Investment Pitches

Pitch Summary:
Advanced Micro Devices, Inc. is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel's. We invested on the belief that AMD's valuation at that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD's GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.

BSD Analysis:
Meridian's AMD investment represents a successful long-term turnaround thesis executed under CEO Lisa Su's leadership transformation. The fund invested in 2018 when AMD was a mid-cap value stock suffering from years of technological lag versus Intel and Nvidia, betting that management's investments would eventually yield superior products. The thesis has materialized over several years as AMD gained CPU market share against Intel and positioned itself as a credible GPU alternative to Nvidia. Recent quarter strength came from AMD's AI GPU product unveiling, with the market recognizing potential for viable competition to Nvidia's dominance in AI servers. While Meridian trimmed their position into strength for risk management, they maintain conviction that AMD's technology leadership will drive continued market share gains in large, growing CPU and GPU markets. The fund views current valuation as reasonable relative to the earnings potential from sustained competitive positioning.

Pitch Summary:
APA Corp. is a global energy exploration and production company with operations in Egypt, the U.K., the North Sea, the U.S. Permian Basin, and Suriname, where it has made a significant oil discovery and sizeable additional discoveries are expected. We believe APA's core global production profile is underappreciated and that the business is viewed as defensive, given its low cost to maintain and grow production. APA's Suriname project, which is moving closer to development with partner TotalEnergies, is expected to provide differentiated low-cost production growth in two to three years as TotalEnergies is carrying the bulk of the development cost. This mix has allowed APA to otherwise aggressively allocate capital to pay down debt and is increasingly focus on buying back stock as opposed to financing capital-intensive production growth. During the quarter, the stock declined as the mix of falling oil and gas prices and an announcement from TotalEnergies timed Suriname's potential first production at the far end of estimates. We increased our holding in APA in the fourth quarter since the timing delay would not change the value we ascribe to the Suriname production. Adding to our confidence was news of the potentially increased size and amount of the first production from that region which, in our view, would more than offset the negative effect of the delay.

BSD Analysis:
Meridian's APA investment thesis centers on an undervalued global production portfolio with a transformational Suriname development opportunity. The fund views APA's diversified geographic footprint across Egypt, UK North Sea, and Permian Basin as providing defensive, low-cost production that's underappreciated by the market. The key catalyst is the Suriname project with TotalEnergies, where the partner is funding most development costs while APA retains significant upside from what could be differentiated low-cost production in 2-3 years. This capital-light growth profile enables aggressive debt reduction and share buybacks rather than traditional capex-heavy growth. Recent stock weakness from falling commodity prices and TotalEnergies' timing delay prompted Meridian to increase their position, viewing the delay as immaterial to long-term value while being encouraged by reports of potentially larger initial production volumes.

Pitch Summary:
Legend Biotech Corp. is a Chinese biotech company with a promising CAR-T cancer drug it is developing in partnership with Johnson & Johnson. The company's stock was out of favor due to the former CEO's arrest for smuggling, a crime unrelated to Legend. Our biotech research team determined that the company's cancer drug was very promising, and the partnership with Johnson & Johnson allowed us to look beyond issues with its former CEO and China. While the stock has appreciated significantly since our initial investment, it was weak during the quarter as some competing company trials attracted FDA attention and cast some aspersions on the safety of CAR-T therapies. Our biotech experts remain confident that the FDA activity will not affect Legend and that its drug has significant blockbuster potential. We took profits during the quarter to manage overall portfolio risk, yet continue to hold a position in Legend, grounded in our team's research-based confidence that upside potential remains.

BSD Analysis:
Meridian's investment in Legend Biotech represents a contrarian bet on CAR-T cancer therapy despite governance and regulatory headwinds. The fund looked past the former CEO's arrest for smuggling and broader China concerns, focusing instead on the promising clinical profile of their CAR-T drug and the validation provided by Johnson & Johnson's partnership. Recent quarter weakness stemmed from FDA scrutiny of competing CAR-T trials raising safety concerns across the category. However, Meridian's biotech research team maintains confidence that Legend's drug profile remains differentiated and unaffected by broader regulatory issues. The fund's decision to take partial profits while maintaining exposure reflects their conviction in the drug's blockbuster potential balanced against prudent risk management. The Johnson & Johnson partnership provides both validation and development resources that distinguish Legend from pure-play biotech competitors.

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 is 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, one of our strongest performers early in 2023, was weak in the quarter due to disappointing earnings results and management guidance. Following the HPC division's largest contract in company history earlier in the year, the company was unable to generate enough new business to offset the tough comparison. Our research indicates that Smart Global remains a leader in HPC implementation for AI, a market that remains strong. The company is enhancing its go-to-market strategy to better position it for growth, including the hiring of a new head of sales. We believe the long-term risk/reward is still strong and took advantage of the price decline to increase our position during the quarter.

BSD Analysis:
Meridian's thesis centers on Smart Global Holdings as a turnaround story with compelling valuation and AI exposure. The fund initially invested in Q3 2020 at less than 8x earnings when multiple headwinds converged - memory volatility from Brazil weakness, premature product investments, and HPC order delays. Management's ability to navigate these challenges while maintaining leadership in HPC for AI applications forms the core investment rationale. Despite recent earnings disappointments and guidance cuts following a record HPC contract, the fund views current weakness as temporary and increased their position. The hiring of a new head of sales and enhanced go-to-market strategy suggest operational improvements are underway. Smart Global's diversified technology platform across memory, LEDs, HPC, and IoT provides multiple avenues for growth as AI demand accelerates.

Pitch Summary:
Matson, Inc. is a US-based ocean and logistics company with a leading position in Pacific shipping that provides a vital lifeline to Hawaii, Alaska, and Guam, as well as premium and expedited service from China to the US. Matson's unique terminal assets give it a significant speed advantage over competitors, which has been especially valuable amid supply chain disruptions. Matson's premium service has enabled the company to keep its fleet utilization strong at a significant rate premium which has led to stronger-than-expected earnings. In addition, Matson continues to generate strong free cash flow which has enabled the company to pay down debt, repurchase shares and invest in high-return projects, including fleet additions and upgrades. During the quarter, we trimmed our position as the share price appreciated based on our valuation discipline.

BSD Analysis:
The fund trimmed its Matson position following share price appreciation, demonstrating disciplined valuation management while maintaining a bullish thesis. The Pacific shipping company's unique terminal assets and speed advantages create sustainable competitive moats, particularly valuable during supply chain disruptions. Matson's premium service positioning enables strong fleet utilization at significant rate premiums, driving better-than-expected earnings performance. The company's diversified route network serving Hawaii, Alaska, Guam, and China-US trade lanes provides geographic diversification and essential service characteristics. Strong free cash flow generation supports balanced capital allocation through debt reduction, share repurchases, and fleet investments. The position trim reflects valuation discipline rather than fundamental concerns, as the company continues executing well operationally. Matson's essential service nature and infrastructure advantages position it well for continued market leadership in Pacific shipping routes.

Pitch Summary:
Euronet Worldwide Inc. is an industry leader in providing secure electronic financial solutions on a global basis. The company operates one of the largest independent ATM networks in Europe, has the largest payment network for prepaid mobile top-ups and other digital content, and is the second-largest global money transfer company. The stock appreciated during the quarter as the company reported solid growth and profitability metrics. We are keeping our eye on consumer health while learning more about the potential opportunities that may materialize from its recent acquisition of Marucci Sports. During the quarter, we maintained our position in the company. We were encouraged by the company's recovery and believe Euronet's valuation remains at an attractive level. As a result, we added to our position during the quarter.

BSD Analysis:
The fund increased its Euronet position based on solid operational recovery and attractive valuation levels. The electronic financial services provider demonstrated strong fundamentals across its three core business segments: European ATM networks, prepaid mobile payments, and money transfer services. The company's market-leading positions in each segment provide competitive advantages and recurring revenue streams. Euronet's recovery from prior period travel-related headwinds indicates operational resilience as global mobility normalized. The fund's decision to add to the position reflects confidence in the company's diversified payment processing model and international exposure. Strong growth and profitability metrics support the investment thesis despite ongoing monitoring of consumer spending health. The company's scale advantages in electronic financial solutions and global reach position it well for continued market share gains in digital payment trends.

Pitch Summary:
CarGurus, Inc. is at the forefront of the online automobile sales industry, operating a web-based retail marketplace and holding a 50% stake in an online auction wholesaler. The marketplace business is unique in that it presents buyers with an unbiased list of available vehicles ranked on their value—a combination of the price and quality of the vehicle. Meanwhile, dealers are drawn to CarGurus.com's attractive pricing and extensive suite of ancillary services. During the quarter, the stock appreciated as the company reported accelerating marketplace growth, up 8% from 4% in the previous quarter. The acceleration was primarily driven by rising inventory on dealer lots, which is forcing dealers to advertise to stimulate demand for the first time post-COVID. CarGurus also has been successful in passing through price increases, as price breaks provided during COVID are coming off the books and the company is the lowest cost source of leads for dealers. The company announced during the quarter that it would be buying the remaining stake in CarOffer, its auction-based wholesaling business. We believe the price, which is based on a depressed 2023 valuation, provides excellent value for CarGurus shareholders. We continue to believe in the long-term fundamentals of the company and maintained our position during the quarter.

BSD Analysis:
The fund maintained its CarGurus position based on accelerating marketplace growth and strategic value creation opportunities. The online automotive marketplace demonstrated strong momentum with growth accelerating from 4% to 8% quarterly, driven by rising dealer inventory levels forcing increased advertising spend. CarGurus' unique value-based ranking system and position as the lowest-cost lead source for dealers provide sustainable competitive advantages. The company successfully implemented price increases as COVID-era discounts expired, demonstrating pricing power in the market. The acquisition of the remaining CarOffer stake at a depressed 2023 valuation represents strategic value creation, consolidating ownership of the auction-based wholesale business. Rising dealer inventory post-COVID creates a favorable operating environment as dealers increase marketing spend to stimulate demand. The fund's conviction reflects confidence in CarGurus' market position and ability to capitalize on automotive industry digitization trends.

Pitch Summary:
Henry Schein, Inc. is a leading dental and medical supply distributor that operates through a centralized and automated distribution network. The company offers more than 300,000 products through its distribution centers. In October, Henry Shein was victimized by a cyberattack that significantly impacted its operations and delivery capabilities. Management anticipates the disruption will negatively impact sales growth in the coming quarter, a likelihood we see extending throughout this year. Longer-term, we believe Henry Schein is well positioned for recovery, however, our research indicates that the company will need to rely on increased promotions to win back business in the near term. With anticipated slower sales and a sluggish dental market in 2024, we elected to trim the position during the quarter.

BSD Analysis:
The fund trimmed its Henry Schein position following a significant cyberattack that disrupted operations and delivery capabilities. The healthcare distributor's extensive product catalog of over 300,000 items and centralized distribution network represent competitive advantages, but the cyber incident created near-term operational challenges. Management's guidance indicates sales growth headwinds extending through 2024, requiring increased promotional spending to regain customer confidence and market share. The broader dental market weakness compounds these company-specific challenges, creating a difficult operating environment. While the fund acknowledges Henry Schein's long-term recovery potential given its market position, the combination of cyber-related disruption, promotional pressure, and sluggish end-market demand justified position reduction. The incident highlights cybersecurity risks facing healthcare distributors with centralized operations.

Pitch Summary:
Fox Factory Holdings, Inc. is a specialized manufacturer of highly engineered suspension components used in high-end mountain bikes, on- and off-road vehicles, and other applications where high-performance components are required. The company's weak quarterly results stemmed from post-pandemic de-stocking, primarily within the bike channel. Responding to strong demand throughout COVID, the company rebuilt its inventory levels just as demand for restocking by its end customers softened. The automotive strikes, which shut down a few of its customers' assembly lines, also impacted results. We expect the company to work through its excessive inventory over the next couple of quarters. Fox still enjoys relatively high margins, with good earnings and reaffirmed guidance, which helped the stock to recover following softer-than-expected results due to a slowdown in overall travel in the prior period. We are keeping our eye on consumer health while learning more about the potential opportunities that may materialize from its recent acquisition of Marucci Sports. During the quarter, we maintained our position in the company.

BSD Analysis:
The fund maintained its position in Fox Factory despite near-term headwinds from inventory destocking and automotive strikes. The specialized suspension component manufacturer faced cyclical challenges as post-COVID demand normalization led to excess inventory buildup. The company's high-performance focus in mountain bikes and off-road vehicles positions it well in premium market segments, though consumer discretionary spending remains a key variable. Management's reaffirmed guidance and the company's ability to maintain relatively high margins demonstrate operational resilience. The recent Marucci Sports acquisition presents potential diversification opportunities beyond traditional suspension components. The fund's neutral stance reflects confidence in the company's long-term fundamentals while acknowledging near-term inventory normalization challenges. Fox Factory's specialized engineering capabilities and market position in performance applications provide competitive advantages once demand stabilizes.

Pitch Summary:
Canada Goose Holdings, Inc. is a global lifestyle brand and manufacturer of performance luxury apparel. The firm, widely known for its iconic down parkas, has expanded its product offerings in recent years and has embarked on a strategic shift from a wholesaling model toward a vertically integrated direct-to-consumer model. The stock fell during the quarter as the company continued to underperform its luxury peer's post-pandemic. The company's significant investments in brick-and-mortar stores also underperformed, particularly in China, where the slow-to-materialize consumer recovery has weighed on results. While there are signs that the strategic transition may pay off, our concerns around weaker topline performance, generally elevated inventories, management turnover, and overall execution led us to exit the position during the quarter.

BSD Analysis:
The fund manager exited Canada Goose due to multiple execution concerns despite the company's strategic pivot to direct-to-consumer retail. The luxury apparel maker has struggled with post-pandemic recovery, particularly underperforming relative to luxury peers. Key issues include weak topline growth, elevated inventory levels suggesting demand challenges, and management turnover indicating internal instability. The company's significant investments in physical retail, especially in China, have not delivered expected returns as Chinese consumer recovery has been slower than anticipated. While the manager acknowledges potential upside from the strategic transition away from wholesale, the combination of operational challenges and execution risks outweighed the potential benefits. The exit reflects concerns about the company's ability to successfully navigate the competitive luxury market while managing its retail transformation.

Pitch Summary:
Microsoft, Inc. is a key player in the technology ecosystem, providing software, services, and devices to individuals, businesses, and enterprises worldwide. The company has expanded well beyond its historical core to include a wide range of products and services, such as cloud computing, gaming, hardware, and AI-enabled business solutions. Microsoft reported another strong quarter of revenue growth across most of its divisions and announced several initiatives focused on the monetization of its AI capabilities across its business units. While still early for the adoption of its AI products and revenue generation, we believe these products provide significant revenue opportunities over the coming years. The AI Copilots are expected to increase productivity, drive more cloud consumption, and enable Microsoft to upsell premium product tiers. We remain constructive on Microsoft's prospects for growth; however, the stock's valuation is beginning to reflect these opportunities. While we continued to hold an unhedged position in the fund, we trimmed our exposure during the quarter.

BSD Analysis:
The manager maintains a constructive but cautious view on Microsoft, acknowledging the company's strong fundamentals while expressing valuation concerns. Microsoft delivered another strong quarter with revenue growth across most divisions and continues to expand beyond its historical software core into cloud computing, gaming, and AI-enabled solutions. The key investment thesis centers on the significant revenue opportunities from AI monetization, particularly through AI Copilots that are expected to increase productivity, drive cloud consumption, and enable premium product upselling. While AI adoption and revenue generation remain in early stages, the manager believes these capabilities provide substantial long-term growth potential. However, the stock's valuation has begun to reflect these AI opportunities, prompting the manager to trim exposure despite maintaining an unhedged position. The decision to reduce allocation suggests the risk-reward profile has become less attractive at current levels. This represents a quality growth play with AI transformation potential, but valuation discipline led to position sizing adjustments.

Pitch Summary:
Levi Strauss & Co. designs, markets, and sells jeans, casual wear, and related accessories under the Levi's, Dockers, and Beyond Yoga brands. The company sells its products directly to consumers through its own stores and e-commerce sites and third-party retailers and distributors globally. In the quarter, the company delivered double-digit direct-to-consumer revenue growth driven by gains across its stores, outlets, and e-commerce. This signals the underlying health of the Levi's brand and its ability to connect directly with loyal customers. Wholesale revenue, however, declined due to macro uncertainty and inventory issues weighing on the US and Europe. The stock appreciated during the quarter in response to general confidence in new management and growth initiatives that, we believe, will accelerate expansion in international markets and women's apparel, which appear to have more runway. In our view, Levi appears well-equipped to navigate challenges in the wholesale segment and capitalize on the strengths of its direct-to-consumer business, brand portfolio, and growth initiatives. We maintained our position in the company based on the underappreciated potential that remains to be unlocked across the company's diverse brand offerings.

BSD Analysis:
The manager maintains a bullish stance on Levi Strauss based on the company's successful direct-to-consumer transformation and growth potential under new management. The investment thesis highlights the underlying strength of the Levi's brand, evidenced by double-digit direct-to-consumer revenue growth across stores, outlets, and e-commerce channels. This demonstrates the brand's ability to connect with loyal customers and capture higher margins through direct sales. While wholesale revenue declined due to macro uncertainty and inventory challenges in the US and Europe, the manager views this as temporary headwinds. New management's growth initiatives focus on international expansion and women's apparel, which offer significant runway for future growth. The company's diverse brand portfolio including Levi's, Dockers, and Beyond Yoga provides multiple avenues for expansion. The manager believes the market underappreciates the transformation potential and growth opportunities across the brand portfolio. This represents a brand transformation play with strong direct-to-consumer momentum and international expansion opportunities.

Pitch Summary:
Sally Beauty Holdings, Inc. is a global distributor of retail and professional beauty products and is the largest in the U.S. by store count. Its operations are divided into two main segments: Sally Beauty Supply, catering to retail consumers, and Beauty Systems Group, serving the needs of salons and stylists. The recent increase in the company's stock price can be attributed to growing evidence that management's strategic initiatives are working. These measures are aimed at driving growth and ensuring profitability in the face of a challenging consumer market. While the company fell short of sales expectations in the quarter, it managed to maintain stronger-than-forecast margins. This performance indicates that the company's pricing strategies and cost-control efforts are yielding positive results. During the quarter, the company generated healthy free cash flow and committed to further stock repurchases, highlighting its commitment to returning value to shareholders. The stock's currently low valuation relative to historical levels may suggest upside potential as management continues to execute its strategy. Despite external challenges, our investment thesis for owning Sally Beauty Holdings as a turnaround story remains intact. The position is held in a hedged structure, with covered call options sold to generate income premiums and offset potential weakness in the stock.

BSD Analysis:
The manager maintains a bullish view on Sally Beauty Holdings as a turnaround story showing early signs of strategic progress. The company operates as the largest beauty products distributor in the U.S. by store count, serving both retail consumers and salon professionals through distinct segments. Management's strategic initiatives appear to be gaining traction, with evidence of improved operational execution despite a challenging consumer environment. While sales fell short of expectations, the company demonstrated pricing power and cost discipline by maintaining stronger-than-forecast margins. Strong free cash flow generation and continued share repurchases highlight management's commitment to shareholder returns and confidence in the business. The stock trades at attractive valuation levels relative to historical metrics, providing upside potential as the turnaround progresses. The manager employs a hedged structure using covered calls to generate income and provide downside protection. This represents a value-oriented turnaround play with improving fundamentals and attractive risk-adjusted returns through options strategies.

Pitch Summary:
Sphere Entertainment Corp. owns the Las Vegas Sphere venue, MSG Networks regional sports network, and a stake in Madison Square Garden Entertainment. The Sphere is a state-of-the-art venue that has the potential to be a transformative asset with strong profit margins. The stock has underperformed the market due to growing concerns about the company's high fixed costs and leverage profile. The Sphere venue has annual operating expenses of $400 million, requiring very high event utilization and consistent ticket sales to break even. We continue to believe the Sphere provides a truly unique consumer experience that taps into strong demand for live events and immersive entertainment. If the venue can scale event volume and attendance over time while rationalizing costs, Sphere could leverage its distinct differentiation to drive strong cash flow generation. During the quarter, we maintained our long exposure to the company.

BSD Analysis:
The manager maintains a bullish stance on Sphere Entertainment despite market concerns about the company's challenging operating leverage. The investment thesis centers on the Las Vegas Sphere venue as a potentially transformative asset with unique differentiation in the entertainment market. The venue offers state-of-the-art immersive experiences that tap into strong consumer demand for live events and entertainment. However, the business model faces significant execution risk with $400 million in annual operating expenses requiring very high utilization rates and consistent ticket sales to achieve profitability. The stock has underperformed due to investor concerns about high fixed costs and leverage profile. The manager's bullish view depends on management's ability to scale event volume and attendance while rationalizing the cost structure over time. Success would leverage the venue's distinct competitive advantages to generate strong cash flows. This represents a high-risk, high-reward turnaround play on a unique entertainment asset with significant operating leverage.

Pitch Summary:
Allegro Microsystems, Inc. is a semiconductor company that provides sensor and power integrated circuits for the automotive and industrial markets. The company's energy-efficient systems provide functionality such as measuring motion, speed, and regulating system voltages. The stock fell in the quarter due to weaker than expected guidance and ongoing inventory corrections weighing on near-term demand. The company continues to see strong traction in its e-mobility business targeting electric and autonomous vehicles, which accounted for 50% of automotive revenue and two-thirds of total design wins in the most recent quarter. However, the dual effects of the UAW strike and its customers' rebalancing of inventory levels caused automotive revenue to decline. Additional weakness is expected in the industrial and consumer markets as customers digest elevated inventory levels built over the past year. While the long-term outlook remains positive in our view, the weaker near-term trends and uncertainty around the pace of recovery have weighed on the stock. As long-term investors, we have experience with cycles and have confidence that the near-term inventory corrections will resolve. As such, we maintained long exposure to the shares.

BSD Analysis:
The manager maintains a bullish long-term view on Allegro Microsystems despite significant near-term headwinds impacting the stock. The company operates in attractive end markets, particularly the growing e-mobility segment which represents 50% of automotive revenue and two-thirds of design wins, positioning it well for the electric vehicle transition. However, multiple cyclical factors are creating temporary pressure: weaker guidance, ongoing inventory corrections across automotive and industrial markets, UAW strike impacts, and customer inventory rebalancing. The manager acknowledges additional weakness expected in industrial and consumer segments as elevated inventory levels are digested. Despite these challenges, the investment thesis remains intact based on the company's strong positioning in energy-efficient sensor and power management solutions for automotive and industrial applications. The manager's decision to maintain exposure reflects confidence in their cycle experience and belief that inventory corrections are temporary. This represents a cyclical growth play with secular tailwinds from electrification trends.

Pitch Summary:
Liberty Broadband Corporation is a holding company that owns interests in several cable businesses, primarily in the United States. Most of Liberty Broadband's value (about 90%) comes from its large stake in Charter Communications, a broadband provider with 32 million customers across 41 states. Charter's stock underperformed after missing subscriber growth expectations. Management signaled a likelihood of continued softness through the remainder of 2023. The company also announced $1 billion of additional capital expenditures, which was unwelcome news for many investors. Liberty Broadband has historically traded at a discount to its net asset value, which continues today. We estimate that the business trades as much as 30% below fair value and presents an opportunity to own a quality asset at a sizeable discount. Our long position in Liberty Broadband remained based on the consistent discount to net asset value and Charter's underlying strengths, even as Charter manages through current industry dynamics.

BSD Analysis:
The manager maintains a bullish stance on Liberty Broadband despite near-term headwinds at Charter Communications. The investment thesis centers on a significant valuation discount, with the manager estimating the holding company trades 30% below fair value relative to its net asset value. Charter's operational challenges include missed subscriber growth expectations and management's guidance for continued softness, compounded by an additional $1 billion in capital expenditures that concerned investors. However, the manager views these as temporary issues while emphasizing Charter's underlying business quality with 32 million customers across 41 states. The persistent discount to NAV provides a margin of safety and attractive entry point. The manager's confidence in maintaining the position reflects their belief in Charter's long-term competitive position despite current industry headwinds. This represents a classic value play on a quality cable asset trading at a meaningful discount to intrinsic value.

Pitch Summary:
C4 Therapeutics, Inc. is a biotechnology firm that specializes in protein degradation therapies to eliminate disease-causing proteins in cancers and other illnesses. The company has three treatments in early-stage clinical trials that target a number of cancers, including multiple myeloma, non-Hodgkin's lymphoma, synovial sarcoma, and other cancer types. The company's stock appreciated during the quarter on two positive developments. First, the company announced a formal agreement with Merck to co-develop degrader-antibody conjugates (DACs). The deal provided an upfront cash infusion and the potential for milestone payments that, if achieved, may be valued at more than $2B. Second, the company received a positive clinical readout on one of its leading compounds (CFT7455) in Phase 1 trials. While still early, the trial results provided an encouraging signal that the company's novel approach to treating cancer has a legitimate therapeutic window with good efficacy. The results also allayed prior safety concerns, which previously held the stock back. As the stock appreciated during the quarter, we trimmed our position based on our valuation discipline.

BSD Analysis:
The manager presents a bullish case for C4 Therapeutics based on its innovative protein degradation platform targeting multiple cancer types including multiple myeloma, non-Hodgkin's lymphoma, and synovial sarcoma. Two significant catalysts drove performance during the quarter: a strategic partnership with Merck for degrader-antibody conjugates providing upfront cash and potential milestone payments exceeding $2 billion, and positive Phase 1 clinical data for lead compound CFT7455 demonstrating both efficacy and safety. The Merck partnership validates C4's platform technology and provides substantial financial resources to advance development programs. The positive clinical readout for CFT7455 addressed previous safety concerns while demonstrating a legitimate therapeutic window, de-risking the platform approach. However, the manager's decision to trim the position following appreciation reflects disciplined valuation management in this early-stage biotech. The protein degradation approach represents a novel therapeutic modality with broad applicability across cancer types. While clinical-stage biotechs carry inherent execution risk, the Merck validation and positive clinical data suggest meaningful progress toward commercial viability. This appears to be a promising platform technology with significant partnership validation and early clinical success.

Pitch Summary:
CarGurus, Inc. is at the forefront of the online automobile sales industry, operating a web-based retail marketplace and holding a 50% stake in an online auction wholesaler. The marketplace business is unique in that it presents buyers with an unbiased list of available vehicles ranked on their value—a combination of the price and quality of the vehicle. Meanwhile, dealers are drawn to CarGurus.com's attractive pricing and extensive suite of ancillary services. During the quarter, the stock appreciated as the company reported accelerating marketplace growth, up 8% from 4% in the previous quarter. The acceleration was primarily driven by rising inventory on dealer lots, which is forcing dealers to advertise to stimulate demand for the first time post-COVID. CarGurus also has been successful in passing through price increases, as price breaks provided during COVID are coming off the books and the company is the lowest cost source of leads for dealers. The company announced during the quarter that it would be buying the remaining stake in CarOffer, its auction-based wholesaling business. We believe the price, which is based on a depressed 2023 valuation, provides excellent value for CarGurus shareholders. We continue to believe in the long-term fundamentals of the company and maintained our position during the quarter.

BSD Analysis:
The manager maintains a bullish stance on CarGurus based on its differentiated marketplace model that provides unbiased vehicle rankings and comprehensive dealer services. The investment thesis strengthened during the quarter with marketplace growth accelerating from 4% to 8%, driven by rising dealer inventory levels forcing increased advertising spend for the first time since COVID. The company's pricing power became evident as COVID-era price concessions rolled off and CarGurus demonstrated its position as the lowest-cost lead source for dealers. The strategic acquisition of the remaining CarOffer stake at a depressed 2023 valuation represents opportunistic capital allocation that should enhance shareholder value. CarGurus benefits from a two-sided marketplace with strong network effects, where increased dealer participation attracts more buyers and vice versa. The post-COVID normalization in dealer inventory levels creates a favorable operating environment as dealers resume marketing spend. The company's unique value proposition combining unbiased rankings with comprehensive dealer tools creates competitive differentiation in the fragmented automotive marketplace sector. This appears to be a well-positioned digital marketplace benefiting from industry normalization trends.

Pitch Summary:
Mirion Technologies, Inc., a global leader in ionizing radiation measurement and detection, provides mission-critical and, in many cases, lifesaving technologies within the industrial (nuclear power) and medical (nuclear medicine and radiation therapy) sectors. Our investment in Mirion is predicated on three primary factors. First, the company operates in industries with strong secular trends. Second, approximately 75% of the company's revenues are recurring or replacement, providing valuable transparency and predictability. Finally, the company competes in relatively fragmented markets, which leads to higher switching costs and strong pricing power. During the quarter, the stock advanced as the company reported 17% organic growth, significantly better than expected. The report added to investors' confidence that growth may exceed management's previously stated full-year revenue guidance of between 6-8%. We also have been encouraged by management's disciplined capital allocation decisions, as the company has selectively acquired high-quality companies at attractive prices, while at the same time reducing leverage on its balance sheet. During the quarter, we maintained our position in Mirion and will continue to monitor valuation closely from here.

BSD Analysis:
The manager presents a compelling bull case for Mirion Technologies based on three key investment pillars: secular growth tailwinds in nuclear power and medical radiation sectors, highly predictable recurring revenue model with 75% revenue visibility, and strong competitive positioning in fragmented markets enabling pricing power. The investment thesis gained validation during the quarter with 17% organic growth significantly exceeding expectations, suggesting the company may surpass management's 6-8% full-year revenue guidance. Management's disciplined capital allocation approach, combining strategic acquisitions at attractive valuations with balance sheet deleveraging, demonstrates operational excellence. The combination of mission-critical technology applications, high switching costs, and strong secular trends in nuclear power and medical radiation creates a defensive growth profile. However, the manager's cautious stance on valuation monitoring suggests the stock may be approaching fair value levels. The recurring revenue model and fragmented market dynamics provide downside protection while secular growth drivers offer upside potential. This appears to be a high-quality defensive growth play in a specialized technology niche.

Pitch Summary:
Sendas Distribuidora (Sendas), one of the largest EM holdings in our International Strategy, is a good illustration. Sendas operates discount grocery stores in Brazil under the "Assai" brand and has around 300 stores across the country. Assai stores are akin to Costco in the sense that they offer bulk discounts on food and household essentials in a no-frills "warehouse"-style format. Unlike Costco, Assai does not charge an annual membership fee, and the stores carry a wider selection of merchandise, roughly twice as many items as a typical Costco location. Brazilian discount grocers—known locally as "cash and carry"—are increasingly popular, taking market share from a fragmented landscape of both traditional supermarkets and mom-and-pop stores. The warehouse model they employ is resilient when times are tough and household budgets are tight, and profitable, continuing to grow along with the middle class as incomes rise (just like Costco). Food spending per capita in Brazil still lags much of the developed world, so every incremental increase in disposable income has a decent correlation with higher spending on food. As such, Assai is well-positioned to benefit from tailwinds in both consumer spending and population growth, which is a broader trend in Brazil. Assai was built by CEO Belmiro Gomes, a world class retailer who leads a well-regarded management team with a 10+ year track record of operational excellence. Gomes' formula has been to acquire less-appealing store formats in great locations and convert them to the Assai concept. The business started within GPA, a diversified Brazilian retail conglomerate owned by France's Casino Group. Over the course of 2021 to 2023, Sendas was spun out as a separately listed company and eventually fully divested from its parent company. Gomes and his team are now in a position to control their own destiny as a standalone business for the first time. After the initial spinoff in 2021, Sendas purchased 71 stores from its former parent. These stores are in prime locations and are in the process of being converted to the Assai format, a project that should wrap up in early 2024. While we believe that these new properties will drive substantial market share gains and free cash flow (FCF) over our investment horizon, the market's key concern has been the level of (floating rate) debt that Sendas has been carrying to pay for the new stores and the capital expenditures needed to convert them. Our research suggests that the debt load is manageable and increasing FCF generation over the next two years should allow for deleveraging that could potentially exceed management's debt reduction plan. Beyond that, we believe the business will be in a great position to grow and ultimately return capital to shareholders. Of course, there is a risk that interest rates in Brazil spike before Sendas can complete the process of deleveraging. We are mindful of this risk but can take comfort in the fact that Brazil has shown incredible monetary discipline—perhaps something central banks in developed markets might learn from! Real rates in Brazil are currently running around 8%—a 12% policy rate vs 4% inflation. With inflation trending down, it is hard for us to imagine anything but lower rates from here, which would be hugely positive for Sendas. One would also expect lower valuation multiples in a high real rate environment (as in the US in the 1980s). As rates in Brazil come down, we would expect an additional tailwind for Sendas in the form of a higher valuation multiple. Had Sendas been around in 2005, the "Costco of Brazil" would surely have been a BRIC-era market darling with a punchy valuation to match. Instead, we can buy it today at a FCF yield of nearly 25% on our 2025 estimates. After they finish converting the current crop of stores to the Assai format, we believe there should be plenty of low-hanging fruit for years to come. For example, they have already secured land for future locations that can potentially earn returns on invested capital of 25% or more. Over time, Sendas should also see its competitive advantage widen. The more it grows, the harder it becomes for smaller competitors to compete on margins. Less competition means more opportunities to grow, and so on. As shown in the table below, Sendas compares favourably to its local and global peers across a number of key metrics. For the purpose of comparison, we prefer to use the 2019-2021 period because this comes before the acquisition and reformatting of their additional stores. Once that process is complete, we expect Sendas to continue delivering similarly strong operational performance relative to its peer group. At its current valuation, we believe we are getting a superior retailer at a significant discount to what you'd expect to pay for such a business in the US. It has been evident to us that the market seems far more concerned with the next 12 months than with the company's longer-term prospects. We are more than happy to wait patiently and take advantage of short-term weakness to build our position.

BSD Analysis:
Orbis presents a compelling bull case for Sendas Distribuidora, positioning it as a high-quality discount retailer trading at an attractive valuation. The fund highlights the company's warehouse-style format that captures market share from fragmented traditional retailers while benefiting from Brazil's rising middle class and increasing food spending per capita. Management's proven track record of converting acquired stores to the profitable Assai format provides a clear growth runway, with 71 recently acquired prime locations expected to drive substantial free cash flow generation. While the market focuses on near-term debt concerns from the store conversion investments, Orbis views the leverage as manageable given expected FCF growth and Brazil's disciplined monetary policy environment. The fund sees multiple tailwinds converging: declining Brazilian interest rates should reduce financing costs and expand valuation multiples, while the company's scale advantages create widening competitive moats. At a 25% FCF yield on 2025 estimates and 25%+ returns on invested capital for future locations, Orbis believes they're acquiring a superior retailer at a significant discount to comparable US businesses. The patient capital approach allows them to capitalize on short-term market myopia while the fundamental transformation story unfolds.