Investment Pitches

Pitch Summary:
Charter Communications (U.S.), a telecommunications and mass media company, was the top contributor to the Fund's performance for the quarter. Second-quarter broadband subscriptions for Charter Communications grew by 77,000 sequentially, beating consensus expectations of 13,000 and roughly doubling its growth year-over-year. Unit growth outperformed peers, even after adjusting for Charter's rural initiative, which contributed 26,000 subscriptions. Charter's mobile net adds were strong at 648,000 and net adds have been over 600,000 each of the last three quarters since Charter launched Spectrum One, which includes one free mobile line for 12 months. Adjusted earnings growth was roughly flat, but we expect it to accelerate over time as the company's financials are no longer negatively impacted by its investments in marketing personnel and the promo roll-off dynamic begins. While faster unit growth does depress adjusted earnings in the near term, we believe Charter's strategy will prove valuable to long-term shareholders.

BSD Analysis:
The manager presents a bullish thesis on Charter Communications based on strong operational momentum across key metrics. The company significantly outperformed broadband subscriber expectations with 77,000 net adds versus consensus of 13,000, demonstrating market share gains even after adjusting for rural expansion initiatives. Mobile subscriber growth remains robust at 648,000 net adds, sustaining momentum from the Spectrum One promotional offering. While near-term earnings growth appears muted due to strategic investments in marketing and promotional dynamics, the manager expects acceleration as these headwinds subside. The thesis centers on Charter's ability to drive sustainable unit growth that will translate into long-term shareholder value creation. The manager views current earnings pressure as temporary, with the underlying business fundamentals supporting future margin expansion. This represents a classic growth-through-investment narrative where short-term profitability is sacrificed for market position and long-term returns.

Pitch Summary:
Sealed Air is a global protective packaging company operating in the food and beverage, industrial, and e-commerce markets. The company sells both packaging equipment and consumable packaging. Sealed Air has a strong market position with leading technology and brands. In the food and beverage market, the Cryovac brand is the gold standard for packaging and shipping fresh, uncooked proteins. Food safety is critically important, and customers are willing to pay for quality and reliability. Additionally, switching costs are high and customer relationships are typically sticky and long term in nature. Sealed Air's brands in e-commerce and industrial include Bubble Wrap and Instapax, and the competitive advantages in these markets are largely similar.

BSD Analysis:
Vulcan Value Partners initiated a position in Sealed Air, a global protective packaging company with strong market positions across food and beverage, industrial, and e-commerce segments. The manager emphasizes the company's razor-and-blade business model selling both packaging equipment and consumable materials. The investment thesis centers on Sealed Air's dominant Cryovac brand, which is the gold standard for packaging fresh proteins where food safety is paramount. This creates pricing power as customers prioritize quality and reliability over cost, given the critical nature of food safety. High switching costs and sticky customer relationships provide revenue stability and predictability. The company's competitive advantages extend to e-commerce and industrial markets through brands like Bubble Wrap and Instapax. The secular growth in e-commerce and continued focus on food safety create favorable long-term demand trends for Sealed Air's mission-critical packaging solutions.

Pitch Summary:
UnitedHealth Group is the largest health insurer in the country and also owns Optum, which is a rapidly growing healthcare services company. The health insurance business benefits from demographic and network effects as more members attract more providers and vice versa, which reinforces United's value proposition and bargaining power with each side of the network. Over the last five years, Optum has grown significantly and roughly half of United's 2022 EBIT was generated from the Optum business. Optum Health provides care for 102 million consumers and serves more than 100 health payer partners. We expect Optum to continue to grow and be a significant contributor to UnitedHealth Group's future successes.

BSD Analysis:
Vulcan Value Partners initiated a position in UnitedHealth Group, emphasizing the company's dual platform of health insurance and healthcare services through Optum. The manager highlights the powerful network effects in the insurance business where more members attract more providers, creating a virtuous cycle that strengthens United's bargaining power and value proposition. The investment thesis particularly focuses on Optum's rapid growth, which now generates approximately half of the company's EBIT and serves 102 million consumers across 100+ health payer partners. This diversification into healthcare services provides multiple revenue streams and reduces dependence on traditional insurance margins. The demographic tailwinds from an aging population support long-term growth, while United's scale advantages and integrated model create sustainable competitive moats. The manager expects Optum to continue driving significant value creation and growth for the overall enterprise.

Pitch Summary:
Texas Instruments is the world's largest designer and manufacturer of analog semiconductors. These semiconductors convert real-world signals, such as temperature, pressure, and sound, into digital data. Analog semiconductors are also used to manage power in electronic devices. We are drawn to this company because its products are mission critical, and product cost as a percentage of total system cost is low. Moreover, market positions are stable over long periods of time and barriers to entry are high. Its management team thinks strategically, in terms of decades, and focuses on maximizing free cash flow per share over the long term.

BSD Analysis:
Vulcan Value Partners initiated a position in Texas Instruments, the world's largest analog semiconductor manufacturer. The manager highlights the mission-critical nature of TI's products, which convert real-world signals into digital data and manage power in electronic devices. The investment thesis centers on the company's durable competitive advantages including stable market positions, high barriers to entry, and low product cost as a percentage of total system cost. This cost structure provides pricing power and customer stickiness since switching costs are high relative to the small impact on overall system costs. The manager particularly values TI's long-term strategic thinking and management's focus on maximizing free cash flow per share over decades rather than quarterly results. The analog semiconductor market's stability and TI's dominant position create a predictable, cash-generative business model with sustainable competitive moats.

Pitch Summary:
Marriott is a company that we have owned several times in the past. The company is an asset-light global lodging franchisor and operator that benefits from strong network effects. Approximately 99% of Marriott's global rooms are managed or franchised which enables the company to generate high returns on capital. Marriott has an extensive portfolio of brands ranging from luxury brands such as The Ritz-Carlton, to premium brands such as Westin Hotels & Resorts, to select brands such as Residence Inn by Marriott. The company is doing an excellent job converting independent hotels into the Marriott system through its soft brands including the Luxury Collection, the Autograph Collection, and the Tribute Portfolio. This conversion opportunity should benefit Marriott's net unit growth in a period when new hotel development could be challenging in North American and Europe. The company generates robust free cash flow through its long-term, contracted franchise fee and management fee revenue streams. Its competitive advantages include brand strength, operational scale, direct booking systems, and loyalty programs. We sold Marriott in the first quarter of 2020 because of our concerns about the company's debt structure. Since then, Marriott has restructured its debt and improved its balance sheet. Additionally, average daily rates (ADR) on corporate travel have returned to pre-Covid levels.

BSD Analysis:
Vulcan Value Partners re-initiated a position in Marriott International, a company they have owned multiple times previously. The manager emphasizes Marriott's asset-light business model with 99% of rooms managed or franchised, generating high returns on capital through fee-based revenue streams. The investment thesis focuses on the company's strong network effects and extensive brand portfolio spanning luxury to select service segments. A key growth driver is the conversion of independent hotels through Marriott's soft brands, which should support unit growth during a challenging new development environment. The manager notes significant balance sheet improvements since their 2020 exit, including debt restructuring and the recovery of corporate travel rates to pre-pandemic levels. Marriott's competitive moat includes brand strength, operational scale, direct booking capabilities, and loyalty programs that drive customer retention and pricing power.

Pitch Summary:
Diageo is a global spirits and beer producer with over 200 brands, including Johnnie Walker, Crown Royal, Guinness, Smirnoff, Baileys, Don Julio, and Casamigos. Diageo's spirits segment generates more than 80% of the company's revenue, and the spirits segment has been taking share from beer and wine over the last decade. The company is diversified across geographies, brands, and alcohol categories. Diageo has strong margins and high returns on invested capital. Its management team has an excellent track record for brand and product innovation, moving into high-growth categories at the right time. The company has pricing power and performs well during recessions. Additionally, the premiumization trend has been a tailwind to Diageo's revenue, and we believe this trend will continue, driven by an expanding global middle class and preference for higher quality spirits.

BSD Analysis:
Vulcan Value Partners initiated a position in Diageo, highlighting the company's dominant position in the global spirits market with over 200 brands including premium labels like Johnnie Walker and Don Julio. The manager emphasizes Diageo's structural advantages including strong margins, high returns on invested capital, and pricing power that enables resilient performance during economic downturns. The investment thesis centers on the ongoing premiumization trend in alcoholic beverages, driven by an expanding global middle class seeking higher-quality spirits. Diageo's spirits segment generates over 80% of revenue and has been gaining market share from beer and wine over the past decade. The company's geographic and brand diversification provides stability, while management's track record of successful brand innovation and category expansion supports long-term growth prospects. The defensive characteristics combined with exposure to secular premiumization trends make this an attractive value investment.

Pitch Summary:
Sealed Air is a global protective packaging company operating in the food and beverage, industrial, and e-commerce markets. The company sells both packaging equipment and consumable packaging. Sealed Air has a strong market position with leading technology and brands. In the food and beverage market, the Cryovac brand is the gold standard for packaging and shipping fresh, uncooked proteins. Food safety is critically important, and customers are willing to pay for quality and reliability. Additionally, switching costs are high and customer relationships are typically sticky and long term in nature. Sealed Air's brands in e-commerce and industrial include Bubble Wrap and Instapax, and the competitive advantages in these markets are largely similar.

BSD Analysis:
Vulcan Value Partners initiated a position in Sealed Air, a global protective packaging leader serving food and beverage, industrial, and e-commerce markets. The investment thesis centers on the company's strong market positions with leading technology and established brands across multiple end markets. In the critical food and beverage segment, Sealed Air's Cryovac brand represents the gold standard for packaging fresh proteins, where food safety requirements create customer willingness to pay premium prices for quality and reliability. The manager emphasizes high switching costs and sticky, long-term customer relationships that provide revenue stability and pricing power. Sealed Air's diversification across growing end markets, including e-commerce with brands like Bubble Wrap and Instapax, provides multiple growth avenues. The combination of mission-critical applications, brand strength, and customer stickiness creates sustainable competitive advantages in the protective packaging industry.

Pitch Summary:
UnitedHealth Group is the largest health insurer in the country and also owns Optum, which is a rapidly growing healthcare services company. The health insurance business benefits from demographic and network effects as more members attract more providers and vice versa, which reinforces United's value proposition and bargaining power with each side of the network. Over the last five years, Optum has grown significantly and roughly half of United's 2022 EBIT was generated from the Optum business. Optum Health provides care for 102 million consumers and serves more than 100 health payer partners. We expect Optum to continue to grow and be a significant contributor to UnitedHealth Group's future successes.

BSD Analysis:
Vulcan Value Partners initiated a position in UnitedHealth Group, recognizing both its dominant health insurance franchise and rapidly growing Optum healthcare services division. The investment thesis highlights powerful network effects where increased membership attracts more providers and vice versa, strengthening UnitedHealth's bargaining power and value proposition on both sides. The manager emphasizes Optum's impressive growth trajectory, now generating approximately half of the company's EBIT after five years of significant expansion. Optum Health's scale, serving 102 million consumers and over 100 health payer partners, demonstrates the division's market penetration and growth potential. The dual-engine growth model combining the stable, cash-generative insurance business with the higher-growth Optum services creates an attractive investment profile. Demographic trends favoring healthcare utilization and UnitedHealth's market leadership position support the long-term investment thesis.

Pitch Summary:
Texas Instruments is the world's largest designer and manufacturer of analog semiconductors. These semiconductors convert real-world signals, such as temperature, pressure, and sound, into digital data. Analog semiconductors are also used to manage power in electronic devices. We are drawn to this company because its products are mission critical, and product cost as a percentage of total system cost is low. Moreover, market positions are stable over long periods of time and barriers to entry are high. Its management team thinks strategically, in terms of decades, and focuses on maximizing free cash flow per share over the long term.

BSD Analysis:
Vulcan Value Partners initiated a position in Texas Instruments, the world's largest analog semiconductor manufacturer. The investment thesis centers on TI's mission-critical products that convert real-world signals into digital data and manage power in electronic devices. The manager emphasizes the attractive industry dynamics where analog semiconductors represent a low percentage of total system costs, reducing price sensitivity while maintaining essential functionality. TI benefits from stable, long-term market positions with high barriers to entry that protect competitive advantages over extended periods. The company's strategic management approach, thinking in decades rather than quarters, aligns well with Vulcan's long-term investment philosophy. Management's focus on maximizing free cash flow per share over the long term provides confidence in capital allocation and shareholder value creation. The analog semiconductor market's defensive characteristics and TI's dominant position create a compelling investment opportunity.

Pitch Summary:
Marriott is a company that we have owned several times in the past. The company is an asset-light global lodging franchisor and operator that benefits from strong network effects. Approximately 99% of Marriott's global rooms are managed or franchised which enables the company to generate high returns on capital. Marriott has an extensive portfolio of brands ranging from luxury brands such as The Ritz-Carlton, to premium brands such as Westin Hotels & Resorts, to select brands such as Residence Inn by Marriott. The company is doing an excellent job converting independent hotels into the Marriott system through its soft brands including the Luxury Collection, the Autograph Collection, and the Tribute Portfolio. This conversion opportunity should benefit Marriott's net unit growth in a period when new hotel development could be challenging in North American and Europe. The company generates robust free cash flow through its long-term, contracted franchise fee and management fee revenue streams. Its competitive advantages include brand strength, operational scale, direct booking systems, and loyalty programs. We sold Marriott in the first quarter of 2020 because of our concerns about the company's debt structure. Since then, Marriott has restructured its debt and improved its balance sheet. Additionally, average daily rates (ADR) on corporate travel have returned to pre-Covid levels.

BSD Analysis:
Vulcan Value Partners re-initiated a position in Marriott International, a company they have owned multiple times previously. The investment thesis focuses on Marriott's asset-light business model with 99% of rooms managed or franchised, generating high returns on capital through recurring franchise and management fees. The manager highlights Marriott's strong competitive moats including brand strength, operational scale, direct booking capabilities, and loyalty programs that create powerful network effects. A key growth driver is the conversion of independent hotels through soft brands like the Luxury Collection and Autograph Collection, providing unit growth during challenging new development periods. The re-entry appears well-timed following Marriott's debt restructuring and balance sheet improvements since their 2020 exit, combined with corporate travel rates returning to pre-pandemic levels. The extensive brand portfolio spanning luxury to select service segments provides diversification and market coverage.

Pitch Summary:
Diageo is a global spirits and beer producer with over 200 brands, including Johnnie Walker, Crown Royal, Guinness, Smirnoff, Baileys, Don Julio, and Casamigos. Diageo's spirits segment generates more than 80% of the company's revenue, and the spirits segment has been taking share from beer and wine over the last decade. The company is diversified across geographies, brands, and alcohol categories. Diageo has strong margins and high returns on invested capital. Its management team has an excellent track record for brand and product innovation, moving into high-growth categories at the right time. The company has pricing power and performs well during recessions. Additionally, the premiumization trend has been a tailwind to Diageo's revenue, and we believe this trend will continue, driven by an expanding global middle class and preference for higher quality spirits.

BSD Analysis:
Vulcan Value Partners initiated a position in Diageo, highlighting the company's dominant position in the global spirits market with over 200 brands including premium labels like Johnnie Walker and Don Julio. The investment thesis centers on Diageo's structural advantages including strong pricing power, high returns on invested capital, and diversification across geographies and alcohol categories. The manager emphasizes the ongoing premiumization trend in spirits consumption, driven by an expanding global middle class seeking higher quality products. Diageo's spirits segment, generating over 80% of revenue, has been gaining market share from beer and wine over the past decade. The company's recession-resistant characteristics and management's track record of successful brand innovation and category expansion provide additional confidence. The investment appears well-timed to capitalize on long-term demographic trends favoring premium spirits consumption globally.

Pitch Summary:
Sealed Air is a global protective packaging company operating in the food and beverage, industrial, and e-commerce markets. The company sells both packaging equipment and consumable packaging. Sealed Air has a strong market position with leading technology and brands. In the food and beverage market, the Cryovac brand is the gold standard for packaging and shipping fresh, uncooked proteins. Food safety is critically important, and customers are willing to pay for quality and reliability. Additionally, switching costs are high and customer relationships are typically sticky and long term in nature. Sealed Air's brands in e-commerce and industrial include Bubble Wrap and Instapax, and the competitive advantages in these markets are largely similar.

BSD Analysis:
Vulcan Value Partners initiated a position in Sealed Air, a global protective packaging leader operating across food and beverage, industrial, and e-commerce markets. The investment thesis centers on the company's strong market position with leading technology and iconic brands including Cryovac and Bubble Wrap. In the food packaging segment, Cryovac represents the gold standard for fresh protein packaging, where food safety requirements create customer willingness to pay premium prices for quality and reliability. High switching costs and sticky customer relationships provide revenue stability and pricing power. The razor-and-blade business model combining equipment sales with consumable packaging generates recurring revenue streams. Secular growth in e-commerce and food safety regulations supports long-term demand. Sealed Air's technological leadership, brand recognition, and customer relationships create sustainable competitive advantages in mission-critical applications. This represents a defensive industrial compounder with exposure to structural growth trends.

Pitch Summary:
UnitedHealth Group is the largest health insurer in the country and also owns Optum, which is a rapidly growing healthcare services company. The health insurance business benefits from demographic and network effects as more members attract more providers and vice versa, which reinforces United's value proposition and bargaining power with each side of the network. Over the last five years, Optum has grown significantly and roughly half of United's 2022 EBIT was generated from the Optum business. Optum Health provides care for 102 million consumers and serves more than 100 health payer partners. We expect Optum to continue to grow and be a significant contributor to UnitedHealth Group's future successes.

BSD Analysis:
Vulcan Value Partners initiated a position in UnitedHealth Group, the largest U.S. health insurer, emphasizing the company's dual-engine growth model combining insurance and healthcare services. The fund highlights powerful network effects where increased membership attracts more providers and vice versa, strengthening UNH's bargaining power and value proposition. Optum's rapid growth represents a key differentiator, generating approximately half of 2022 EBIT and serving 102 million consumers across 100+ health payer partnerships. The healthcare services segment provides diversification beyond traditional insurance while benefiting from demographic tailwinds and healthcare digitization trends. UNH's scale advantages, data capabilities, and integrated care model create sustainable competitive moats in a fragmented industry. The combination of defensive insurance cash flows and higher-growth Optum services positions the company for continued market share gains. This represents a quality healthcare compounder with multiple growth vectors and strong competitive positioning.

Pitch Summary:
Texas Instruments is the world's largest designer and manufacturer of analog semiconductors. These semiconductors convert real-world signals, such as temperature, pressure, and sound, into digital data. Analog semiconductors are also used to manage power in electronic devices. We are drawn to this company because its products are mission critical, and product cost as a percentage of total system cost is low. Moreover, market positions are stable over long periods of time and barriers to entry are high. Its management team thinks strategically, in terms of decades, and focuses on maximizing free cash flow per share over the long term.

BSD Analysis:
Vulcan Value Partners initiated a position in Texas Instruments, the world's largest analog semiconductor manufacturer, highlighting the mission-critical nature of their products in converting real-world signals to digital data and managing power in electronic devices. The investment thesis centers on TXN's structural competitive advantages including stable market positions, high barriers to entry, and low product cost as a percentage of total system cost. These characteristics create pricing power and customer stickiness across diverse end markets. Management's long-term strategic thinking, measured in decades rather than quarters, aligns with value creation through maximizing free cash flow per share. The analog semiconductor market benefits from secular growth trends in automation, electrification, and IoT applications. TXN's manufacturing scale, R&D capabilities, and customer relationships provide sustainable competitive moats. This represents a high-quality technology compounder with defensive characteristics and long-term growth visibility.

Pitch Summary:
Marriott is a company that we have owned several times in the past. The company is an asset-light global lodging franchisor and operator that benefits from strong network effects. Approximately 99% of Marriott's global rooms are managed or franchised which enables the company to generate high returns on capital. Marriott has an extensive portfolio of brands ranging from luxury brands such as The Ritz-Carlton, to premium brands such as Westin Hotels & Resorts, to select brands such as Residence Inn by Marriott. The company is doing an excellent job converting independent hotels into the Marriott system through its soft brands including the Luxury Collection, the Autograph Collection, and the Tribute Portfolio. This conversion opportunity should benefit Marriott's net unit growth in a period when new hotel development could be challenging in North American and Europe. The company generates robust free cash flow through its long-term, contracted franchise fee and management fee revenue streams. Its competitive advantages include brand strength, operational scale, direct booking systems, and loyalty programs. We sold Marriott in the first quarter of 2020 because of our concerns about the company's debt structure. Since then, Marriott has restructured its debt and improved its balance sheet. Additionally, average daily rates (ADR) on corporate travel have returned to pre-Covid levels.

BSD Analysis:
Vulcan Value Partners re-initiated a position in Marriott International, emphasizing the company's asset-light business model with 99% of rooms managed or franchised, generating high returns on capital. The fund highlights Marriott's strong network effects and extensive brand portfolio spanning luxury to select service segments. A key growth driver is the conversion of independent hotels through soft brands, providing unit growth opportunities during challenging new development periods in North America and Europe. The company's competitive moats include brand strength, operational scale, direct booking capabilities, and loyalty programs that drive customer retention. Marriott generates robust free cash flow through contracted franchise and management fees, providing revenue stability. The fund notes significant balance sheet improvements since their 2020 exit, with debt restructuring addressing previous concerns. Corporate travel recovery to pre-COVID average daily rates supports the investment thesis for this hospitality leader.

Pitch Summary:
Diageo is a global spirits and beer producer with over 200 brands, including Johnnie Walker, Crown Royal, Guinness, Smirnoff, Baileys, Don Julio, and Casamigos. Diageo's spirits segment generates more than 80% of the company's revenue, and the spirits segment has been taking share from beer and wine over the last decade. The company is diversified across geographies, brands, and alcohol categories. Diageo has strong margins and high returns on invested capital. Its management team has an excellent track record for brand and product innovation, moving into high-growth categories at the right time. The company has pricing power and performs well during recessions. Additionally, the premiumization trend has been a tailwind to Diageo's revenue, and we believe this trend will continue, driven by an expanding global middle class and preference for higher quality spirits.

BSD Analysis:
Vulcan Value Partners initiated a position in Diageo, highlighting the company's dominant position in the global spirits market with over 200 premium brands. The fund emphasizes Diageo's structural advantages including strong pricing power, recession-resistant characteristics, and high returns on invested capital. Management's track record of successful brand innovation and strategic positioning in high-growth categories provides competitive differentiation. The investment thesis centers on the ongoing premiumization trend in alcoholic beverages, driven by an expanding global middle class seeking higher-quality spirits. Diageo's diversified portfolio across geographies and alcohol categories reduces concentration risk while the spirits segment's market share gains over beer and wine support long-term growth. The company's strong margins and cash generation capabilities make it an attractive defensive growth play. This represents a quality compounder with secular tailwinds and proven management execution.

Pitch Summary:
Sealed Air is a global protective packaging company operating in the food and beverage, industrial, and e-commerce markets. The company sells both packaging equipment and consumable packaging. Sealed Air has a strong market position with leading technology and brands. In the food and beverage market, the Cryovac brand is the gold standard for packaging and shipping fresh, uncooked proteins. Food safety is critically important, and customers are willing to pay for quality and reliability. Additionally, switching costs are high and customer relationships are typically sticky and long term in nature. Sealed Air's brands in e-commerce and industrial include Bubble Wrap and Instapax, and the competitive advantages in these markets are largely similar.

BSD Analysis:
Vulcan Value Partners initiated a position in Sealed Air in their All Cap strategy, emphasizing the company's dominant position in protective packaging across food and beverage, industrial, and e-commerce markets. The business model combines equipment sales with higher-margin consumable packaging products, creating recurring revenue streams and customer lock-in effects. In the food and beverage segment, the Cryovac brand represents the gold standard for packaging fresh proteins, where food safety requirements create strong customer loyalty and pricing power. High switching costs and the mission-critical nature of food safety drive long-term customer relationships and revenue stability. The company's iconic brands including Bubble Wrap and Instapax provide similar competitive advantages in e-commerce and industrial markets. Sealed Air benefits from secular growth in e-commerce packaging demand while maintaining strong positions in traditional industrial applications. The combination of leading technology, established brands, and high switching costs creates sustainable competitive advantages across multiple end markets.

Pitch Summary:
SmartRent provides hardware and software that enables apartment owners to offer digital services to renters. For instance, their software allows apartment operators to control access, provide self-guided tours, and parking management to name a few of their services. Their products lower operating costs for apartment owners and improve their renters' experience enabling the owners to charge higher rents. During the quarter, we believe the stock price decreased in response to a short report that was published. Through our research, we believe the report to be unfounded and misleading. SmartRent's products offer a strong value proposition for its customers. The company has a significant and growing backlog with current installations only representing about 10% of the existing customer opportunity.

BSD Analysis:
Vulcan Value Partners addressed SmartRent as a material detractor from Small Cap performance, attributing the decline to a short report they believe to be unfounded and misleading. SmartRent provides integrated hardware and software solutions that enable apartment owners to offer digital services including access control, self-guided tours, and parking management. The value proposition centers on reducing operating costs for property owners while enhancing tenant experience, ultimately enabling higher rental rates. This dual benefit creates strong customer retention and expansion opportunities within existing accounts. The manager emphasizes the significant growth runway, noting that current installations represent only 10% of the existing customer opportunity, suggesting substantial expansion potential. The growing backlog provides revenue visibility and validates customer demand for the platform. Despite short-term stock price volatility from the critical report, Vulcan maintains confidence in the business model and long-term growth prospects in the digitization of rental property management.

Pitch Summary:
ISS is a facilities management company based in Denmark specializing in services that are non-core to their customers such as cleaning, food management, building maintenance, security, technical support, and other services. During the quarter, the CFO, Kasper Fangel, became the CEO. The prior CEO left to become CEO at the much larger brewer Carlsberg Group. The company also announced its plans to exit its struggling French operations. ISS has global scale to service multinational accounts and is benefitting from the trend of companies outsourcing non-core functions. The company has stable operating margins due to the inherent nature of its business contracts which allow it to pass through wage and other cost increases to its customers.

BSD Analysis:
Vulcan Value Partners discussed ISS as a material detractor from Small Cap performance, but maintained their position in the Danish facilities management company. ISS specializes in non-core services including cleaning, food management, building maintenance, and security, benefiting from the secular trend toward outsourcing of non-essential functions. The company underwent leadership transition with CFO Kasper Fangel becoming CEO after the previous CEO departed for Carlsberg Group. Management announced plans to exit struggling French operations, suggesting focus on more profitable markets. ISS's global scale provides competitive advantages in serving multinational accounts that require consistent service delivery across geographies. The business model features stable operating margins due to contract structures that allow pass-through of wage and cost inflation to customers. This cost-plus pricing mechanism provides defensive characteristics and margin stability despite inflationary pressures, supporting the long-term investment thesis.

Pitch Summary:
Ituran is an Israeli-based company that provides telematics services such as stolen vehicle recovery and usage-based insurance to insurance companies and individual car owners. While nothing material has changed during the past quarter, the company's growth initiatives continue to bear fruit and the intrinsic value continues to compound. We are happy with the progress the company is making and it remains an attractive price to value opportunity in the portfolio.

BSD Analysis:
Vulcan Value Partners highlighted Ituran as a material contributor to Small Cap performance, emphasizing the company's specialized position in telematics services including stolen vehicle recovery and usage-based insurance solutions. The Israeli-based company serves both insurance companies and individual car owners, providing mission-critical services that generate recurring revenue streams. While the manager notes no material changes during the quarter, ongoing growth initiatives continue to drive value creation and intrinsic value compounding. The business model benefits from the increasing adoption of telematics technology and usage-based insurance products, which provide more accurate risk assessment for insurers. Ituran's established market position and technology platform create competitive advantages in this growing market. The manager's satisfaction with operational progress and the attractive price-to-value ratio suggests continued confidence in the long-term investment thesis despite the stock's recent performance contribution.