux now commands c. 45-50% share of branded frames and lenses, c. 10-12% share of retail in key markets of US and Western Europe, and owns the second largest managed care provider in the US, which is a crucial customer acquisition tool for the business. The industry itself is still under-served and secularly growing. We estimate c. 2-3% consistent and structural volume growth for the business from ageing populations and increasing incidence of myopia amongst children. As the industry #1 operator, EssiLux spends c. 75% of the industry's R&D, which we think the business is now positioned to start to monetise in three distinct ways. Firstly, through the launch (in the US and Western Europe) and scale-up (in China and Asia) of its myopia management business, which is clinically proven to cut myopia progression in children by up to 67%. We think this market could eventually represent c. EUR 2.5bn of revenues for EssiLux, or 10% of the Group currently. Secondly, through the launch of its invisible hearing aid embedded within eyeglass frames for patients with mild hearing loss. With c. 1bn such patients globally, and majority of them also wearing eyeglasses, even a conservative take-up assumption could drive very meaningful revenue upside to the business. We estimate this could also represent up to EUR 2bn revenue upside for EssiLux in the long-term. Finally, we have acquired and trialled EssiLux's 2nd generation smart glass product produced in a joint venture with Meta. This generation represents a significant advance from the previous one, and we see this as a highly attractive product proposition and way for wearers of eyeglasses to benefit from GenAI applications (e.g. text translation, maps guidance, hands-free photography and video recording etc). We conservatively estimate just c. EUR 500m of revenues from this product for EssiLux, with substantial scope for upside. Together, we think these innovations can take Group organic growth sustainably to 5-7%, which, with ongoing margin expansion and cash generation sets the business for sustained low teens TSR, with scope for further upside from better than our conservatively expected take-up of the above and upcoming innovations. We view the stock as attractively valued for this return profile and have, hence, opened a new position in the name. We are travelling to Milan in May to meet with senior management and will further assess our holding thereafter.

BSD Analysis:
Lansdowne initiated a new position in EssilorLuxottica following the completion of integration challenges, viewing it as the dominant vertically integrated player in global eye-care. The company commands 45-50% market share in branded frames/lenses and 10-12% retail share in key Western markets, with the second-largest US managed care provider. The manager sees 2-3% structural volume growth from aging populations and rising childhood myopia. EssiLux's 75% share of industry R&D spending positions it to monetize three innovation areas: myopia management (EUR 2.5bn revenue potential), invisible hearing aids (EUR 2bn potential), and smart glasses with Meta (EUR 500m conservative estimate). These innovations could drive 5-7% sustainable organic growth, supporting low-teens total shareholder returns through margin expansion and cash generation. The fund views the valuation as attractive for this return profile and plans management meetings to assess the position further.

Pitch Summary:
Relx is a global leader in providing productivity enhancing professional services encompassing Risk, Legal and Scientific research/publishing services. The business benefits from several secular growth drivers, such as demand for tools and analytics to manage risk & minimise fraud, rising spend on R&D etc. In addition, we view the business as very well placed to benefit from being able to incorporate GenAI services within its offerings, specifically within its legal tools, analytics and databases products. We view that even with conservative assumptions, this alone could further enhance Group organic growth by up to c. 100bps, taking the Group to structural organic growth of c. 7% p.a., driven almost entirely from hard-currency markets of the US and Western Europe. When coupled with ongoing margin expansion and strong cash generation, we estimate the business can sustainably deliver low-mid teens TSR, which leaves the current valuation of c. 26x PE highly attractive given it represents a discount to the market on a PEG basis.

BSD Analysis:
Lansdowne views RELX as well-positioned to capitalize on secular growth drivers including demand for risk management tools, fraud prevention analytics, and rising R&D spending. The manager sees significant potential from GenAI integration across legal tools, analytics, and databases, estimating this could add 100bps to organic growth. This would drive structural organic growth to approximately 7% annually, primarily from hard-currency markets in the US and Western Europe. The combination of growth acceleration, margin expansion, and strong cash generation supports sustainable low-to-mid teens total shareholder returns. At 26x PE, the fund views the valuation as attractive on a PEG basis, representing a discount to the broader market. RELX's professional services model provides defensive characteristics while offering meaningful growth optionality through technology integration.