Investment Pitches

Pitch Summary:
Teva Pharmaceuticals (TEVA): The company continued to deliver rapid growth in its patented branded portfolio, with results consistently exceeding expectations. The market began to reflect this progress only after policy headwinds eased, including a negotiated pricing agreement with the Centers for Medicare & Medicaid Services for TEVA’s drug Austedo beginning in 2027. These developments more than offset muted performance in the generics business and highlight the progress TEVA has made in its transition to a branded pharmaceutical company.

BSD Analysis:
Teva is a turnaround story built on cash flow, not hope. The generics business is unglamorous but throws off real money when managed with discipline, and pricing pressure has finally stabilized. Legal overhangs around opioids are largely quantified, shifting the narrative from survival to optimization. Specialty drugs add upside, but the core thesis is debt reduction and margin normalization. Investors still price Teva like a terminal asset rather than a repaired balance sheet. Manufacturing scale and regulatory know-how remain real advantages competitors can’t replicate cheaply. Execution, not innovation, drives value here. If leverage keeps coming down, equity rerates quietly. This is ugly pharma math that can still work.

Pitch Summary:
Victoria’s Secret (VSCO): A prior management team nearly destroyed one of the most well-known brands in the world. To be more politically correct, it got rid of sexy and eliminated its world-famous fashion show. New management is reversing those decisions and the brand is beginning to recover. The stock, which was all but left for dead, is beginning to reflect the brand’s recovery.

BSD Analysis:
Victoria’s Secret is a brand reset story after years of cultural and merchandising missteps. Core intimates demand is stable, but fashion execution drives margins. Investors conflate brand fatigue with operational errors. Store footprint rationalization improves profitability without killing reach. Direct-to-consumer economics matter more than runway theatrics. The customer base remains large and recurring. If inventory and product discipline hold, earnings recover quickly. This is retail leverage on execution, not relevance.

Pitch Summary:
Fluor/NuScale Power stub (FLR/SMR): FLR owned the majority of SMR, which essentially went parabolic. We anticipated FLR would dispose of its SMR stake and use the proceeds to repurchase its own shares, and this is exactly what is happening. The result of the heavy sales by FLR combined with SMR’s very speculative valuation has led to a sharp decline in SMR, while FLR has been largely stable. The result is that the value of our stub position increased substantially.

BSD Analysis:
Fluor is a global engineering and construction firm tied to large-scale energy, infrastructure, and government projects. Past execution issues damaged credibility, but the project mix has improved materially. Fixed-price risk is being reduced in favor of reimbursable and services-heavy contracts. Investors still price Fluor for past sins. Backlog quality now matters more than backlog size. Energy transition and infrastructure spending provide demand visibility. Cash flow stability is the real swing factor. This is an execution repair story, not a growth one.

Pitch Summary:
In the EMU, German holdings Evotec, a provider of outsourced drug discovery and development services, and software provider TeamViewer were key detractors in the quarter and year. Weak spending in the biopharmaceutical industry continued to impact Evotec, whose sales and profits declined in its fiscal third quarter.

BSD Analysis:
Evotec is a drug discovery platform company that sells probability, not promises. Its value lies in partnerships, data, and optionality across dozens of programs rather than single-asset bets. The model smooths binary risk, but also delays gratification. Execution missteps have hurt credibility, and the market is no longer forgiving. That said, the scientific engine remains relevant, especially as pharma outsources R&D. Profitability depends on milestone discipline and cost control, not just pipeline breadth. This is not biotech for momentum traders. It’s patient capital exposure to drug discovery infrastructure. High risk, but not reckless.

Pitch Summary:
Within Consumer Staples, Grupo Herdez, Mexico’s leading packaged-food manufacturer, posted solid results and completed two transactions that helped streamline its business. It sold a stake in a joint venture with US spice giant McCormick to its partner, with the proceeds potentially going toward stock buybacks. It also spun off its lower-returning Grupo Nutrisa business of coffee shops and yogurt stores.

BSD Analysis:
Grupo Herdez is a defensive Mexican food company built on brands that live in everyday kitchens. Demand doesn’t disappear in downturns — consumers just eat at home more. Pricing power exists because these are habitual purchases, not luxuries. Input inflation squeezes margins temporarily, but scale and brand loyalty restore balance. Distribution reach is a real moat in Mexico’s fragmented retail market. Capital allocation has been conservative, favoring stability over splashy growth. This is not a high-growth consumer name. It’s a survival-first compounder. In volatile economies, that matters.

Pitch Summary:
We had another strong year in Consumer Staples. Even within staples, investors’ appetite for growth remained strong. Performance was boosted by two long-term holdings: Lotus Bakeries of Belgium and Japan’s Rohto Pharmaceuticals. Rohto makes everything from acne creams and eyecare products to dietary supplements. Growth has been driven by rising demand in Japan for the company’s high-end skin-care offerings, which Rohto has recently expanded beyond Asia into the US market. Last year, its growth was further accelerated by unexpected demand for eyecare products amid a wave of COVID-related conjunctivitis. As this demand normalized, Rohto’s shares pulled back, creating an attractive entry point for further investment.

BSD Analysis:
Rohto is a quietly exceptional Japanese healthcare company built around eye care, dermatology, and OTC wellness products. Its brands enjoy deep consumer trust, especially in Asia, where repeat usage drives steady cash flow. Innovation is incremental rather than risky, which keeps failure rates low. International expansion adds growth without breaking the domestic base. Margins are stable because pricing reflects efficacy, not marketing hype. The balance sheet is conservative, giving Rohto room to invest patiently. This is not a biotech lottery ticket. It’s consumer healthcare done with discipline. Rohto compounds by showing up in daily routines, not headlines.

Pitch Summary:
Yantai China Pet Foods, which is based in the northern Chinese port city of the same name, makes pet snacks such as jerky strips and freeze-dried chicken, selling them in Europe and the US and in the domestic Chinese market. Yantai’s main foreign competitors operate largely in Thailand, while China Pet Foods benefits from China’s extensive food-supply chain and access to local labor. But until recently, Chinese pet-food producers were held back in foreign markets by concerns about food safety. China Pet Foods was the first Chinese company to gain US and EU certifications that allow it to export pet snacks to those markets. It is now the leading Chinese pet-snack maker by exports and is continuing to expand its share.

BSD Analysis:
Yantai China Pet Foods is leveraged to the long-term humanization of pets, a trend that persists across economic cycles. Export exposure and private-label production drive volume growth. Scale manufacturing supports margin expansion as utilization rises. Investors worry about consumer cyclicality and geopolitics. Yet pet food demand is sticky and brand-agnostic in many channels. Product mix continues to move up the value chain. Regulatory compliance creates barriers for smaller competitors. This is pet care infrastructure benefiting from global demand normalization.

Pitch Summary:
Until recently, most of Britain’s hog farms used farrowing crates to reduce piglet deaths by preventing sows from rolling over on their young. But the crates can’t allow the sows to move around, leading the country’s largest supermarket chains to vow to no longer sell pork produced with them. The shift to “free farrowing” is not easy—sows unfamiliar with the space can crush their young at higher rates, and farmers must invest in new barns and equipment to meet the requirements. This has driven many small hog farmers to exit the business, driving down supply. But it has been a boon to Cranswick, as it is one of the few pork producers with the scale and financial resources to transition to the new practices and increase production while earning returns above its cost of capital.

BSD Analysis:
Cranswick is a vertically integrated UK food producer benefiting from scale, efficiency, and retailer relationships. Protein demand is resilient even when consumers trade down. Vertical integration improves margin stability versus peers. Input cost volatility creates earnings noise, not structural risk. Investors lump food producers together indiscriminately. Cranswick’s execution discipline sets it apart. Cash flow supports reinvestment and growth. This is food manufacturing done right, not commodity farming.

Pitch Summary:
Company B is our Italian holding DiaSorin, a key detractor from the portfolio’s relative returns for the year. DiaSorin is a well-established business in a growing niche. Hospitals and labs using its diagnostic devices need an ongoing supply of test kits—repeat purchases that generate attractive margins for DiaSorin. Unlike ABL Bio, DiaSorin benefits from the highly regulated nature of health care because it raises the barriers to entry. These dynamics help DiaSorin sustain a competitive advantage and deliver strong cash flow returns on investment (CFROI).

BSD Analysis:
DiaSorin operates in specialty diagnostics where accuracy and reliability matter more than test volume. Its assays are embedded in lab workflows that don’t change casually. COVID distorted earnings optics, but core demand remains intact. Margins reflect specialization, not scale theatrics. Investors anchor to post-pandemic normalization too aggressively. Pipeline innovation supports steady growth. Regulatory and validation barriers protect market position. This is diagnostics infrastructure with quiet pricing power.

Pitch Summary:
Another new holding this quarter is BAE Systems. BAE, formerly British Aerospace, is among the largest defense contractors outside the US or China, with capabilities across air, land, sea, space, and electronic systems, and the scale to serve multiple geographies. Its intellectual property, long-standing government relationships, and track record of program execution have supported resilient profitability even through long years of restrained European defense spending. With indications of sustained higher defense budgets in Europe, alongside a push to modernize in the US, BAE’s order book has strengthened while profitability has remained steady. We were able to buy shares amid a broader sell-off in European defense stocks, as investors wavered over a potential Ukraine–Russia settlement that could reduce near-term order momentum.

BSD Analysis:
BAE Systems is one of the clearest beneficiaries of the structural reset in global defense spending. Order backlogs provide multi-year visibility rarely seen in industrials. Defense programs run long, creating revenue durability once contracts are secured. Margins reflect engineering depth and program complexity rather than volume growth. Investors underestimate how hard it is to replace prime contractors mid-cycle. Political consensus around defense spending has shifted meaningfully. Cash flow supports reinvestment and shareholder returns simultaneously. This is defense infrastructure priced like a cyclical manufacturer.

Pitch Summary:
Naver, one of South Korea’s leading search platforms and the country’s second-largest e-commerce business, illustrates the trade-offs we see in international AI investment. Naver is investing in AI capabilities that can expand its revenue opportunities across both advertising and e-commerce by following the same playbook that Alphabet and Meta used in Western markets—making digital advertising both easier and cheaper. AI-based targeting, measurement, and automated ad-generation tools will allow Naver to help small and medium businesses that historically have spent less on Naver advertising and e-commerce because they lacked the know-how to use it effectively and found the cost of using digital advertising too high. While these investments will dilute profit margins in the near term, they should improve Naver’s long-term profitability and free-cash-flow generation as products scale up, capex plateaus, and monetization broadens. Against that backdrop, Naver shares trade at a meaningful discount to global internet platforms in our modeling of fair value as well as on traditional metrics such as earnings multiples, creating an attractive entry point for the investment we made this quarter.

BSD Analysis:
Naver is Korea’s dominant digital platform, monetizing local search, commerce, content, and fintech in ways global peers struggle to localize. Its strength lies in ecosystem control rather than pure advertising volume, which stabilizes revenue through cycles. Line, webtoons, and commerce integrations extend monetization beyond search. AI investment is targeted toward enhancing existing products, not chasing vanity benchmarks. Investors discount Naver due to slower growth optics versus U.S. tech. That misses how deeply embedded Naver is in Korean digital life. Optionality exists in global content exports, especially webtoons. This is regional platform dominance with underappreciated durability.

Pitch Summary:
We also purchased another IT holding in third quarter, China’s Bochu, a leading maker of software used to guide lasers used in automated manufacturing processes.

BSD Analysis:
Bochu is a Chinese industrial software company supplying laser cutting control systems — the brains behind modern fabrication. Manufacturing automation in China continues regardless of macro noise. Once embedded in factory workflows, switching costs are real. Growth tracks industrial upgrading rather than consumer demand. Margins reflect software economics inside a hardware-heavy world. Domestic substitution trends work in Bochu’s favor. Policy support adds tailwinds, but execution matters more. This is not flashy tech. It’s industrial productivity software. Boring, sticky, and valuable.

Pitch Summary:
A case in point is our new purchase in the Energy sector: Kazakhstan-based uranium miner Kazatomprom. The energy demands of AI data centers are staggering, renewing attention on nuclear power as a scalable, carbon-free solution. Kazatomprom commands roughly 25% market share of global uranium production and has the lowest cost structure in the industry. With strong free cash flow, an investment-grade balance sheet, and substantial reserves, the company is well positioned to benefit from a multiyear uranium supply deficit.

BSD Analysis:
Kazatomprom is the single most important uranium producer in the world, and the market still treats uranium like a dead commodity. Nuclear power is back for one reason: reliability beats ideology. Supply discipline has been rational, and new mines are not coming easily. Geopolitical risk is the obvious overhang, but asset quality is unmatched. Long-term contracts anchor demand visibility. Pricing power improves as utilities scramble to secure supply. This is not a speculative miner. It’s strategic resource ownership. When energy security matters, Kazatomprom matters.

Pitch Summary:
Based on this assessment, we initiated a new holding in SK hynix. Historically, we viewed SK hynix as a structurally weaker player in the memory industry due to its narrow focus and balance sheet risk. However, the company made an early strategic commitment to HBM, investing ahead of the demand curve, which enabled it to emerge as the global leader and primary supplier to NVIDIA. This repositioning has materially improved margins, free cash flow, and balance sheet strength, with the company achieving a net-cash position. We estimate through-cycle operating margins of over 25%, above historical levels.

BSD Analysis:
SK hynix is one of the clearest leverage points to the AI buildout through its dominance in high-bandwidth memory. HBM is not optional — accelerators don’t function without it. Supply is tight, qualification is brutal, and SK hynix sits in pole position. Memory cycles still exist, but this one is structurally different. Capital intensity is extreme, which magnifies outcomes in both directions. Technology leadership matters more now than ever, and hynix has it. Volatility is guaranteed. This is not a defensive stock. It’s torque backed by real demand.

Pitch Summary:
HBM production is highly capacity intensive; as a growing share of fabrication capacity is allocated to these chips, the industry’s available capacity for conventional DRAM is tightening. Through the course of 2025, DRAM supply tightened acutely as AI-related demand expanded beyond just HBM products and across other high-performance DRAM products used in AI servers. These changes caused by AI industry demand not only support the current memory upcycle but should also underpin structurally higher and less-volatile profitability for leading memory manufacturers over the long term. Improved industry dynamics also benefit Samsung’s memory business, which is expected to generate record profits in 2026 as its efforts to regain HBM market share bear fruit and the company benefits from tight supply conditions in conventional memory.

BSD Analysis:
Samsung is frustrating because it’s too big, too complex, and too cyclical — and that’s exactly why it survives. Memory dominates sentiment, but AI demand is reshaping the profit curve through advanced DRAM and HBM. Consumer electronics stabilize cash flow even when growth stalls. Foundry ambitions lag TSMC, but internal demand provides ballast. The balance sheet is fortress-level, giving Samsung staying power through brutal cycles. Governance discounts persist, but shareholder returns are improving slowly. This isn’t a clean story stock. It’s a collection of world-class assets under one roof. Patience is the entry price.

Pitch Summary:
Alphabet was the top relative contributor in 2025, even as other Communication Services stocks languished in the final months. The company’s dominant position in search has remained resilient, and profitability has improved. Management successfully integrated its Gemini large language model into Google Search and other products, allowing AI-generated answers to enhance rather than disrupt the core search experience. Recent traffic data shows Gemini gaining share against standalone AI tools, reinforcing Alphabet’s competitive moat.

BSD Analysis:
Alphabet remains the most powerful attention-monetization engine ever built, even as every new tech cycle claims it’s about to be disrupted. Search continues to print extraordinary cash flow because intent, not interfaces, is what advertisers pay for. YouTube has quietly evolved into a multi-engine business spanning ads, subscriptions, and creator economics. AI spend looks heavy, but Alphabet owns the data, distribution, and infrastructure to actually earn a return on it. Cloud margins are improving, adding a second profit pillar the market still undervalues. Regulatory pressure is constant but has barely altered user behavior. Investors consistently overestimate disruption speed and underestimate adaptation. Alphabet funds reinvention internally without balance-sheet stress. This is dominance with optionality, priced like it’s fragile.

Pitch Summary:
The top-performing stock in the small-cap IT sector in 2025 was Winbond Electronics. Winbond has benefited from the AI gold rush, not because it makes the cutting-edge, high-bandwidth chips AI data centers are scrambling for, but because it makes legacy memory chips. As industry manufacturing capacity has been redirected toward advanced AI chips, supply of these legacy products has tightened, pushing prices sharply higher. To generate attractive returns over time in cyclical industries such as semiconductor manufacturing, a company must possess a durable advantage. Winbond, however, appears to have neither, evidenced by its history of low CFROI.

BSD Analysis:
Winbond plays in specialty memory — NOR flash and niche DRAM — where longevity matters more than bleeding-edge performance. Its chips live in industrial, automotive, and embedded systems that value stability over speed. This insulates Winbond from the worst of commodity memory bloodbaths. Margins are lower than high-bandwidth AI memory, but volatility is lower too. Demand tracks embedded electronics growth, not consumer gadget cycles. Capex discipline is a real advantage in memory markets. This is not a stock for AI tourists. It’s for investors who understand where boring memory still makes money. Winbond survives cycles by not chasing them.

Pitch Summary:
Company B is our Italian holding DiaSorin, a key detractor from the portfolio’s relative returns for the year. DiaSorin is a well-established business in a growing niche. Hospitals and labs using its diagnostic devices need an ongoing supply of test kits—repeat purchases that generate attractive margins for DiaSorin. Unlike ABL Bio, DiaSorin benefits from the highly regulated nature of health care because it raises the barriers to entry. In November, the company cut its growth outlook for the full year from 8% to 5% and lowered margin expectations by about 100 basis points, citing reduced demand for molecular respiratory-infection tests compared to 2024. Even if sales were to remain at these subdued levels, the business would still generate a CFROI above 10%.

BSD Analysis:
DiaSorin operates in diagnostic niches where accuracy and reliability trump scale and price. Its immunodiagnostics and molecular testing platforms are embedded in hospital workflows that rarely change vendors lightly. Growth cooled post-COVID, but the underlying business remains intact. The real value lies in recurring reagent revenue rather than instrument sales. Margins reflect specialization, not commodity testing. Management has been conservative, sometimes frustratingly so, but capital discipline protects downside. Diagnostics cycles are slower than biotech hype cycles — and more durable. DiaSorin is not exciting, but it is resilient. A classic quality operator hiding behind post-pandemic hangover.

Pitch Summary:
Company A’s stock looks to be little more than a lottery ticket—but it was a winning ticket in 2025, surging more than 500%. To be sure, the company, ABL Bio of South Korea, is doing important work: Its cancer drugs are aimed at making treatment more effective with fewer side effects, and its “brain delivery” technology helps medicines more easily reach the brain, a key feature of a Parkinson’s drug being developed with Sanofi. Yet these are crowded fields, and any new treatment must be vetted against existing options. The process of completing clinical trials and securing regulatory approvals is costly and can take years—sometimes more than a decade—with no guarantee of a product in the end. In the meantime, revenue is minimal, aside from upfront payments from large pharmaceutical partners hoping to share in the rewards if a drug succeeds.

BSD Analysis:
ABL Bio is a Korea-based biotech betting on differentiated antibody and bispecific platforms rather than me-too science. The value here lives in partnerships, licensing deals, and proof-of-concept data — not near-term revenue. Early validation from global pharma is the key de-risking lever. Clinical timelines are long, and dilution risk is real, making this unsuitable for impatient capital. What separates ABL is platform optionality across oncology and immunology targets. One strong data readout can reprice the equity dramatically. Failure, of course, is binary. This is not diversified biotech exposure. It’s a focused science bet where outcomes matter more than narratives.

Pitch Summary:
Microchip Technology struggled with supply chain challenges as lengthening production lead times led to customer over-ordering. While management actions are improving fundamentals, as the stock’s valuation has recovered, we elected to sell our small stake.

BSD Analysis:
Microchip lives at the boring, indispensable end of semiconductors, which is exactly why it works. Its microcontrollers and analog chips are designed into industrial, automotive, and embedded systems that don’t get ripped out every product cycle. Long product lifetimes create recurring revenue streams that look more like annuities than tech sales. Inventory cycles create noise, but end-demand doesn’t disappear — it just pauses. Pricing power comes from reliability and qualification costs, not cutting-edge performance. The balance sheet carries leverage, but cash generation remains strong enough to manage it. This is not an AI hype stock. It’s infrastructure silicon that compounds slowly and predictably. When the cycle normalizes, Microchip’s earnings snap back faster than sentiment.