Investment Pitches

Pitch Summary:
Argan Inc. (AGX) was a top performer throughout 2024. Argan operates in the industrial construction industry building natural gas powerplants. The retirement of coal-fired power plants is driving a multi-year cycle of new natural gas fired power plant construction. Tightening environmental regulation, favorable economics, and the rise of artificial intelligence (AI) have propelled Argan stock to all-time highs. Argan builds these power plants for utility companies like Vistra and Duke Energy. There are shortages of power across the country where companies like Microsoft and Meta are building new AI data centers. These data centers consume extreme amounts of power which the current grid capacity is not suited for. We estimate the company is on a path to reach $1 billion in revenue and $100 million in EBITDA as this buildout happens. The company has a current project backlog of $800 million with visibility of growth to $2 billion. Argan holds $430 million in cash, no debt and is highly profitable. Additionally, they recently increased their quarterly dividend to $0.375 for an annual dividend yield of 1.5%. We sold Argan for investor portfolios in January as the stock rallied to $175 per share and our long-term price target was achieved.

BSD Analysis:
The manager presents a compelling bull case for Argan based on the structural shift from coal to natural gas power generation and the emerging AI data center power demand. The thesis centers on a multi-year construction cycle driven by environmental regulations and AI infrastructure needs, with major tech companies like Microsoft and Meta creating unprecedented power demand. The company's strong financial position with $430 million cash, zero debt, and $800 million backlog provides excellent visibility into future growth. Management's revenue projection of $1 billion and $100 million EBITDA suggests significant scaling potential from current levels. The recent dividend increase to 1.5% yield demonstrates management confidence in cash generation. The manager's decision to sell at $175 after achieving price targets shows disciplined profit-taking. The combination of secular tailwinds, strong balance sheet, and predictable project pipeline makes this an attractive infrastructure play.

Pitch Summary:
Axsome Therapeutics Inc. (AXSM) was a new addition to investor portfolios in January and has been a positive contributor since. Axsome is a biopharmaceutical company focused on central nervous system conditions such as Alzheimer's Disease Agitation, Major Depressive Disorder, Migraines, and Fibromyalgia. Their products target a broad range of serious conditions that impact over 150 million people in the United States. Axsome has 3 products commercially available today with 3 others in late stages of approval. These products have the potential to provide over $16 billion in peak sales in comparison to Asxome's $385 million of revenue in 2024. Auvelity is an oral drug used for the treatment of major depressive disorder (MDD). It was approved by the FDA in August of 2022 and has quickly ramped to over $290 million in sales in 2024. Sunosi, another one of Axsome's products, is an oral drug for the treatment of excessive daytime sleepiness also known as EDS in patients with sleep apnea and narcolepsy. The drug was approved by the FDA in 2022 and has ramped to $94 million in 2024. Symbravo, a drug used for acute treatment of Migraine was approved by the FDA in January 2025. The 3 drugs in late stages of approval include the treatment of Alzheimer's Disease Agitation which has data readouts later in Q1 2025, one for the treatment of Fibromyalgia, and another for Attention Deficit Disorder. We believe the company is an attractive acquisition candidate for a larger pharmaceutical company and we continue to hold AXSM stock in investor portfolios.

BSD Analysis:
The manager presents Axsome as a compelling growth story with significant revenue scaling potential from its CNS-focused drug portfolio. The investment thesis centers on the massive market opportunity of 150 million affected patients and the company's ability to capture meaningful market share. Current commercial products demonstrate strong execution with Auvelity reaching $290 million in sales within two years of approval. The pipeline's $16 billion peak sales potential versus current $385 million revenue suggests substantial upside if development programs succeed. Three late-stage programs provide multiple near-term catalysts, particularly the Alzheimer's Disease Agitation data readout in Q1 2025. The company's focus on underserved CNS conditions creates differentiated positioning in large addressable markets. Management's successful commercial execution with existing products de-risks the pipeline development strategy. The acquisition candidate thesis provides additional upside optionality given the company's specialized CNS expertise and commercial infrastructure.

Pitch Summary:
Zeta Global Holdings Corp. (ZETA), which we identified in early 2022, has been a top performer, up over 165%. We trimmed the Zeta position in August and September as it reached an overly larger portion of investor portfolios. We continue to hold Zeta as a large weighting as we believe they can continue to take market share in the advertising industry. Zeta is a marketing technology software company which benefits from multiple market tailwinds in the advertising industry. Zeta's software platform combined with artificial intelligence helps companies' market more efficiently by targeting ads based on specific demographics. The Zeta marketing platform helps customers deliver advertisements through all channels such as email, social media, web, chat, connected TV and video. Zeta is unique in that their platform doesn't use cookies. This reduces risk from a regulatory and customer standpoint as they are not impacted by these issues. Consequently, they can take market share from competitors like Adobe, Salesforce, and Oracle who have all made legacy acquisitions to enter the space (valuations of 8-20x EV/Revenues). Oracle announced they would be exiting the advertising business on their Q4 2024 earnings call, creating an incremental revenue opportunity for Zeta. Despite broader softness in software spending, Zeta remains unaffected, citing a healthy demand environment. The company was founded by former Apple CEO, John Scully, and the management team has a strong track record of performance (the company has beat their revenue guidance for 11 consecutive quarters since their IPO in 2021). In early September, the company increased their 3rd quarter 2024 guidance to at least $255 million in revenue, representing year-over-year growth of at least 35%. This accelerated from Q2 growth of 33% and Q1 growth of 24%. We went into detail on the factors influencing their growth in our previous two quarterly letters, and since then the thesis has begun to play out. In mid-November, a short report by Culper Research was published on Zeta, causing the stock to drop 50% in a few days. There were multiple inaccuracies discovered in the report including the wrong auditor named as "E&Y" who has never audited Zeta (Deloitte has been their auditor since the 2021 IPO). We believe the management did a good job in refuting the claims made in the report and have since commented they have not lost a single customer because of it. In fact, they mentioned that 20+ customer upsells occurred during the quarter. Management remains confined they will report record revenues and profitability on their 4th quarter earnings call, upcoming on February 25th. Zeta management and board members personally purchased $3 million worth of stock in the days following the report in addition to the company initiating a $100 million stock repurchase program to buy their own shares on the open market. We remain confident in the trajectory of the business despite the noise and continue to hold Zeta stock in investor portfolios.

BSD Analysis:
The manager maintains strong conviction in Zeta despite recent volatility, viewing the short attack as a buying opportunity rather than fundamental concern. The investment thesis centers on Zeta's cookieless advertising platform providing competitive advantages in an increasingly regulated environment. The company's accelerating revenue growth from 24% to 35% year-over-year demonstrates strong execution and market share gains. Oracle's exit from advertising creates additional market opportunity for Zeta to capture. Management's consistent guidance beats (11 consecutive quarters) and insider buying following the short report signal confidence in business fundamentals. The $100 million share repurchase program and $3 million insider purchases provide strong management alignment signals. Zeta's omnichannel platform and AI capabilities position it well against legacy competitors like Adobe and Salesforce who rely on acquisitions. The company's resilience during broader software spending weakness indicates strong competitive positioning and customer value proposition.

Pitch Summary:
Graham Corp. (GHM), a company we identified in 2023 at $13 per share, has been a top performer in investor portfolios. Historically, Graham has supplied industrial equipment like vacuum and heat transfer products for the global refining and petrochemical markets. With new management and an acquisition in 2021, Graham has diversified the business serving the defense, space, and new energy markets. The strategic focus has been on growing the defense business over the past 2 years. Graham sells critical propulsion equipment to the U.S. Navy for their nuclear submarines. They are the only supplier of the equipment they produce, giving them pricing power and margin enhancement as more subs are built. The U.S. has created the Pacific Deterrence Initiative (PDI) specifically aimed at deterring potential aggression from China in the Pacific Ocean, by bolstering U.S. military presence, and infrastructure. One of the ways the U.S. is accomplishing this is by growing and upgrading its fleet of Columbia and Virginia Class Nuclear Submarines. The U.S. has committed to building 11 more Columbia Class subs and 32 Virginia Class subs equating to $1.2-1.4 billion in projected revenue for Graham. These buildouts are expected to last through 2050. Graham carries a backlog of $385 million, of which 80% is for the defense industry. Their annual revenues are expected to be $200 million this year, giving them multi-year visibility. Graham has transformed from being highly cyclical to highly predictable over the last few years. We trimmed Graham stock in January and continue to hold a smaller weighting in investor portfolios.

BSD Analysis:
The manager identifies Graham as a successful transformation story from cyclical industrial supplier to predictable defense contractor with monopolistic positioning. The investment thesis hinges on Graham's exclusive supplier status for nuclear submarine propulsion equipment, creating significant pricing power and margin expansion opportunities. The Pacific Deterrence Initiative provides a compelling long-term growth catalyst with $1.2-1.4 billion in projected revenue visibility through 2050. The company's strategic pivot to defense (80% of $385 million backlog) has fundamentally altered the business model from cyclical to predictable cash flows. Management's acquisition strategy and business diversification have successfully repositioned the company for sustained growth. The substantial revenue opportunity from 43 new submarines represents multiple years of revenue growth from current $200 million annual run rate. The manager's position trimming after strong performance demonstrates prudent portfolio management while maintaining conviction in the long-term thesis.

Pitch Summary:
Argan Inc. (AGX) was a top performer throughout 2024. Argan operates in the industrial construction industry building natural gas powerplants. The retirement of coal-fired power plants is driving a multi-year cycle of new natural gas fired power plant construction. Tightening environmental regulation, favorable economics, and the rise of artificial intelligence (AI) have propelled Argan stock to all-time highs. Argan builds these power plants for utility companies like Vistra and Duke Energy. There are shortages of power across the country where companies like Microsoft and Meta are building new AI data centers. These data centers consume extreme amounts of power which the current grid capacity is not suited for. We estimate the company is on a path to reach $1 billion in revenue and $100 million in EBITDA as this buildout happens. The company has a current project backlog of $800 million with visibility of growth to $2 billion. Argan holds $430 million in cash, no debt and is highly profitable. Additionally, they recently increased their quarterly dividend to $0.375 for an annual dividend yield of 1.5%. We sold Argan for investor portfolios in January as the stock rallied to $175 per share and our long-term price target was achieved.

BSD Analysis:
The manager presents a compelling bull case for Argan based on the structural shift from coal to natural gas power generation and the emerging AI data center power demand. The thesis centers on a multi-year construction cycle driven by environmental regulations and AI infrastructure buildout. The company's strong financial position with $430 million cash, zero debt, and $800 million backlog provides excellent visibility into future revenue growth. Management's revenue projection of $1 billion and EBITDA target of $100 million suggests significant scaling potential from current levels. The monopolistic positioning as a specialized natural gas power plant constructor for major utilities creates pricing power. The dividend increase to 1.5% yield demonstrates management confidence in cash generation. The manager's decision to sell at $175 after achieving price targets shows disciplined profit-taking execution.

Pitch Summary:
Axsome Therapeutics Inc. (AXSM) was a new addition to investor portfolios in January and has been a positive contributor since. Axsome is a biopharmaceutical company focused on central nervous system conditions such as Alzheimer's Disease Agitation, Major Depressive Disorder, Migraines, and Fibromyalgia. Their products target a broad range of serious conditions that impact over 150 million people in the United States. Axsome has 3 products commercially available today with 3 others in late stages of approval. These products have the potential to provide over $16 billion in peak sales in comparison to Asxome's $385 million of revenue in 2024. Auvelity is an oral drug used for the treatment of major depressive disorder (MDD). It was approved by the FDA in August of 2022 and has quickly ramped to over $290 million in sales in 2024. Sunosi, another one of Axsome's products, is an oral drug for the treatment of excessive daytime sleepiness also known as EDS in patients with sleep apnea and narcolepsy. The drug was approved by the FDA in 2022 and has ramped to $94 million in 2024. Symbravo, a drug used for acute treatment of Migraine was approved by the FDA in January 2025. The 3 drugs in late stages of approval include the treatment of Alzheimer's Disease Agitation which has data readouts later in Q1 2025, one for the treatment of Fibromyalgia, and another for Attention Deficit Disorder. We believe the company is an attractive acquisition candidate for a larger pharmaceutical company and we continue to hold AXSM stock in investor portfolios.

BSD Analysis:
The manager presents Axsome as a compelling growth story with significant revenue scaling potential from its CNS-focused drug portfolio. The investment thesis centers on the massive market opportunity of 150 million affected patients and the company's ability to capture meaningful market share. Current commercial products demonstrate strong execution with Auvelity reaching $290 million in sales within two years of approval. The pipeline's $16 billion peak sales potential versus current $385 million revenue suggests substantial upside if development programs succeed. Three late-stage programs provide multiple near-term catalysts, particularly the Alzheimer's Disease Agitation data readout in Q1 2025. The company's focus on underserved CNS conditions creates differentiated positioning in large addressable markets. Management's successful commercial execution with existing products de-risks the pipeline development strategy. The acquisition candidate thesis provides additional upside optionality given the company's specialized CNS expertise and commercial infrastructure.

Pitch Summary:
Zeta Global Holdings Corp. (ZETA), which we identified in early 2022, has been a top performer, up over 165%. We trimmed the Zeta position in August and September as it reached an overly larger portion of investor portfolios. We continue to hold Zeta as a large weighting as we believe they can continue to take market share in the advertising industry. Zeta is a marketing technology software company which benefits from multiple market tailwinds in the advertising industry. Zeta's software platform combined with artificial intelligence helps companies' market more efficiently by targeting ads based on specific demographics. The Zeta marketing platform helps customers deliver advertisements through all channels such as email, social media, web, chat, connected TV and video. Zeta is unique in that their platform doesn't use cookies. This reduces risk from a regulatory and customer standpoint as they are not impacted by these issues. Consequently, they can take market share from competitors like Adobe, Salesforce, and Oracle who have all made legacy acquisitions to enter the space (valuations of 8-20x EV/Revenues). Oracle announced they would be exiting the advertising business on their Q4 2024 earnings call, creating an incremental revenue opportunity for Zeta. Despite broader softness in software spending, Zeta remains unaffected, citing a healthy demand environment. The company was founded by former Apple CEO, John Scully, and the management team has a strong track record of performance (the company has beat their revenue guidance for 11 consecutive quarters since their IPO in 2021). In early September, the company increased their 3rd quarter 2024 guidance to at least $255 million in revenue, representing year-over-year growth of at least 35%. This accelerated from Q2 growth of 33% and Q1 growth of 24%. We went into detail on the factors influencing their growth in our previous two quarterly letters, and since then the thesis has begun to play out. In mid-November, a short report by Culper Research was published on Zeta, causing the stock to drop 50% in a few days. There were multiple inaccuracies discovered in the report including the wrong auditor named as "E&Y" who has never audited Zeta (Deloitte has been their auditor since the 2021 IPO). We believe the management did a good job in refuting the claims made in the report and have since commented they have not lost a single customer because of it. In fact, they mentioned that 20+ customer upsells occurred during the quarter. Management remains confined they will report record revenues and profitability on their 4th quarter earnings call, upcoming on February 25th. Zeta management and board members personally purchased $3 million worth of stock in the days following the report in addition to the company initiating a $100 million stock repurchase program to buy their own shares on the open market. We remain confident in the trajectory of the business despite the noise and continue to hold Zeta stock in investor portfolios.

BSD Analysis:
The manager maintains strong conviction in Zeta despite recent volatility, viewing the short attack as a buying opportunity rather than fundamental concern. The investment thesis centers on Zeta's cookieless advertising platform providing competitive advantages in an increasingly regulated environment. The company's accelerating revenue growth from 24% to 35% year-over-year demonstrates strong execution and market share gains. Oracle's exit from advertising creates additional market opportunity for Zeta to capture. Management's consistent guidance beats (11 consecutive quarters) and insider buying following the short report signal confidence in business fundamentals. The $100 million share repurchase program and $3 million insider purchases provide strong management alignment signals. Zeta's omnichannel platform and AI capabilities position it well against legacy competitors like Adobe and Salesforce who rely on acquisitions. The company's resilience during broader software spending weakness indicates strong competitive positioning and customer value proposition.

Pitch Summary:
Graham Corp. (GHM), a company we identified in 2023 at $13 per share, has been a top performer in investor portfolios. Historically, Graham has supplied industrial equipment like vacuum and heat transfer products for the global refining and petrochemical markets. With new management and an acquisition in 2021, Graham has diversified the business serving the defense, space, and new energy markets. The strategic focus has been on growing the defense business over the past 2 years. Graham sells critical propulsion equipment to the U.S. Navy for their nuclear submarines. They are the only supplier of the equipment they produce, giving them pricing power and margin enhancement as more subs are built. The U.S. has created the Pacific Deterrence Initiative (PDI) specifically aimed at deterring potential aggression from China in the Pacific Ocean, by bolstering U.S. military presence, and infrastructure. One of the ways the U.S. is accomplishing this is by growing and upgrading its fleet of Columbia and Virginia Class Nuclear Submarines. The U.S. has committed to building 11 more Columbia Class subs and 32 Virginia Class subs equating to $1.2-1.4 billion in projected revenue for Graham. These buildouts are expected to last through 2050. Graham carries a backlog of $385 million, of which 80% is for the defense industry. Their annual revenues are expected to be $200 million this year, giving them multi-year visibility. Graham has transformed from being highly cyclical to highly predictable over the last few years. We trimmed Graham stock in January and continue to hold a smaller weighting in investor portfolios.

BSD Analysis:
The manager identifies Graham as a successful transformation story from cyclical industrial supplier to predictable defense contractor with monopolistic positioning. The investment thesis hinges on Graham's exclusive supplier status for nuclear submarine propulsion equipment, creating significant pricing power and margin expansion opportunities. The Pacific Deterrence Initiative provides a compelling long-term growth catalyst with $1.2-1.4 billion in projected revenue visibility through 2050. The company's strategic pivot to defense (80% of $385 million backlog) has fundamentally altered the business model from cyclical to predictable cash flows. Management's acquisition strategy and business diversification have successfully repositioned the company for sustained growth. The substantial revenue opportunity from 43 new submarines represents multiple years of revenue growth from current $200 million annual run rate. The manager's position trimming after strong performance demonstrates prudent portfolio management while maintaining conviction in the long-term thesis.

Pitch Summary:
Argan Inc. (AGX) was a top performer throughout 2024. Argan operates in the industrial construction industry building natural gas powerplants. The retirement of coal-fired power plants is driving a multi-year cycle of new natural gas fired power plant construction. Tightening environmental regulation, favorable economics, and the rise of artificial intelligence (AI) have propelled Argan stock to all-time highs. Argan builds these power plants for utility companies like Vistra and Duke Energy. There are shortages of power across the country where companies like Microsoft and Meta are building new AI data centers. These data centers consume extreme amounts of power which the current grid capacity is not suited for. We estimate the company is on a path to reach $1 billion in revenue and $100 million in EBITDA as this buildout happens. The company has a current project backlog of $800 million with visibility of growth to $2 billion. Argan holds $430 million in cash, no debt and is highly profitable. Additionally, they recently increased their quarterly dividend to $0.375 for an annual dividend yield of 1.5%. We sold Argan for investor portfolios in January as the stock rallied to $175 per share and our long-term price target was achieved.

BSD Analysis:
The manager presents a compelling bull case for Argan based on the structural shift from coal to natural gas power generation and the emerging AI data center power demand. The thesis centers on a multi-year construction cycle driven by environmental regulations and AI infrastructure buildout. The company's strong financial position with $430 million cash, zero debt, and $800 million backlog provides excellent visibility into future revenue growth. Management's revenue projection of $1 billion and EBITDA target of $100 million suggests significant scaling potential from current levels. The monopolistic positioning as a specialized natural gas power plant constructor for major utilities creates pricing power. The dividend increase to 1.5% yield demonstrates management confidence in cash generation. The manager's decision to sell at $175 after achieving price targets shows disciplined profit-taking execution.

Pitch Summary:
Axsome Therapeutics Inc. (AXSM) was a new addition to investor portfolios in January and has been a positive contributor since. Axsome is a biopharmaceutical company focused on central nervous system conditions such as Alzheimer's Disease Agitation, Major Depressive Disorder, Migraines, and Fibromyalgia. Their products target a broad range of serious conditions that impact over 150 million people in the United States. Axsome has 3 products commercially available today with 3 others in late stages of approval. These products have the potential to provide over $16 billion in peak sales in comparison to Asxome's $385 million of revenue in 2024. Auvelity is an oral drug used for the treatment of major depressive disorder (MDD). It was approved by the FDA in August of 2022 and has quickly ramped to over $290 million in sales in 2024. Sunosi, another one of Axsome's products, is an oral drug for the treatment of excessive daytime sleepiness also known as EDS in patients with sleep apnea and narcolepsy. The drug was approved by the FDA in 2022 and has ramped to $94 million in 2024. Symbravo, a drug used for acute treatment of Migraine was approved by the FDA in January 2025. The 3 drugs in late stages of approval include the treatment of Alzheimer's Disease Agitation which has data readouts later in Q1 2025, one for the treatment of Fibromyalgia, and another for Attention Deficit Disorder. We believe the company is an attractive acquisition candidate for a larger pharmaceutical company and we continue to hold AXSM stock in investor portfolios.

BSD Analysis:
The manager presents Axsome as a compelling growth story with significant revenue scaling potential from its CNS-focused drug portfolio. The investment thesis centers on the massive market opportunity of 150 million affected patients and the company's ability to capture meaningful market share. Current commercial products demonstrate strong execution with Auvelity reaching $290 million in sales within two years of approval. The pipeline's $16 billion peak sales potential versus current $385 million revenue suggests substantial upside if development programs succeed. Three late-stage programs provide multiple near-term catalysts, particularly the Alzheimer's Disease Agitation data readout in Q1 2025. The company's focus on underserved CNS conditions creates differentiated positioning in large addressable markets. Management's successful commercial execution with existing products de-risks the pipeline development strategy. The acquisition candidate thesis provides additional upside optionality given the company's specialized CNS expertise and commercial infrastructure.

Pitch Summary:
Zeta Global Holdings Corp. (ZETA), which we identified in early 2022, has been a top performer, up over 165%. We trimmed the Zeta position in August and September as it reached an overly larger portion of investor portfolios. We continue to hold Zeta as a large weighting as we believe they can continue to take market share in the advertising industry. Zeta is a marketing technology software company which benefits from multiple market tailwinds in the advertising industry. Zeta's software platform combined with artificial intelligence helps companies' market more efficiently by targeting ads based on specific demographics. The Zeta marketing platform helps customers deliver advertisements through all channels such as email, social media, web, chat, connected TV and video. Zeta is unique in that their platform doesn't use cookies. This reduces risk from a regulatory and customer standpoint as they are not impacted by these issues. Consequently, they can take market share from competitors like Adobe, Salesforce, and Oracle who have all made legacy acquisitions to enter the space (valuations of 8-20x EV/Revenues). Oracle announced they would be exiting the advertising business on their Q4 2024 earnings call, creating an incremental revenue opportunity for Zeta. Despite broader softness in software spending, Zeta remains unaffected, citing a healthy demand environment. The company was founded by former Apple CEO, John Scully, and the management team has a strong track record of performance (the company has beat their revenue guidance for 11 consecutive quarters since their IPO in 2021). In early September, the company increased their 3rd quarter 2024 guidance to at least $255 million in revenue, representing year-over-year growth of at least 35%. This accelerated from Q2 growth of 33% and Q1 growth of 24%. We went into detail on the factors influencing their growth in our previous two quarterly letters, and since then the thesis has begun to play out. In mid-November, a short report by Culper Research was published on Zeta, causing the stock to drop 50% in a few days. There were multiple inaccuracies discovered in the report including the wrong auditor named as "E&Y" who has never audited Zeta (Deloitte has been their auditor since the 2021 IPO). We believe the management did a good job in refuting the claims made in the report and have since commented they have not lost a single customer because of it. In fact, they mentioned that 20+ customer upsells occurred during the quarter. Management remains confined they will report record revenues and profitability on their 4th quarter earnings call, upcoming on February 25th. Zeta management and board members personally purchased $3 million worth of stock in the days following the report in addition to the company initiating a $100 million stock repurchase program to buy their own shares on the open market. We remain confident in the trajectory of the business despite the noise and continue to hold Zeta stock in investor portfolios.

BSD Analysis:
The manager maintains strong conviction in Zeta despite recent volatility, viewing the short attack as a buying opportunity rather than fundamental concern. The investment thesis centers on Zeta's cookieless advertising platform providing competitive advantages in an increasingly regulated environment. The company's accelerating revenue growth from 24% to 35% year-over-year demonstrates strong execution and market share gains. Oracle's exit from advertising creates additional market opportunity for Zeta to capture. Management's consistent guidance beats (11 consecutive quarters) and insider buying following the short report signal confidence in business fundamentals. The $100 million share repurchase program and $3 million insider purchases provide strong management alignment signals. Zeta's omnichannel platform and AI capabilities position it well against legacy competitors like Adobe and Salesforce who rely on acquisitions. The company's resilience during broader software spending weakness indicates strong competitive positioning and customer value proposition.

Pitch Summary:
Graham Corp. (GHM), a company we identified in 2023 at $13 per share, has been a top performer in investor portfolios. Historically, Graham has supplied industrial equipment like vacuum and heat transfer products for the global refining and petrochemical markets. With new management and an acquisition in 2021, Graham has diversified the business serving the defense, space, and new energy markets. The strategic focus has been on growing the defense business over the past 2 years. Graham sells critical propulsion equipment to the U.S. Navy for their nuclear submarines. They are the only supplier of the equipment they produce, giving them pricing power and margin enhancement as more subs are built. The U.S. has created the Pacific Deterrence Initiative (PDI) specifically aimed at deterring potential aggression from China in the Pacific Ocean, by bolstering U.S. military presence, and infrastructure. One of the ways the U.S. is accomplishing this is by growing and upgrading its fleet of Columbia and Virginia Class Nuclear Submarines. The U.S. has committed to building 11 more Columbia Class subs and 32 Virginia Class subs equating to $1.2-1.4 billion in projected revenue for Graham. These buildouts are expected to last through 2050. Graham carries a backlog of $385 million, of which 80% is for the defense industry. Their annual revenues are expected to be $200 million this year, giving them multi-year visibility. Graham has transformed from being highly cyclical to highly predictable over the last few years. We trimmed Graham stock in January and continue to hold a smaller weighting in investor portfolios.

BSD Analysis:
The manager identifies Graham as a successful transformation story from cyclical industrial supplier to predictable defense contractor with monopolistic positioning. The investment thesis hinges on Graham's exclusive supplier status for nuclear submarine propulsion equipment, creating significant pricing power and margin expansion opportunities. The Pacific Deterrence Initiative provides a compelling long-term growth catalyst with $1.2-1.4 billion in projected revenue visibility through 2050. The company's strategic pivot to defense (80% of $385 million backlog) has fundamentally altered the business model from cyclical to predictable cash flows. Management's acquisition strategy and business diversification have successfully repositioned the company for sustained growth. The substantial revenue opportunity from 43 new submarines represents multiple years of revenue growth from current $200 million annual run rate. The manager's position trimming after strong performance demonstrates prudent portfolio management while maintaining conviction in the long-term thesis.

Pitch Summary:
Argan Inc. (AGX) was a top performer throughout 2024. Argan operates in the industrial construction industry building natural gas powerplants. The retirement of coal-fired power plants is driving a multi-year cycle of new natural gas fired power plant construction. Tightening environmental regulation, favorable economics, and the rise of artificial intelligence (AI) have propelled Argan stock to all-time highs. Argan builds these power plants for utility companies like Vistra and Duke Energy. There are shortages of power across the country where companies like Microsoft and Meta are building new AI data centers. These data centers consume extreme amounts of power which the current grid capacity is not suited for. We estimate the company is on a path to reach $1 billion in revenue and $100 million in EBITDA as this buildout happens. The company has a current project backlog of $800 million with visibility of growth to $2 billion. Argan holds $430 million in cash, no debt and is highly profitable. Additionally, they recently increased their quarterly dividend to $0.375 for an annual dividend yield of 1.5%. We sold Argan for investor portfolios in January as the stock rallied to $175 per share and our long-term price target was achieved.

BSD Analysis:
The manager presents a compelling bull case for Argan based on the structural shift from coal to natural gas power generation and the emerging AI data center power demand. The thesis centers on a multi-year construction cycle driven by environmental regulations and AI infrastructure buildout. The company's strong financial position with $430 million cash, zero debt, and $800 million backlog provides excellent visibility into future revenue growth. Management's revenue projection of $1 billion and EBITDA target of $100 million suggests significant scaling potential from current levels. The monopolistic positioning as a specialized natural gas power plant constructor for major utilities creates pricing power. The dividend increase to 1.5% yield demonstrates management confidence in cash generation. The manager's decision to sell at $175 after achieving price targets shows disciplined profit-taking execution.

Pitch Summary:
Raytheon is one portfolio holding in the All Cap Value Fund and we thought it would be helpful if we summarized how investor emotions can create significant value opportunities. RTX – Crisis Creates Opportunity On July 25, 2023, RTX Corporation (formerly Raytheon Technologies Corporation), a multi-national Aerospace & Defense company, reported that its subsidiary, Pratt & Whitney, identified a manufacturing quality issue with certain powdered metals in certain GTF engines produced in prior years, which required an accelerated fleet inspection. During its earnings conference call in July, the company indicated that the issue affected approximately 1,200 engines, 200 of which had to be inspected by mid-September because of their time in service. The remainder would need inspection over the next twelve months. The quality issue did not impact engines currently being produced. Following the July 25th disclosure of the engine issue, the price of the company's stock fell approximately 10%. On September 11, 2023, the company provided an update on the financial impact of the engine issue, as well as details of its remediation plan. RTX recorded a pre-tax operating profit charge in the third quarter of 2023 of approximately $3 billion, which reflected Pratt & Whitney's estimate of the losses to be incurred by Pratt & Whitney's 51% share of the joint venture that makes the PW 1100 GTF engine. This charge included estimates of potential compensation and other considerations for customer fleet disruption and the one-time impact of estimated incremental costs to long-term maintenance contracts as a result of this matter, including the cost of additional inspections, replacement of parts and other related costs. Following the September 11th announcement of the financial impact and details of its plan to correct this issue, the price of the company's stock fell another 8%. In fact, between the start of the reporting period for this shareholder letter on July 1, 2023, shortly before the initial announcement of the engine issue and the close of the third quarter on September 30, 2023 (shortly after the announcement of the $3 billion charge to address this issue), the price of the company's stock fell approximately 26% and its market capitalization shrank by approximately $37 billion. Of course, this experience isn't representative of every holding in the Funds. As value investors, we often identify opportunities in companies affected by overreactions to bad news. We believe that the market's short-term reaction to such situations as that experienced by RTX can create profitable opportunities for the patient long-term investor. When we identify companies that have been unduly penalized by short-term thinking, our primary focus is to determine the expected financial impact of the problem on the company's long-term intrinsic value. A 26% drop in the company's stock price that wiped out $37 billion in market capitalization for what is approximately a $3 to $3.5 billion issue piqued our interest. From experience, we know that temporary issues affect every company from time to time. Some issues are financial, some operational, some strategic – but all eventually weigh on the stock price in the near term. Our analysis in such situations focuses on two keys questions: (1) is the problem likely to cause long-term erosion of the company's intrinsic value, and (2) does the company's remediation plan adequately address the problem and its impact within a reasonable time frame? Staying focused on answering these questions is critical in our analytical and decision-making processes. From our perspective as a long-term holder of its stock, RTX is a well-run company with a strong track record of providing high-quality products and services. Additionally, we believe RTX is doing the right thing by taking care of its clients with its corrective course of action. As a result of our analysis of the issue and the company's corrective course, it is our judgment that the issue is temporary and fixable and did not merit the market's overreaction. We believe the financial impact of the issue to be approximately $2 per share of intrinsic value – a far cry from the $26 drop in the company's stock price from June 30 to September 30, 2023. Going forward, while the stock may continue to be impacted by earnings revisions, press coverage, and other near-term concerns, we have a $115 value for RTX after our last earnings review, which incorporates the costs of the company's remediation plan. During the three-month period when extensive reaction to the engine issue caused the price of RTX stock to drop, we accumulated shares at what we believe to be very favorable prices, significantly increasing the size of our holding. As of the close of 2023 and into 2024, the price of RTX stock has bounced back nicely and as of February 1, 2024, has traded above $92 per share. We continue to monitor RTX, and developments related to the engine issue, and we will adjust our determination of intrinsic value based on revised estimates of future excess cash flow as the company reports its financial results.

BSD Analysis:
Olstein presents a compelling contrarian investment thesis on RTX Corporation following a significant market overreaction to engine quality issues. The fund manager demonstrates disciplined value investing by viewing the 26% stock decline and $37 billion market cap loss as disproportionate to the actual $3-3.5 billion financial impact. Their analysis focuses on two critical factors: whether the problem causes long-term intrinsic value erosion and the adequacy of management's remediation plan. Olstein concludes the issue is temporary and fixable, estimating only $2 per share impact on intrinsic value versus the $26 stock price decline. The fund significantly increased their position during the selloff, demonstrating conviction in their $115 price target. RTX's strong operational track record, quality management response, and the temporary nature of the manufacturing issue support the investment thesis. The stock's subsequent recovery to above $92 by February 2024 validates their contrarian approach and suggests meaningful upside remains to their target price.

Pitch Summary:
Basic-Fit is an operator of fitness centers in Europe. With 1,402 clubs and 3.8 million memberships across six countries, Basic-Fit is the largest fitness chain in Europe. Given Asheville Capital's mandate to invest in world-class businesses before they are broadly appreciated as such, let me clearly state the following: Basic-Fit is world-class due to the fact that it produces a compelling value proposition that is both competitively advantaged and capital efficient, thereby resulting in returns on incremental capital that are both high and sustainable. Basic-Fit is not broadly appreciated as such due to the fact that these returns on incremental capital are currently hidden underneath a reinvestment cycle that takes time to materialize. As these earnings reveal themselves, it seems likely for the future valuation to reflect the cash flows of the individual units more accurately. Fitness centers themselves are a phenomena that was birthed out of the United States in the 1980s. Their popularity coincided with a general incline in obesity rates and diabetes. These diseases are continuing to claim more victims internationally, and so too is there a growing awareness for the need to exercise. In countries like France, Belgium, and Spain, gym membership as a percentage of the total population is approximately half that of the United States. Basic-Fit operates in these countries as the low-cost fitness option. At €24.99 per four weeks, people gain access to the highest value-for-dollar fitness center that is to be found in all of Europe. Basic-Fit offers conveniently located, low-cost access to high quality fitness centers. Basic-Fit has cut out expensive, underutilized amenities like swimming pools and basketball courts in exchange for more treadmills, weight machines and free weight areas. The result is a greater capacity for high-utilization equipment at a lower total cost to the fitness center owner. Basic-Fit therefore maximizes its revenue per club while minimizing its costs. These cost savings are further optimized when you account for the scale that Basic-Fit operates with. By being the largest fitness chain in Europe, Basic-Fit enjoys bargaining power with its suppliers that allows the company to negotiate lower equipment purchase prices. These collective cost savings are passed on to the consumer in the form of lower prices. This engenders mass appeal to the majority of local populations and high rates of loyalty, resulting in maximal return on ad-spend and best-in-class churn rates. Basic-Fit is very similar to its US-based comparable, Planet Fitness. Both operate low-cost fitness center models. But Basic-Fit and Planet Fitness differ in one key area; that of franchising. In the United States, Planet Fitness has opted to franchise its brand out in order to reduce its total capex requirement. This has allowed Planet Fitness to grow quickly with reduced capital expenditures per unit and it has created a lucrative revenue stream of equipment resale to its captive franchisee customer base. But in doing so, Planet Fitness has also ceded control of location decision-making. Basic-Fit's CEO, René Moos, rejected this model under the reasoning that greater control of club location will result in a more defensible membership revenue stream. In owning each of its locations, Basic-Fit is able to execute a cluster strategy in which clubs are built with significant geographical overlap to its other fitness centers. This is a decision that franchisees would never opt into of their own volition due to the cannibalization of its base of potential members. Basic-Fit reasons that this cannibalization is offset by having more convenient locations, and that this benefits its members, thereby making them less likely to churn. Additionally, there are operational and marketing efficiencies to be gained by following this approach. Basic-Fit, when it enters a city, will often times build and launch multiple locations at the same time, thereby ensuring that its local advertisements are relevant to a maximal percentage of the local population. Moreover, by being close together, these clubs can be operated with fewer managerial staff, thus reducing operational overhead. Finally, this cluster strategy serves to both capture market share from existing competitors and deter future potential competitors from entering a market that Basic-Fit has already staked its claim on. When Basic-Fit enters a city that has a low membership penetration rate, it ends up capturing the vast majority of the incremental fitness memberships. It costs Basic-Fit approximately €1.2 million to build out a 1,500 square foot club. After months of pre-selling memberships, these clubs are cash-flow break-even on day one. In about 24 months, these clubs will have reached a state of maturity at approximately 3,300 members per club. When clubs reach maturity, they generate approximately €870k of revenue per year and cost €439k to operate, resulting in EBTIDA per club of €431k per year for a 50% EBITDA margin and a 36% ROIC. This gets to my earlier point about Basic-Fit's earnings power being hidden beneath a reinvestment cycle that takes time to materialize. Of Basic-Fit's 1,402 clubs, approximately 900 of them are considered mature, with the other 500 still being immature and within that 24-month post-launch time period. In two years' time, all of these 500 clubs will have reached maturity and the collective 1,402 clubs will be producing more than €1.2 billion of revenue and €600 million of EBITDA. At a market capitalization of €1.9 billion today, these 1,402 clubs are currently being valued at €1.3 million, or 3x 2025 Club EBITDA. There is debt on the balance sheet, however, and Basic-Fit's enterprise value is at approximately €4 billion today, meaning that EV/EBITDA amounts to €2.8 million per club, or 6.6x 2025 Club EBITDA. This does not factor in any of the incremental ~400 clubs that Basic-Fit will likely open over the next two years. These incremental clubs could effectively be considered free. Another way to look at it is this: In 2023, Basic-Fit is likely to produce more than €1 billion in revenues and more than €500 million in cash flows from operations. Nearly all of these cash flows have historically been spent on growth capex into new club buildouts or on the repayment of debt. In the years to come, Basic-Fit's immature club base will reach maturity and the company's embedded earnings power will reveal itself through the growth of operating cash flows in a non-linear manner. Similarly, growth capex and debt repayment will make up incrementally smaller proportions of operating cash flows, thereby producing a dual tailwind effect in which operating cash flows are expanding at approximately the same time that uses of cash flow are decreasing proportionately. If we were to ignore growth capex in an attempt to assess the stand-still value of Basic-Fit today we would deduct approximately €80 million in ongoing maintenance capex from the estimated €500 million of operating cash flows to arrive at €420 million of stand-still free cash flow. With 66 million shares outstanding, this equates to €6.36 of stand-still free cash flow per share. At year-end, Basic-Fit's shares traded at €28.16, meaning that Basic-Fit trades today at 4.4x stand-still free cash flows. If you were to take into consideration total enterprise value, then the math would equate to ~10x stand-still free cash flows. Basic-Fit is therefore cheap on an absolute basis. All of this would be for naught, however, if Basic-Fit were unable to maintain its unit economics. To that end, we turn to Basic-Fit's staying power not just as an operative business but as a high-caliber producer of returns on incremental capital that should see them grow into the highest quintile of the public equity universe (and hope to stay there). At the most basic level, fitness membership is a long-term trend that is unlikely to go away anytime soon. The nearest existential threat that we have witnessed to this industry unfolded just a few years ago, when the coronavirus pandemic shuttered everyone indoors for extended periods of time. Basic-Fit lost 34% of its revenue from 2019 through 2021. The company swung very quickly from producing small profits to deep losses and had to issue equity to meet its debt obligations and to continue to keep its head above water. Importantly, René Moos and his team saw this for what it was… a transient headwind, and he continued to invest in new store buildouts during this time period to position Basic-Fit to capture market share at a time when its competitors were at their weakest. Having made it through to the other side, Basic-Fit is a stronger business today, with a significantly larger presence and the company has since regained all of its lost revenue. When Basic-Fit reports its 2023 revenues in a few days it will have nearly doubled its revenues from its pre-pandemic high-point and more than doubled its operating cash flows. The company maintains a 2.6x leverage ratio with limited debt repayments required over the next three years and is well positioned to continue to roll out around 200 clubs per year. From a competitive standpoint, Basic-Fit has made it incredibly difficult for low-cost gyms to successfully compete with them. Its cluster strategy has gained Basic-Fit the lion's share of memberships within its existing locales and it continues to take market share in the regions that it is expanding into. Over the last year, I have spoken with more than a dozen employees of competitor fitness clubs in Europe and the general perspective is that Basic-Fit is an unstoppable force in Europe. When Basic-Fit announced its entry into Spain a few years ago, a number of Spanish fitness chains offered their clubs for sale, with one purchase actually going through in December of this year when Basic-Fit acquired the 47 locations of RSG Group at a purchase price that I estimate to be below Basic-Fit's total build cost. Apart from low-cost competitors, boutique gyms and niche services like Cross-Fit and cycle clubs stand to compete only on the fringes and do not have the mass appeal that Basic-Fit offers to the general public. There are uncertainties, to be sure. There are questions of whether Basic-Fit is going to be able to maintain its ultra-low overhead costs. Questions about if Basic-Fit can keep its maintenance capex at their guided-for levels. Additionally, Basic-Fit is expanding into Germany which is significantly more complex than its previous markets with a competent, albeit smaller, competitor already established. Nevertheless, Basic-Fit operates with a highly stable stream of revenues and a value proposition that appears to transcend geographical boundaries. It maintains a traditional moat around its business and is passing through its economies of scale to its customers in an effort to maintain its position as the highest value-for-dollar fitness chain despite inevitable increases in unavoidable fixed expenses. As Basic-Fit gains scale and regional market share it becomes increasingly difficult for new and existing fitness operators to compete with them. The best opportunity for a competitor was a decade ago, and now it seems as if the opportunity has passed the industry by. Lastly, and perhaps most importantly for Basic-Fit's immediate future, René Moos, Basic-Fit's Founder and CEO remains at the helm and aligned with shareholders, with 9% of the shares outstanding. In future years, as Basic-Fit, the company, reaches maturity, this likely becomes a business that an idiot could run.

BSD Analysis:
The manager presents Basic-Fit as a compelling value investment with hidden earnings power masked by a reinvestment cycle. The thesis centers on Europe's underpenetrated fitness market, where gym membership rates are roughly half those of the US, providing substantial runway for growth. Basic-Fit's competitive advantage stems from its low-cost model (€24.99 per four weeks) combined with a unique cluster strategy that prioritizes market dominance over individual unit optimization. The company achieves impressive unit economics with 36% ROIC on mature clubs generating €431k annual EBITDA. With 500 of 1,402 clubs still maturing, embedded earnings growth should accelerate as these units reach full potential. The valuation appears attractive at 4.4x stand-still free cash flow and 6.6x 2025 club EBITDA. Management's counter-cyclical investment during COVID-19 demonstrates strategic thinking, positioning the company to emerge stronger with doubled revenues and operating cash flows. CEO René Moos's 9% ownership stake ensures alignment, while the cluster strategy creates formidable competitive moats that have deterred rivals across European markets.

Pitch Summary:
Temple & Webster, an Australian furniture e-commerce marketplace and retailer that we have allocated a large proportion of our assets to. In February, Temple & Webster's shares declined by 26% in a single day on the back of what was perceived to be a negative earnings report. I wrote to you that Temple & Webster's challenges were transient in nature and that, if you were to dig into the publicly available industry data, it was actually quite clear that Temple & Webster was consolidating market share. Therefore I deemed it likely that Temple & Webster would return to growth in the near future, given that Temple & Webster's long-term tailwind (i.e. underpenetration in Australian furniture e-commerce) and competitive advantage (as the scaled marketplace with a dominant mind-share) was unimpaired. Only a few months later, in November, the furniture industry remains negative on an annual sales basis, yet Temple & Webster has returned to growth in resounding fashion. First half sales have risen by 26% year-over-year, with Q2 revenues, in particular, growing by 42%. The question of if and when Temple & Webster might return to growth has been answered and the future expectations for revenues and earnings have adjusted accordingly. In other words, the multiple expanded.

BSD Analysis:
The manager presents a compelling turnaround thesis for Temple & Webster, demonstrating strong conviction by significantly increasing position size during market weakness. The investment case centers on market share consolidation in a structurally growing market - Australian furniture e-commerce remains underpenetrated relative to other categories. The manager correctly identified that February's 26% single-day decline was driven by temporary industry headwinds rather than company-specific issues. Temple & Webster's competitive moat as the scaled marketplace with dominant mindshare provides sustainable advantages in customer acquisition and supplier relationships. The thesis validation came quickly, with Q2 2023 revenue growth of 42% and first-half growth of 26% year-over-year, demonstrating the company's ability to gain share even in a declining industry. The multiple expansion from 2.4x to 7.6x gross profits reflects improved market sentiment as growth resumed. This position contributed 14.1% to total portfolio returns, representing the manager's highest conviction bet paying off substantially.

Pitch Summary:
The company is facing an existential crisis - broken business model; terrible accounting practices; persistent lack of profits; rising debt level; target price - zero;

BSD Analysis:
Sotera provides sterilization services, including EtO sterilization under litigation and regulatory scrutiny. Liability exposure is material, with potential multibillion-dollar settlements. While end-market demand is stable, the legal overhang caps valuation and leverage compounds risk.

Pitch Summary:
Evolution is naturally a stock I've been paying close attention to lately. There's been a lot of noise, and both investors and analysts are growing concerned that the company's moat is weakening, with EBITDA margins and growth either slowing or stalling. Right now, I'm focusing on the fundamentals and the potential for growth in Asia. According to the CEO, growth could normalize by 2025 if the cyberattack issues are resolved. However, it will likely take a few quarters before the company's countermeasures start to show results. When asked by an analyst, "Does that still mean you expect improvements this year?" EVO responded: "Yes. The underlying market is intact and looking good. And I have no other flavor to give you. So 100% focus is the cyber attack, that someone is stealing our product." 2025 will be a defining year for value investors in Evolution, either they'll be very right or very wrong. My view is that the numbers are simply too attractive to ignore, and it feels like emotions are currently driving the narrative. I wouldn't be surprised if I ended up buying more in 2025.

BSD Analysis:
The manager takes a contrarian bullish stance on Evolution despite recent concerns about weakening competitive moats and slowing growth metrics. The investment thesis centers on the belief that current market pessimism is emotionally driven rather than fundamentally justified, creating an attractive valuation opportunity. The manager acknowledges near-term headwinds from cyberattack issues affecting the business but expects normalization by 2025 as countermeasures take effect. Management's confidence in the underlying market strength and focus on resolving operational challenges supports the bull case. The emphasis on Asian growth potential suggests significant expansion opportunities ahead. The manager views 2025 as a pivotal year that will validate or refute the value investment thesis, with current attractive metrics providing downside protection while offering substantial upside if operational issues resolve as expected.

Pitch Summary:
Another holding that is firing on all cylinders is the Canadian vertical market software acquirer Constellation Software. What I admire so much about this company and the best serial acquirers is that they do very complicated things so well, and they do it over time. Many people have written in long format about this firm and that's not something I'm going to do here. However, what I want to highlight are 3 things that hit the best serial acquire broadly: 1) Decentralization is a term often used and people say "they are decentralized" without actually explaining what it means in an operational setting. My understanding of this is that the company units are themselves responsible for creating objectives and key measurements based on what they believe they are capable of achieving. How they achieve this is up to them, but they have to report their progress and their achievements. This again is tracked by senior management to ensure that the business is moving in the right direction and that hiccups and best practices can be utilized efficiently. The opposite methodology here is that senior management decides which margin the unit should achieve and then just monitors performance periodically. The reason this way often fails is because of the single thing that Charlie Munger repeated over and over "Show me the incentive and I will show you the outcome". Without ownership and meaning, it's hard for large companies to ensure that units perform as they want. Accountability and ownership are the core of decentralization in my opinion. 2) The best serial acquirers are masters of post-merger integration. This means they don't just acquire a company and let it operate in isolation but rather integrate it in a way that ensures routines quickly take hold and the new company becomes more efficient. They understand that value from an acquisition comes not just from owning the company but from making sure it works smoothly within the existing structure and that they do so fast. What often happens in acquisitions is that a company is brought in, but the integration process is fragmented. Routine documents end up scattered across multiple SharePoint sites and often without clear owners. Employees are left unsure about what constitutes actual company policy, both at a high level and within their specific units. The outcome here is that without a clear structure, it becomes difficult to understand how the unit's objectives align with the broader goals of the company. When this happens, inefficiencies arise, and instead of benefiting from the acquisition, the company struggles with confusion, operational slowdowns, and a lack of "best practices". They are acquired and might share the same name, but they are not operating as "one company". The best acquirers avoid this by having a well-defined integration process that ensures new teams and systems are smoothly incorporated, making sure that routines, policies, and goals are clear from the start. Further, they are godlike in terms of operational efficiency and ensuring value realization post-integration. 3) Lastly, the best serial acquirers are masters of capital allocation, measured in terms of return on invested capital and they focus on the right things: Increasing the free cash flow to its owners over the long run.

BSD Analysis:
The manager expresses strong conviction in Constellation Software as a premier serial acquirer, highlighting three key competitive advantages that drive superior returns. First, the company's decentralized operating model creates accountability and ownership at the business unit level, aligning incentives for optimal performance rather than top-down mandates. Second, Constellation excels at post-merger integration, ensuring acquired companies are efficiently incorporated into the broader organization with clear processes and best practices. Third, the company demonstrates exceptional capital allocation discipline, focusing on ROIC and long-term free cash flow generation. The manager views these operational capabilities as sustainable competitive advantages that enable Constellation to consistently create value through acquisitions. The emphasis on decentralization and integration expertise suggests the company can continue scaling its acquisition strategy while maintaining operational excellence across its diverse software portfolio.

Pitch Summary:
Visa (29,1% weight) experienced for a while a storm due to regulatory noise and while I must admit that the prosecutors wrote a very solid piece of research, in the end, I didn't find many solutions in the paper as an alternative to Visa. That part was pretty weak and there was no chance that a major disruption could happen shortly. When one took the stock price fall into account and compared it to the size of a potential fine, it was pretty clear that the correction was overdone. In my opinion, Visa continues to be one of the best businesses in the world with extremely solid fundamentals along with solid growth. The case is pretty simple if you ask me: The firm is operating with ROCE at 31%, gross margins at 69%, and free cash flow margins at 27%, and is expected to grow its earnings per share over the long run at 13% annually. The driver? There's still way too much cash being used in the world and we are nowhere close to having reached maturity in the digital payment sphere.

BSD Analysis:
The manager maintains a strong bullish stance on Visa despite regulatory headwinds, viewing the recent correction as an overreaction. The investment thesis centers on Visa's exceptional financial metrics including 31% ROCE, 69% gross margins, and 27% free cash flow margins, demonstrating the company's dominant market position and pricing power. The manager expects 13% annual EPS growth driven by the ongoing global transition from cash to digital payments, suggesting significant runway for expansion. The regulatory concerns appear manageable given the lack of viable alternatives to Visa's network. At 29.1% portfolio weight, this represents the manager's highest conviction position, reflecting confidence in Visa's durable competitive moat and long-term growth prospects in the digital payments ecosystem.