Investment Pitches

Pitch Summary:
Tyson Foods (TSN) is one of the world's largest chicken, pork, and beef processors. The company's brands include Tyson, Jimmy Dean, Hillshire Farms, and Ballpark. Tyson shares have declined from a high of over $100 in 2022 to the current mid-$50 range due to unprecedented simultaneous cyclical price pressures in each of its businesses. The company is reducing its costs and making operating improvements to withstand the current downturn. This should allow for a meaningful profit recovery when conditions improve. We believe the demand for protein will remain strong and that Tyson shares have a meaningful upside from the current price. The most recent earnings report showed improving profits.

BSD Analysis:
Matrix views Tyson Foods as a compelling turnaround opportunity following a significant 45% decline from 2022 highs to the mid-$50s range. The manager attributes the weakness to unprecedented cyclical pressures across all protein segments simultaneously, creating an unusually challenging operating environment. Tyson's cost reduction initiatives and operational improvements position the company to benefit meaningfully when industry conditions normalize. The investment thesis centers on the structural demand for protein remaining robust despite current headwinds. Matrix's confidence is reinforced by recent earnings showing early signs of profit improvement, suggesting the turnaround strategy is gaining traction. The company's diversified protein portfolio across chicken, pork, and beef provides multiple recovery vectors. Tyson's strong brand portfolio including Jimmy Dean, Hillshire Farms, and Ballpark offers pricing power and market positioning advantages. The manager's emphasis on 'meaningful upside' suggests significant appreciation potential from current depressed levels.

Pitch Summary:
American Electric Power (AEP) is a high-quality electric utility company with over 5.5 million customers in 11 states. The Utility sector was the worst-performing market sector in 2023. AEP's share price decline created an opportunity to buy a company with predictable earnings and dividend growth. Historically, Utility companies have been more defensive when the economy slows, and markets become more turbulent. But there is also a growth story emerging for the sector as demand for electricity to power investment in new technology (AI, data centers) is projected to rise rapidly through the end of the decade. The company recently added two new directors nominated by activist investor Carl Icahn, who made a large investment in the company. We are optimistic about the company's appreciation potential.

BSD Analysis:
Matrix initiated a position in American Electric Power following significant sector underperformance in 2023, viewing the decline as an attractive entry point for a high-quality utility with predictable cash flows. The manager emphasizes AEP's defensive characteristics during economic uncertainty while highlighting an emerging growth narrative driven by AI and data center electricity demand. The involvement of activist investor Carl Icahn, who secured board representation, adds a potential catalyst for operational improvements and shareholder value creation. AEP's 5.5 million customer base across 11 states provides geographic diversification and regulatory stability. The utility sector's projected electricity demand growth through the decade, particularly from technology infrastructure, represents a structural tailwind. Matrix views the combination of defensive income characteristics and growth potential as compelling at current valuations. The manager's optimism about appreciation potential suggests confidence in both the turnaround story and long-term sector dynamics.

Pitch Summary:
Tenet Healthcare Corp. is a top-ten U.S. operator of hospitals, outpatient surgery centers, and healthcare business process services. We initiated our position in late 2022 as we believed that the market's short-term focus on COVID-caused staffing and admissions challenges overshadowed the value of Tenet's long-term strategy of growing outpatient surgery centers. Outpatient surgery provides a cost-effective and patient-centered level of care that patients prefer and a business model that drives significantly higher returns to Tenet above that of the legacy hospital model. Tenet surged nearly 40% in the first quarter as the company executed nine hospital sales at valuations above where the stock trades. These divestitures drive three improvements to incremental return on equity by allowing Tenet to reduce debt, accelerate the corporate shift to higher-returning outpatient surgery centers, and free more capital to be returned to shareholders via stock buybacks. While the divestitures temporarily depress Tenet's earnings growth, it accelerates our core thesis. We remain optimistic about the company's newfound capital flexibility, and during the quarter we maintained our holding in Tenet.

BSD Analysis:
The manager maintains strong conviction in Tenet Healthcare's strategic transformation from traditional hospitals to higher-return outpatient surgery centers. The investment thesis, initiated in late 2022, was based on the market's myopic focus on COVID-related challenges while overlooking the long-term value creation from the outpatient strategy. Outpatient surgery centers offer superior economics through cost-effectiveness, patient preference, and significantly higher returns versus legacy hospital operations. The recent 40% surge was driven by successful execution of nine hospital divestitures at valuations above the stock's trading multiple, validating management's capital allocation strategy. These transactions create a triple benefit: debt reduction, acceleration of the shift to higher-return outpatient centers, and increased capital available for shareholder returns through buybacks. While divestitures temporarily pressure earnings growth, they accelerate the core transformation thesis and improve return on equity. The manager views the newfound capital flexibility as a key competitive advantage for future value creation.

Pitch Summary:
Sweetgreen, Inc. operates restaurants serving fresh and healthy foods in the United States. The salad-focused restaurant concept has invested heavily to develop a captive network of growers that help ensure the freshness of its produce, a distinct competitive advantage. Additionally, management's investment in automation technology, known as the "Infinite Kitchen," has shown strong promise of significant labor cost savings, a reduction of order fulfillment errors, and increased restaurant throughput. While Infinite Kitchen has only been tested in a handful of stores to date, initial data supports the potential for automation technology to significantly improve both margins and average unit volumes. The stock rose in the quarter on accelerating same-store sales growth and better than expected guidance from management. In addition, investors took notice that material margin improvements could quickly reduce Sweetgreen's cash burn, a prior source of concern, and during the quarter we added to our position as fundamentals continued to improve.

BSD Analysis:
The manager demonstrates growing conviction in Sweetgreen's transformation story, adding to the position as fundamentals improve. The investment thesis is built on two key competitive advantages: a captive network of growers ensuring produce freshness and the promising "Infinite Kitchen" automation technology. The automation platform addresses critical restaurant industry challenges by reducing labor costs, minimizing order errors, and increasing throughput. While still in early testing phases across limited stores, initial data validates the technology's potential to drive significant margin expansion and volume growth. Recent strong performance was driven by accelerating same-store sales growth and better-than-expected guidance, signaling operational momentum. The potential for material margin improvements to reduce cash burn addresses a previous investor concern and represents a key inflection point. The manager's decision to increase the position reflects confidence in the company's ability to scale its differentiated model and achieve sustainable profitability through operational leverage.

Pitch Summary:
SMART Global Holdings, Inc. is a diversified technology company with leading market positions in memory, LEDs, high-performance computing (HPC), and the Internet of Things (IoT). Our interest was piqued when the company hit a rough patch in 2019-early 2020 as several factors led to an earnings decline. Volatility in its memory business caused by weakness in Brazil, new product investments the company had made ahead of revenue, and order delays in its HPC business all converged. While none of these developments are particularly unusual, it is uncommon for all three to turn negative at the same time. Our thesis was that the company's impressive new management team could not only smooth out some of the volatility in the business but also drive growth through superior capital allocation and organic investment. With the stock trading at less than 8x earnings at the time of our investment (Q3 2020), we believed the risk/reward was excellent. The stock was strong in the quarter due to positive earnings results and guidance. The memory business appears to be in a cyclical upturn within a strong long-term secular growth trend driven by increased memory content in everything from phones to data center equipment to cars. Smart Global remains a leader in HPC implementation for AI, a market that remains strong, and there is anticipation that the company's efforts to enhance its go-to-market strategy should gain traction. We believe the long-term risk/reward is still strong and maintain a large position in the stock, though we reduced our position during the quarter as part of our regular risk management process.

BSD Analysis:
The manager maintains a bullish long-term view on SMART Global Holdings despite recent position trimming for risk management purposes. The original investment thesis from Q3 2020 centered on an attractive valuation below 8x earnings during a temporary convergence of negative factors affecting memory, HPC, and new product investments. The manager's confidence was anchored by strong new management capable of smoothing business volatility and driving growth through superior capital allocation. Recent strong performance was driven by positive earnings and guidance, with the memory business entering a cyclical upturn supported by secular growth from increased memory content across devices and data centers. The company's leadership position in HPC for AI applications provides additional growth exposure to a robust market. Enhanced go-to-market strategies are expected to gain traction and drive further growth. While maintaining a large position, the recent reduction reflects disciplined risk management rather than fundamental concerns about the long-term opportunity.

Pitch Summary:
Navitas Semiconductor Corp. designs and produces highly efficient power semiconductors and is the leader in Gallium Nitride (GaN) technology, which enables superior energy efficiency and charging speeds over traditional silicon. This material is difficult to handle, and Navitas overcame significant technological hurdles to create a meaningful competitive advantage in what has a high potential to become a large and growing market. We originally invested in Navitas early in 2023 when the company was out of favor due to a mobile phone end-market downturn which slowed growth. We also detected market confusion over the acquisition of a Silicon Carbide-(SiC) based company. Navitas made this acquisition to broaden its product portfolio, but the market at the time viewed it as a possible signal that the company's GaN technology was slow to gain traction. These concerns faded as Navitas grew revenues by over 100% in 2023 and the stock performed strongly. The stock declined in the quarter as revenue guidance came in lower than anticipated due to a slowdown in the EV market. While Navitas will continue to be subject to volatile end markets like mobile phones and EVs, we believe that each end market will have less effect over time as the company diversifies into new areas like data centers, appliances, and other markets. We continue to feel that Navitas has a large, untapped market opportunity and retains a significant technological advantage, and as such increased our position during the quarter.

BSD Analysis:
The manager demonstrates strong conviction in Navitas Semiconductor's gallium nitride (GaN) technology leadership despite recent volatility from end-market exposure. The investment thesis centers on the company's technological competitive advantage in GaN power semiconductors, which offer superior energy efficiency and charging speeds versus traditional silicon. Navitas overcame significant technical hurdles to commercialize this difficult-to-handle material, creating meaningful barriers to entry. The manager initially invested in early 2023 during a period of disfavor due to mobile phone market weakness and market confusion over a Silicon Carbide acquisition. Strong execution was validated by over 100% revenue growth in 2023, though recent EV market slowdown pressured guidance. The diversification strategy into data centers, appliances, and other markets should reduce end-market concentration risk over time. The manager views the current weakness as temporary and increased the position, citing the large untapped market opportunity and sustained technological advantages.

Pitch Summary:
Brookfield Renewable Corp. operates one of the world's largest renewable power platforms with a global portfolio featuring hydroelectric, solar, and wind projects along with other assets. We became Brookfield Renewable shareholders in 2020 when the company bought a holding of ours, TerraForm Power, and the acquisition generated significant returns for the Fund. We remained shareholders post-merger because we believed Brookfield Renewable was a well-managed company with excellent assets and strong growth prospects trading at a reasonable valuation. We feel these characteristics still hold and the decline in the stock during the quarter was driven mainly by concerns that higher interest rates, with the U.S. Treasury 10-year bond yield rebounding during the quarter, could have a negative impact on industry growth due to higher financing costs and restricted access to capital. While these concerns are valid, we believe they are short-term in nature and that Brookfield Renewable's financial strength and management acumen will allow it to benefit from opportunities created by weaker competitors to drive outsized future growth. In the meantime, the company offers an attractive dividend yield and above-average growth for the sector. We took advantage of what we viewed as temporary price weakness and increased our position during the quarter.

BSD Analysis:
The manager maintains strong conviction in Brookfield Renewable despite quarterly underperformance driven by interest rate concerns. The investment thesis is built on the company's scale as one of the world's largest renewable power platforms with diversified global assets across hydroelectric, solar, and wind. The manager's history with the company dates to 2020 through the TerraForm Power acquisition, which generated significant returns. Key investment merits include excellent asset quality, strong management team, and reasonable valuation despite recent weakness. While acknowledging valid concerns about higher financing costs impacting industry growth, the manager views current headwinds as temporary. The company's financial strength and management expertise are expected to create competitive advantages during market stress, potentially driving outsized future growth. The attractive dividend yield provides income support while the manager increased the position during perceived temporary weakness.

Pitch Summary:
QuidelOrtho Corp. QuidelOrtho is a global leader in the diagnostics industry. The merger of Quidel and Ortho Clinical Diagnostics has resulted in a top 10 player in the in-vitro diagnostics industry, combining Quidel's strong point of care platform with Ortho's blood chemistry and transfusion platform. Quidel declined during the quarter on weaker Q4 earnings and a reduced 2024 outlook. The company's financial shortfall can be attributed to a dramatic slowdown in its higher-margin respiratory business and in particular Covid-19 testing volumes. The company now anticipates Covid testing revenue of ~$200 million, down from prior expectations of $200-$400 million. However, this should serve as the new base as current testing is associated with an endemic state and a normal respiratory season. Outside of its respiratory business, the company's clinical diagnostic division continues to demonstrate steady performance. While the respiratory revenue and margin impact were disappointing, we continue to hold a position in the company given steady performance out of its core business, solid profitability (EBITDA margins north of 20%), and an exciting new product launch in Savannah that could accelerate top-line growth.

BSD Analysis:
The manager maintains a bullish stance on QuidelOrtho despite near-term headwinds from declining COVID-19 testing volumes. The investment thesis centers on the company's leadership position in diagnostics following the merger of Quidel and Ortho Clinical Diagnostics, creating a top-10 player with complementary platforms. While COVID testing revenue has been cut to ~$200 million from prior expectations of $200-$400 million, the manager views this as establishing a new baseline in an endemic environment. The core clinical diagnostics business continues to perform steadily with strong profitability metrics, including EBITDA margins above 20%. The upcoming Savannah product launch represents a potential growth catalyst that could accelerate revenue expansion. The manager's conviction appears rooted in the company's diversified diagnostic capabilities and solid underlying fundamentals beyond the volatile respiratory testing segment.

Pitch Summary:
RB Global, Inc. operates an online auction marketplace for used industrial equipment, including earthmoving, agricultural, and transportation vehicles. Given its large global network and scale advantages, we believe the company is well positioned for additional growth from its single-digit market share position today. While market uncertainty lingered around its recent acquisition of IAA, Inc., we saw strong fundamentals within its core heavy equipment auctions business and expect strong pricing and volumes to drive incremental profitability. The company has also made progress on its auto salvage performance with continued improvements in asset turns which should position the company for incremental market share gains going forward. The stock rose during the quarter on continued strong results that were devoid of lingering distractions that had previously held back the stock. Underlying fundamentals continue to look strong as used equipment supply remains healthy and government-funded infrastructure projects come online. We are also monitoring progress on the IAA acquisition front, where we anticipate improved business momentum. During the period, we trimmed the position as the share price appreciated based on our position size and risk management discipline.

BSD Analysis:
The manager maintains a bullish view on RB Global while practicing disciplined position management through trimming on appreciation. The investment thesis centers on the company's dominant position in online industrial equipment auctions with significant runway for growth from its single-digit market share. Strong fundamentals in the core heavy equipment business are driving pricing power and volume growth, while improvements in auto salvage asset turns position the company for market share expansion. The IAA acquisition, while initially creating uncertainty, is expected to generate improved business momentum. Government infrastructure spending provides a favorable backdrop with healthy used equipment supply supporting auction volumes. The manager's decision to trim the position reflects risk management discipline rather than a change in fundamental outlook. The company's ability to deliver strong results without previous operational distractions demonstrates improved execution and focus on core business drivers.

Pitch Summary:
ACV Auctions, Inc. operates a digital wholesale auction marketplace to facilitate business-to-business used car sales between sellers and dealers. It has disrupted the traditional physical used-car auction marketplace by attracting thousands of dealers to its online platform. ACV's competitive advantage is its sizeable team of inspectors and the technology tools supporting this team. The depth and accuracy of ACV's inspection reports provide buyers the confidence to bid aggressively, knowing that they are unlikely to contend with negative post-purchase surprises. Sellers are drawn to ACV due to its lower auction fees and large buyer base. The stock appreciated during the quarter on strong results and 2024 guidance that came in well ahead of expectations. After a challenging 2-year period characterized by low dealer inventories and high car prices, new and used car markets are showing signs of normalization. We expect ACV to continue growing market share and to generate higher margins as volumes return closer to normal (volumes remain approximately 40% below pre-pandemic levels). The company is also well positioned as the market continues to migrate from legacy physical auctions toward ACV's more efficient digital platform. As fundamentals continued to improve during the quarter, we maintained a large position in the company.

BSD Analysis:
The manager maintains strong conviction in ACV Auctions as a digital disruptor in the used car auction marketplace. The investment thesis is built on ACV's competitive moat through its inspector network and technology platform, which provides superior inspection accuracy that enables aggressive bidding and reduces post-purchase surprises. The company benefits from a dual value proposition of lower fees for sellers and a large buyer base, creating network effects. Strong quarterly results and 2024 guidance exceeding expectations validate the recovery thesis as automotive markets normalize after a challenging two-year period. With volumes still 40% below pre-pandemic levels, significant operating leverage exists as the business scales. The secular shift from physical to digital auctions provides a long-term tailwind for market share gains. The manager's decision to maintain a large position reflects confidence in ACV's ability to capitalize on market normalization and continued digital adoption.

Pitch Summary:
Trimble, Inc. is a leading industrial technology company that provides hardware, software, and services primarily to the construction, geospatial, transportation, and agricultural industries. Over the last several years, Trimble has been transitioning toward a subscription-based, recurring revenue model. The stock responded positively in the quarter when it announced the completion of a joint venture allowing Trimble to divest the hardware side of its agricultural business, an important vertical, while retaining partial ownership. With a cleaner, recurring-revenue business model now in focus, we expect the company to realize better gross margins, free cash flow, and profitability over the long term. Today, our investment thesis is underpinned by a business that has gone through a heavy lift on the transformation side, has vastly improved gross margins, and is growing annual recurring revenue at a solid rate. With a valuation at roughly half of its peer group, we see strong upside potential. During the period, we held our position steady as the share price appreciated.

BSD Analysis:
The manager maintains a bullish outlook on Trimble following the successful completion of its business model transformation to recurring revenue. The investment thesis centers on the company's strategic shift away from hardware toward subscription-based services across construction, geospatial, transportation, and agricultural markets. The agricultural joint venture represents a key milestone, allowing Trimble to monetize hardware assets while retaining exposure through partial ownership and focusing on higher-margin recurring revenue streams. The manager emphasizes the transformation's impact on gross margins and free cash flow generation, with annual recurring revenue growing at a solid pace. A compelling valuation at roughly half the peer group multiple provides significant upside potential. The decision to hold the position steady during share price appreciation reflects confidence in the long-term value creation from the business model transformation while maintaining disciplined position sizing.

Pitch Summary:
Sotera Health Company offers mission-critical sterilization and lab-testing services to the healthcare industry and counts 40 of the top 50 medical device companies and eight of the top 10 pharmaceutical companies as customers. As part of its sterilization service portfolio, the company offers ethylene oxide sterilization as a critical modality. In fact, approximately 50% of all medical devices are sterilized with ethylene oxide, and in most cases, it is required by the FDA for effective sterilization and market commercialization. The stock came under pressure during the quarter following a new lawsuit related to its Sterigenics facility located in California which conducts ethylene oxide sterilization. The company had settled a previous lawsuit in Illinois and we believe the company can defend its position and the merits of its operations in this case as well. Sterigenics has a strong track record of performance, emissions control, and compliance with regulatory standards. Given the company's strong competitive position, attractive margins, and consistent growth profile, we added to our position in the company during the quarter.

BSD Analysis:
The manager demonstrates strong conviction in Sotera Health despite legal headwinds, adding to the position during the quarter. The investment thesis is anchored on the company's mission-critical role in healthcare sterilization, serving 40 of the top 50 medical device companies and 8 of the top 10 pharmaceutical companies. The manager emphasizes that ethylene oxide sterilization is FDA-required for approximately 50% of all medical devices, creating a defensible moat around the business. While acknowledging the California lawsuit as a near-term pressure point, the manager draws confidence from the company's successful defense in a previous Illinois case and Sterigenics' strong compliance track record. The decision to increase the position reflects belief in the company's competitive positioning, margin profile, and growth consistency, viewing the legal issues as manageable risks rather than fundamental threats to the business model.

Pitch Summary:
Iridium Communications, Inc. is a global satellite communications company that provides mobile voice and data communications services to businesses, governments, non-governmental organizations, and consumers worldwide. We invested in Iridium following the build-out of its next-generation satellite constellation, which was completed in 2018. With significant capital investment behind it, the company is poised to return capital to shareholders via meaningful share buybacks funded by strong and predictable free cash flow. We are also excited by the company's efforts to monetize its network through expanded use cases for its global coverage, including applications for marine operators and consumer devices such as global Wi-Fi hot spots and Garmin devices. Unfortunately, the company's plans were delayed when Qualcomm, Iridium's partner in the mobile phone market, canceled their partnership after failing to generate enough demand from smartphone manufacturers. We maintained our position in the company during the quarter.

BSD Analysis:
The manager maintains a bullish stance on Iridium despite recent setbacks with the Qualcomm partnership cancellation. The investment thesis is built on the completion of Iridium's next-generation satellite constellation in 2018, which positions the company for capital returns through share buybacks supported by strong free cash flow generation. The manager sees significant monetization opportunities through expanded use cases including marine operations and consumer devices like Wi-Fi hotspots and Garmin integration. While the Qualcomm mobile partnership failure represents a near-term disappointment, the manager views this as a temporary setback rather than a fundamental challenge to the investment thesis. The decision to maintain the position suggests confidence in Iridium's ability to find alternative pathways to growth and capitalize on its global satellite network infrastructure.

Pitch Summary:
QuidelOrtho Corporation is a global leader in the diagnostics industry. The merger of Quidel and Ortho Clinical Diagnostics has resulted in a top 10 player in the in-vitro diagnostics industry, combining Quidel's strong point of care platform with Ortho's blood chemistry and transfusion platform. Quidel declined during the quarter on weaker Q4 earnings and a reduced 2024 outlook. The company's financial shortfall can be attributed to a dramatic slowdown in its higher-margin respiratory business and in particular Covid-19 testing volumes. The company now anticipates Covid testing revenue of ~$200 million, down from prior expectations of $200-$400 million. However, this should serve as the new base as current testing is associated with an endemic state and a normal respiratory season. Outside of its respiratory business, the company's clinical diagnostic division continues to demonstrate steady performance. While the respiratory revenue and margin impact were disappointing, we continue to hold a position in the company given steady performance out of its core business, solid profitability (EBITDA margins north of 20%), and an exciting new product launch in Savannah that could accelerate top-line growth.

BSD Analysis:
The manager maintains a cautious but constructive view on QuidelOrtho following the merger of Quidel and Ortho Clinical Diagnostics. The investment thesis centers on the company's position as a top 10 player in the in-vitro diagnostics industry with complementary platforms. However, the company faces significant headwinds from the normalization of COVID-19 testing demand, with revenue expectations dropping to $200 million from a prior range of $200-$400 million. The manager emphasizes the company's core clinical diagnostics business remains stable, with EBITDA margins exceeding 20%. A key catalyst is the Savannah product launch, which could drive accelerated growth. The position reflects a balanced approach, acknowledging near-term challenges while maintaining exposure to the company's fundamental strengths and long-term potential in the diagnostics market.

Pitch Summary:
Amazon.com, Inc. reported a strong quarter. Its focus on streamlining its fulfillment network through regionalization efforts has yielded significant cost savings and efficiency gains. These improvements, coupled with strategic investments in automation and robotics, are expected to further enhance margins and profitability in the coming quarters. We believe the set-up for margin expansion over the coming years is compelling. Driven both by efficiency gains and growth in more profitable businesses like advertising, Amazon continues to invest strategically in innovation and expansion initiatives. These include advancements in artificial intelligence and machine learning, the development of new fulfillment centers and delivery stations, and the expansion of Prime services and digital content offerings. We believe these strategic investments are laying the groundwork for sustained growth and market leadership in the years to come and continue to hold shares in Amazon as an unhedged position.

BSD Analysis:
The manager presents a strong bull case for Amazon focused on operational efficiency improvements and margin expansion potential. The regionalization of the fulfillment network has delivered meaningful cost savings and efficiency gains, while automation and robotics investments should drive further margin enhancement. The combination of operational improvements and growth in higher-margin businesses like advertising creates a compelling setup for sustained profitability expansion. Strategic investments in AI and machine learning, along with continued fulfillment infrastructure development, position Amazon for long-term competitive advantages. The expansion of Prime services and digital content offerings supports customer retention and lifetime value growth. The decision to hold Amazon as an unhedged position reflects high conviction in the company's execution capabilities and long-term growth trajectory. The manager appears confident that current investments will drive sustained market leadership across multiple business segments. This represents a quality growth investment with improving operational leverage and diversified revenue streams supporting margin expansion.

Pitch Summary:
NVIDIA Corporation is a leading designer of graphics processing units (GPUs) for the gaming and professional markets, as well as system-on-a-chip units for the mobile computing and automotive markets. The company has experienced strong performance recently due to booming demand for its data center products, particularly those related to artificial intelligence. A major driver of Nvidia's recent success has been the growing adoption of its GPU accelerators for AI training and inference across various end markets. The company's GPUs have become an industry standard for training large language models (LLMs), and its networking solutions, such as NVLink and InfiniBand, are critical to maximizing the performance of AI systems. Nvidia's latest Blackwell GPU platform is expected to further extend its lead in the AI accelerator market, with significant performance and total cost of ownership benefits over its predecessors. As the AI market continues to expand with growing adoption across enterprises and sovereign nations, we expect Nvidia to maintain its dominance and experience sustained growth in its data center business. Beyond data centers, Nvidia has also benefited from strong demand in its gaming business, which has recovered after a period of inventory digestion in 2022. The company's gaming GPUs have been well-received, and its focus on the high-end market has supported growth in average selling prices. Looking ahead, we expect the gaming market to remain healthy with ongoing growth potential. Nvidia also sees opportunities to diversify its business and foray into new markets, such as automotive and robotics. We continued to hold our position in Nvidia.

BSD Analysis:
The manager presents a comprehensive bull case for NVIDIA centered on its dominant position in the rapidly expanding AI accelerator market. The thesis emphasizes NVIDIA's industry-standard GPUs for large language model training and critical networking solutions like NVLink and InfiniBand that maximize AI system performance. The upcoming Blackwell platform represents a significant technological advancement with superior performance and cost benefits, likely extending NVIDIA's competitive moat. The manager expects sustained data center growth driven by enterprise and sovereign AI adoption, positioning NVIDIA to maintain market leadership. Beyond AI, the gaming business recovery following 2022 inventory normalization provides additional growth support, with high-end focus driving average selling price expansion. The diversification opportunities in automotive and robotics offer longer-term growth vectors. The decision to maintain the position reflects confidence in NVIDIA's technological leadership and market positioning across multiple high-growth end markets. This represents a classic growth investment thesis supported by strong competitive advantages and expanding addressable markets.

Pitch Summary:
Vistra Corp. is an integrated retail electricity and power generation company based in Irving, Texas. It operates in 12 states and six of the seven competitive markets in the U.S. Vistra's retail brands serve approximately 2.9 million customers and its power generation fleet totals approximately 41,000 megawatts of natural gas, nuclear, coal, and solar facilities. Vistra was a top performer in the strategy over the past quarter, with its shares rallying over 80%. A key driver has been the thesis that the projected growth of power-hungry data centers, spurred by the rise of generative AI, will increase electricity demand and power prices. This is expected to significantly benefit incumbent power generators like Vistra. The company's efficient generation portfolio, especially its nuclear and natural gas plants, is well-positioned to capitalize on rising demand, scarcity pricing, and ancillary services in the Texas power market. Vistra is also pursuing opportunities to potentially sign high-margin power offtake agreements directly with data center customers for its nuclear plants, similar to a recent deal by peer Talen Energy and Amazon. We continue to like Vistra's strong free cash flow generation supporting continued share buybacks and debt reduction, synergies from the recent Energy Harbor acquisition, and a favorable power market backdrop with rising spark spreads. We trimmed the stock following its strong performance during the period.

BSD Analysis:
The manager presents a compelling thesis on Vistra Corp centered on the structural demand shift from AI-driven data center growth. The 80% quarterly rally reflects market recognition of the company's advantaged position to benefit from increased electricity demand and higher power prices driven by generative AI adoption. Vistra's diversified generation portfolio, particularly nuclear and natural gas assets, provides optimal positioning to capture scarcity pricing and ancillary services in competitive markets like Texas. The potential for direct power purchase agreements with data center customers represents a high-margin growth opportunity, as evidenced by peer transactions. Strong free cash flow generation enables continued capital returns through buybacks and debt reduction, while the Energy Harbor acquisition provides additional synergies. Rising spark spreads create a favorable operating environment for the company's gas-fired generation. The decision to trim following strong performance demonstrates disciplined portfolio management while maintaining conviction in the long-term AI-driven power demand thesis.

Pitch Summary:
Rivian Automotive, Inc. is a US-based manufacturer of electric vehicles, namely the R1T pickup truck and R1S SUV. They also have exposure to the commercial vehicle market with their electric delivery vans (EDVs) that are sold to companies like Amazon. The company has faced challenges amid the broader slowdown in electric vehicle demand and rising interest rates. This has contributed to Rivian underperforming expectations over the past few quarters. Rivian has also incurred losses as it continues to invest in the development of its products and manufacturing capabilities. We own Rivian in a hedged structure, which provides a significant margin of safety. Despite the near-term challenges, several factors provide optimism that Rivian can emerge as a long-term winner in the EV market. Rivian's balance sheet is strong, with a substantial cash position that enables the company to continue investing in its growth and navigate through the current economic headwinds. Rivian is also unveiling the R2, which is a smaller and more affordable EV platform that will open the company's products to a wider customer base. Lastly, Rivian's investment in the enhancement of its production capabilities should improve the company's manufacturing efficiency and drive a path to profitability. We continue to hold the company in a hedged structure.

BSD Analysis:
The manager maintains a constructive long-term view on Rivian despite acknowledging significant near-term challenges in the electric vehicle sector. While recognizing headwinds from broader EV demand slowdown, rising interest rates, and current losses from ongoing product and manufacturing investments, the fund emphasizes several key competitive advantages. The strong balance sheet with substantial cash reserves provides crucial runway to navigate current market volatility and continue growth investments. The upcoming R2 platform represents a strategic expansion into the mass market with more affordable pricing, potentially significantly expanding Rivian's addressable market beyond the premium truck/SUV segments. Manufacturing efficiency improvements should drive margin expansion and a clearer path to profitability. The hedged structure demonstrates prudent risk management while maintaining upside exposure to the long-term EV opportunity. The manager appears confident in Rivian's differentiated position in electric trucks and commercial vehicles, particularly given the Amazon partnership, while appropriately managing execution risk through options hedging.

Pitch Summary:
Liberty Broadband Corporation is a holding company. The largest asset at Liberty Broadband is a 26% ownership stake in Charter Communications, which is a cable company. This ownership exposes Liberty Broadband to trends in the cable industry and the equity value of Charter shares. The underperformance of Liberty Broadband shares over the past quarter was largely driven by the underperformance of Charter. Charter shares have been under pressure since its recent earnings report when management raised the near-term capital expenditures (capex) outlook for network upgrades and line extensions. Higher capex, the looming defunding of the Affordable Connectivity Program (ACP), continued competitive pressure on broadband net adds, and some incremental free cash flow pressure from higher cash taxes have also represented recent/current headwinds for the stock. Despite these near-term challenges, we remain optimistic about the long-term prospects for both Charter and the cable industry. Cable companies are well-positioned to benefit from the growing demand for high-speed internet access, as more and more people work from home and consume streaming video content. Additionally, cable companies have been investing heavily in network upgrades and new technologies, such as DOCSIS 4.0, that will allow them to offer even faster speeds and more reliable service. We also see an opportunity for cable companies to bundle their broadband services with other products, such as mobile phone service and home security, which could help to drive further growth. Given this favorable outlook, we continue to hold shares of the company.

BSD Analysis:
The manager maintains a constructive long-term view on Liberty Broadband despite near-term headwinds affecting Charter Communications, the holding company's primary asset. While acknowledging current pressures including elevated capex for network upgrades, ACP defunding, competitive broadband dynamics, and cash flow headwinds, the fund emphasizes the structural growth drivers supporting the cable industry. The thesis centers on increasing demand for high-speed internet driven by remote work trends and streaming consumption, positioning cable companies favorably. The manager highlights significant infrastructure investments in DOCSIS 4.0 technology that should enable faster speeds and improved service quality. Additionally, the bundling opportunity across broadband, mobile, and home security services represents a compelling revenue diversification strategy. The decision to maintain the position reflects confidence in the long-term secular trends despite current operational challenges. This represents a classic value-oriented approach, maintaining conviction through temporary headwinds while focusing on fundamental industry dynamics.

Pitch Summary:
Sally Beauty Holdings, Inc. is an international specialty retailer and distributor of professional beauty products, with a focus on hair color and hair care. The company has two segments: Sally Beauty Supply ("SBS"), which serves retail customers and salon professionals, and Beauty Systems Group ("BSG"), which serves professional stylists and salons. The company has faced several challenges in recent quarters, impacting both the top and bottom lines. The lower- to middle-income consumer who shops at SBS has felt pressure from inflation and has been more cautious with their spending. This has led to softer traffic at SBS as customers have been extending the time between hair treatments and buying fewer discretionary items. Unfavorable weather conditions in the early part of the second quarter of fiscal 2024 further pressured traffic. This is especially impactful to SBS, as it is the larger and higher-margin segment for the company. Despite near-term headwinds, Sally Beauty is implementing several initiatives that should benefit the company over time. The company has launched several programs, including the "Studio by Sally" store concept and the "Licensed Colorist on Demand" online platform, that should drive customer engagement and retention. Sally Beauty has also launched a new store concept called "Happy Beauty Co.," a value-focused beauty store with all items priced under $10. The company is also focused on increasing the penetration of its owned brands across its segments, which carry higher margins than national brands. We expect these initiatives will aid in a return to positive comparable sales growth over time and help drive margin expansion. Given the uncertainty of the timing of these turnaround initiatives, we re-hedged our exposure to the stock during the period.

BSD Analysis:
The manager presents a balanced view of Sally Beauty Holdings during a challenging period for the specialty beauty retailer. The fund acknowledges significant headwinds including inflation-pressured consumers reducing discretionary spending, extended treatment cycles, and weather-related traffic declines particularly impacting the higher-margin SBS segment. However, the manager identifies several strategic initiatives that could drive long-term value creation, including the "Studio by Sally" concept, "Licensed Colorist on Demand" platform, and the new "Happy Beauty Co." value-focused stores. The focus on increasing owned brand penetration represents a clear margin expansion opportunity given the higher profitability versus national brands. The decision to re-hedge the position reflects prudent risk management given execution uncertainty around the turnaround timeline. The manager appears cautiously optimistic about the company's strategic direction while appropriately managing downside risk through options hedging during this transitional period.