Investment Pitches

Pitch Summary:
Also in the quarter, we initiated a new position in Mexico's leading stock exchange, Bolsa Mexicana de Valores S.A.B. de C.V. (BMV). The company's integrated business model and near monopoly has played a pivotal role in the country's financial market infrastructure, consistently yielding impressive results. With a well-diversified portfolio, robust cost controls, and ongoing initiatives to obtain additional liquidity, we anticipate BMV will deliver steady growth. Additionally, we find BMV's strong financial position, highlighted by its net cash balance sheet and robust free cash flow generation, to be an attractive feature for a long-term investment opportunity.

BSD Analysis:
Ariel initiated a new position in Bolsa Mexicana de Valores, attracted by the company's near-monopoly position as Mexico's leading stock exchange and its integrated business model. The exchange plays a pivotal role in Mexico's financial market infrastructure and has consistently delivered impressive operational results. BMV's well-diversified revenue portfolio, combined with robust cost controls and ongoing liquidity enhancement initiatives, positions the company for steady growth. The fund particularly values BMV's strong financial position, highlighted by a net cash balance sheet and robust free cash flow generation capabilities. This financial strength provides flexibility for strategic investments and shareholder returns. As Mexico's dominant exchange operator, BMV benefits from structural growth in the country's capital markets and increasing financial market participation. The combination of monopolistic market position, strong financial metrics, and exposure to Mexico's economic development creates an attractive long-term investment opportunity with defensive characteristics and steady growth potential.

Pitch Summary:
Finally, global pharmaceutical and diagnostics leader, Roche Holding AG, weighed on returns in the period on mixed earnings. A miss in the diagnostics segment drove sales slightly lower than consensus, but margins came in ahead and EPS was in-line. Importantly, management reiterated full year guidance. We remain enthusiastic about Roche's growing pharma portfolio and believe the core oncology franchise remains one of the most valuable in the world. The diagnostics segment also continues to demonstrate momentum following a rise in installed platforms during the pandemic. In our view, Roche is a quality defensive name with a rich suite of pipeline opportunities.

BSD Analysis:
Ariel maintains a bullish stance on Roche despite mixed quarterly results that included a diagnostics segment miss, viewing the company as a quality defensive healthcare play. While diagnostics sales came in below consensus, stronger margins and in-line EPS demonstrate operational resilience, with management reiterating full-year guidance. The fund remains enthusiastic about Roche's expanding pharmaceutical portfolio, particularly highlighting the core oncology franchise as one of the most valuable globally. The diagnostics segment continues to show positive momentum with increased installed platforms following pandemic-driven growth. Ariel views Roche as offering defensive characteristics combined with significant pipeline opportunities across both pharmaceuticals and diagnostics. The company's dual-pillar business model provides diversification and stability, while the rich pipeline offers multiple shots at breakthrough therapies. This combination of defensive qualities, market-leading oncology franchise, and robust pipeline development supports the long-term investment thesis.

Pitch Summary:
Peruvian banking franchise, Credicorp, Ltd., also declined in the quarter. Although the company delivered solid earnings results, management anticipates slower loan growth and higher provisions in the back half of the year due to an increasingly challenging macro backdrop. Our thesis remains focused on Credicorp's attractive long-term earnings potential. The company holds a dominant position in a highly concentrated banking system with many attractive features including low penetration and high returns on equity. Credicorp also continues to invest in digital transformation and accelerate disruptive innovations. Moreover, it views venture capital and the underdeveloped fintech market in Peru as an opportunity to boost growth and enhance shareholder value.

BSD Analysis:
Ariel maintains conviction in Credicorp despite near-term headwinds including anticipated slower loan growth and higher provisions due to challenging macroeconomic conditions in Peru. The fund's thesis centers on the bank's dominant market position within Peru's highly concentrated banking system, which provides significant competitive advantages. Key structural attractions include low banking penetration rates and consistently high returns on equity, suggesting substantial growth runway. Credicorp's strategic investments in digital transformation and disruptive innovations position the bank to capture market share as financial services modernize. The manager views Peru's underdeveloped fintech market as a significant opportunity, with Credicorp's venture capital initiatives potentially driving growth and shareholder value creation. Despite short-term macro challenges, the combination of market dominance, structural growth opportunities, and digital transformation initiatives supports the long-term investment thesis. The bank's strategic positioning in an emerging market with low financial penetration offers compelling upside potential.

Pitch Summary:
By comparison, global communications and technology leader, Verizon Communications Inc., continued to weigh on performance following an article in the Wall Street Journal outlining concerns on lead cable lines posing a significant public health threat. Although the lead covered cable lines remain an overhang on shares, we find Verizon's valuation to be compelling. The company delivered a solid earnings report, with subscriber and financial metrics in-line or ahead of consensus. Management also reiterated full year guidance and noted it may exceed its outlook for free-cash-flow. From a competitive and financial standpoint, we view Verizon to be among one of the best positioned telecoms in the world. Looking forward, we expect free cash flow to grow significantly in the years ahead as the company moves past the secular peak in 5G capital spending.

BSD Analysis:
Despite near-term headwinds from lead cable concerns highlighted in the Wall Street Journal, Ariel maintains a bullish view on Verizon based on compelling valuation and strong operational performance. The company delivered solid quarterly results with subscriber and financial metrics meeting or exceeding consensus expectations. Management's reiteration of full-year guidance and potential upside to free cash flow outlook demonstrates confidence in business fundamentals. Ariel views Verizon as one of the best-positioned telecommunications companies globally from both competitive and financial perspectives. The key catalyst is the expected significant growth in free cash flow as 5G capital expenditures move past their secular peak. This capital spending normalization should unlock substantial cash generation capacity. The manager sees the current lead cable overhang as creating an attractive entry point for a high-quality telecom franchise with improving cash flow dynamics.

Pitch Summary:
Additionally, French multinational tire manufacturer, Michelin SCA, traded higher over the period following an earnings beat and a raise in full year guidance. We remain enthusiastic about Michelin's strong global competitive position, cyclical resiliency, pricing strategy and cost discipline. Furthermore, we expect the company's "Around Tire" and "Beyond Tire" initiatives to drive profitable growth over the long term.

BSD Analysis:
Ariel expresses strong conviction in Michelin following another quarter of earnings outperformance and raised full-year guidance. The fund highlights Michelin's competitive advantages including its strong global market position and demonstrated cyclical resiliency. Management's effective pricing strategy and disciplined cost structure have enabled the company to navigate challenging market conditions successfully. The "Around Tire" and "Beyond Tire" strategic initiatives represent key growth drivers that extend beyond traditional tire manufacturing. These initiatives position Michelin to capture value across the broader mobility ecosystem and drive profitable growth over the long term. The combination of operational excellence, strategic positioning, and innovative growth initiatives supports the manager's bullish outlook. Michelin's ability to consistently beat earnings expectations while expanding into adjacent markets demonstrates strong execution capabilities.

Pitch Summary:
Global pharmaceutical and healthcare company, GSK plc., also advanced in the period following a top- and bottom-line earnings beat and subsequent raise in full-year guidance. Shares were also aided by a successful U.S. and European launch of Arexvy, a respiratory syncytial virus (RSV) vaccine for older adults. Although risks around the Zantac litigation remain a concern, we believe GSK should generate sustainable growth and margin expansion as the company transitions its Pharma pipeline towards specialty medicines and vaccines. Furthermore, the company's robust balance sheet provides the scope for bolt-ons, which has the potential to drive additional growth.

BSD Analysis:
Ariel maintains a bullish stance on GSK following strong quarterly earnings that beat both top and bottom line expectations, prompting management to raise full-year guidance. The successful launch of Arexvy, their RSV vaccine for older adults, in both U.S. and European markets represents a significant commercial milestone. The fund views GSK's strategic transition toward specialty medicines and vaccines as a pathway to sustainable growth and margin expansion. While Zantac litigation remains an overhang, the company's strong balance sheet provides financial flexibility for strategic acquisitions. The manager sees GSK as well-positioned to capitalize on its pipeline transformation and expects bolt-on acquisitions to drive additional growth opportunities. This represents a quality defensive healthcare play with multiple growth drivers. The combination of pipeline transition, successful product launches, and acquisition capacity supports the bullish investment thesis.

Pitch Summary:
Also in the quarter, we established a new position in Singapore-based, niche electronics manufacturing service provider, Venture Corporation Ltd. The company has a diversified customer base, generates industry leading margins and is consistently recognized for solid execution. Macro headwinds and near-term demand weakness provided us an attractive entry point in the name. In our view, Venture Corporation can attract test & measurement and life-science customers, which are largely underpenetrated due to complex specification and regulatory requirements. We also see upside with Philip Morris, one of the company's key customers, as they roll out their electronic cigarette product, IQOS, in the US. Additionally, we find Venture Corporation's strong financial position, highlighted by its net cash balance sheet to be a plus for a long-term investment opportunity.

BSD Analysis:
Ariel initiated a new position in Venture Corporation, a Singapore-based niche electronics manufacturing services provider, taking advantage of macro headwinds and near-term demand weakness for an attractive entry point. The fund highlights several competitive advantages including a diversified customer base, industry-leading margins, and consistent operational execution. Ariel sees significant growth potential in underpenetrated markets, particularly test & measurement and life-science customers, where complex specifications and regulatory requirements create barriers to entry that favor established players like Venture. The manager is also optimistic about growth opportunities tied to Philip Morris's IQOS electronic cigarette rollout in the US market. The company's strong financial position, including a net cash balance sheet, provides additional confidence for this long-term investment opportunity.

Pitch Summary:
Finally, Dutch international grocer, Koninklijke Ahold Delhaize N.V., traded lower in the quarter. Despite the delivery of robust earnings results, food inflation is slowing and some investors are concerned the back half of the year will be more challenging. We continue to believe Ahold's strong market share, stable business model and solid balance sheet should help the company navigate the current market environment. We also think there is potential for Ahold to unlock additional value through its online channel, bol.com.

BSD Analysis:
Ariel maintains a bullish stance on Ahold Delhaize despite the stock's quarterly decline and investor concerns about slowing food inflation potentially creating headwinds in the latter half of the year. The fund emphasizes the company's fundamental strengths, including strong market share positions, a stable grocery business model, and a solid balance sheet that should provide resilience during challenging market conditions. Beyond the core grocery operations, Ariel sees significant value creation potential through the company's online platform, bol.com, which could serve as an additional growth driver. The manager appears confident that Ahold's defensive characteristics and diversified revenue streams position it well to navigate the evolving retail environment while capitalizing on e-commerce opportunities.

Pitch Summary:
Global pharmaceutical and diagnostics leader, Roche Holding AG, also weighed on returns in the period on mixed earnings. A miss in the diagnostics segment drove sales slightly lower than consensus, but margins came in ahead and EPS was in-line. Importantly, management reiterated full year guidance. We remain enthusiastic about Roche's growing pharma portfolio and believe the core oncology franchise remains one of the most valuable in the world. The diagnostics segment also continues to demonstrate momentum following a rise in installed platforms during the pandemic. In our view, Roche is a quality defensive name with a rich suite of pipeline opportunities.

BSD Analysis:
Despite mixed quarterly earnings that weighed on share performance, Ariel maintains strong conviction in Roche Holding AG as a high-quality defensive healthcare investment. While the diagnostics segment missed sales expectations, the company delivered better-than-expected margins and in-line EPS, with management reaffirming full-year guidance. The fund is particularly enthusiastic about Roche's expanding pharmaceutical portfolio, highlighting the oncology franchise as one of the world's most valuable. The diagnostics business continues to show positive momentum, benefiting from increased installed platforms during the pandemic. Ariel views Roche as an attractive defensive play with significant pipeline opportunities across both divisions, positioning the company well for long-term growth despite near-term earnings volatility.

Pitch Summary:
By comparison, shares of German mobile telecommunications company, Telefónica Deutschland Holdings AG, sharply declined in the quarter. This underperformance was driven by 1&1's recent announcement it would move its national roaming and spectrum leasing partnership from Telefónica to Vodafone in 2025. Although management expects the decision to meaningfully impact EBITDA and free cash flow over the medium-term, the company reassured investors it will remain a rational player in the market. Telefónica plans to use the now under-utilized network capacity to accommodate new and existing customers. While we remain cautious about these recent developments, we think Telefónica Deutschland can benefit from the relatively stable competitive environment in Germany over the long term.

BSD Analysis:
Ariel acknowledges significant near-term headwinds for Telefónica Deutschland following 1&1's decision to switch its national roaming and spectrum leasing partnership from Telefónica to Vodafone in 2025. This development is expected to materially impact the company's EBITDA and free cash flow over the medium term, creating meaningful financial pressure. However, management has indicated they will remain disciplined market participants and plans to utilize the freed-up network capacity to serve new and existing customers. While Ariel expresses caution about these recent negative developments, they maintain a constructive long-term view based on Germany's relatively stable telecommunications competitive environment. The fund appears to be taking a wait-and-see approach while monitoring how effectively management can offset the revenue loss.

Pitch Summary:
Additionally, Japanese auto manufacturer, Subaru Corporation, advanced over the period on solid financial results. Despite semiconductor chip shortages, management noted production and vehicle sales remain on track to meet the company's full year outlook. Additionally, the company expressed its intention to push ahead its electric vehicle (EV) strategy and boost U.S. production capacity. We remain focused on Subaru's solid business fundamentals and view its EV roadmap as a long-term opportunity to increase market share.

BSD Analysis:
Ariel maintains a positive outlook on Subaru Corporation, citing solid financial results and management's ability to navigate supply chain challenges. Despite ongoing semiconductor chip shortages affecting the automotive industry, Subaru has managed to keep production and vehicle sales on track to meet full-year guidance, demonstrating operational resilience. The fund is particularly encouraged by Subaru's accelerated electric vehicle strategy and plans to expand U.S. production capacity. Ariel views the company's EV roadmap as a strategic long-term opportunity to gain market share in the evolving automotive landscape. The manager emphasizes confidence in Subaru's fundamental business strength and its positioning for future growth through electrification and geographic expansion.

Pitch Summary:
Markets worldwide posted declines in the third quarter, with French multinational tire manufacturer, Michelin SCA, also many developed economies adjusting to the new "higher for traded higher over the period following an earnings beat and a longer" rate regime and its implications for slowing global raise in full year guidance. We remain enthusiastic about growth. Japan remains an outlier with accommodative policy, Michelin's strong global competitive position, cyclical while intensifying problems in China have many investors resiliency, pricing strategy and cost discipline. Furthermore, anticipating additional stimulus. As some investors remain we expect the company's "Around Tire" and "Beyond Tire" cautiously optimistic central banks will engineer a soft- initiatives to drive profitable growth over the long term.

BSD Analysis:
Ariel maintains a bullish stance on Michelin following the company's strong Q3 earnings beat and raised full-year guidance. The fund highlights Michelin's competitive advantages including its strong global market position, cyclical resilience, effective pricing strategy, and disciplined cost management. The manager is particularly optimistic about Michelin's strategic initiatives - the "Around Tire" and "Beyond Tire" programs - which are expected to drive profitable growth over the long term. These initiatives likely represent Michelin's diversification beyond traditional tire manufacturing into adjacent services and technologies. The fund views Michelin as well-positioned to navigate the current challenging macroeconomic environment while capitalizing on long-term growth opportunities through strategic expansion.

Pitch Summary:
Also in the quarter, we initiated a new position in boutique asset manager, Affiliated Managers Group, Inc. (AMG). AMG has a unique business model in which it purchases meaningful equity interests in boutique asset management firms and in return receives a fixed percentage of revenues. The Company's partnership approach allows for its affiliates' management teams to own significant equity while maintaining operational independence. We believe AMG's size and scale allow the company to be the leading destination for growing boutique firms addressing succession issues and/or seeking assistance in marketing, distribution and product development. In our view, investors currently underappreciate the company's active and alternative-asset affiliate business model.

BSD Analysis:
Ariel initiated a new position in Affiliated Managers Group, attracted by the company's differentiated partnership model in asset management. AMG's strategy of taking equity stakes in boutique firms while preserving management independence creates a win-win structure that appeals to entrepreneurial investment managers. The fund believes AMG's scale and resources position it as the preferred partner for growing boutiques facing succession planning or seeking distribution support. This creates a sustainable competitive advantage in attracting high-quality affiliate partners. Ariel views the market as undervaluing AMG's exposure to active and alternative asset management, which should benefit from industry consolidation trends. The partnership model provides diversified revenue streams and growth optionality through both organic growth and new affiliate additions.

Pitch Summary:
Lastly, Cruise ship operator, Norwegian Cruise Line Holdings Ltd. (NCLH) traded lower in the quarter. The stocks strong price appreciation up 34.64% year-to-date drove profit taking following an underwhelming outlook relative to Royal Caribbean Group's upward guidance revision. Notably, NCLH continues to deliver record cumulative bookings as well as increased occupancy capacity at higher prices. The company remains focused on right sizing its cost base and improving margins to strengthen its foundation for sustainable and profitable growth. Meanwhile, the company executed on its leadership succession plan, with 15-year veteran, Harry J. Sommer's recent appointment to CEO. With an experienced management team at its helm, a young average fleet and solid liquidity position, we remain enthusiastic about the name.

BSD Analysis:
Ariel maintains a bullish stance on Norwegian Cruise Line despite recent stock weakness, attributing the decline to profit-taking after strong year-to-date gains rather than fundamental deterioration. The manager highlights strong operational metrics including record bookings and improved occupancy at higher pricing, demonstrating robust demand recovery. Management's focus on cost optimization and margin improvement positions the company for sustainable profitability. The successful CEO transition to industry veteran Harry Sommer provides experienced leadership continuity. Ariel emphasizes Norwegian's competitive advantages including a young fleet, strong liquidity position, and experienced management team. The fund views current valuation as attractive given the company's operational momentum and structural improvements in the cruise industry post-pandemic.

Pitch Summary:
Leading direct-to-consumer pool and spa care services company in the U.S., Leslie's Inc. (LESL), also declined in the period following a preannounced earnings miss. Unfavorable weather across key markets and increased price sensitivity has resulted in weaker than expected store and website traffic trends. Investor concerns regarding the potential deflation on the price of chlorine further weighed on shares. In response to these results, management is reducing inventory, cutting costs and installed a new CFO. We believe our thesis on the name remains intact. In our view, the company continues to differentiate itself through its loyal client base, vertically integrated supply chain, scale advantage and seamless customer experience.

BSD Analysis:
Ariel maintains conviction in Leslie's despite recent earnings disappointment and stock decline, viewing current weakness as temporary. The manager attributes poor performance to weather-related headwinds and price sensitivity rather than structural issues. Management's proactive response through inventory reduction, cost cutting, and CFO replacement demonstrates operational discipline. Ariel's investment thesis remains centered on Leslie's competitive advantages including customer loyalty, vertical integration, and scale benefits in the fragmented pool care market. The fund believes the company's differentiated market position and superior customer experience will drive long-term value creation. Current valuation appears attractive given the temporary nature of operational challenges and the strength of underlying competitive moats.

Pitch Summary:
Alternatively, shares of luxury adventure travel services company, Lindblad Expeditions Holdings, Inc. (LIND), weighed on results in the period. We believe this recent price action runs counter to the company's solid business fundamentals. LIND reported revenue and EBITDA ahead of Wall Street expectations. Future travel reservations continue to be strong with both booking trends and pricing for 2023 ahead of pre-pandemic levels. Although more expensive fuel prices and an uptick in discounting from certain competitors may present short-term headwinds, cancelation rates are slowly improving and should result in higher cruise occupancy. Longer-term, we expect LIND's fundamentals will pave the way for multiple expansion as the company extends its market share in the expedition tourism niche. At today's valuation, we believe LIND's risk/reward is skewed sharply to the upside.

BSD Analysis:
Ariel maintains a contrarian bullish view on Lindblad Expeditions despite recent stock weakness, arguing that fundamentals remain strong. The company exceeded Wall Street expectations for both revenue and EBITDA, while booking trends and pricing have recovered above pre-pandemic levels. The manager acknowledges near-term headwinds from fuel costs and competitive discounting but emphasizes improving cancellation rates and occupancy trends. Ariel's long-term thesis centers on Lindblad's market share expansion in the specialized expedition tourism niche, which should drive multiple expansion. The fund views current valuation as creating an asymmetric risk-reward opportunity, with the stock price disconnect from solid operational performance presenting an attractive entry point for patient investors.

Pitch Summary:
Logistics and cash management services provider, Brink's Company (BCO), also traded higher in the period on an earnings beat, highlighted by record second quarter revenue and operating profit. Management reaffirmed full-year guidance and remains focused on improving the customer experience, enhancing productivity, driving additional growth through digital retail solutions and ATM managed services, as well as improving free cash flow conversion. At today's valuation, BCO still trades at a discount to our estimate of private market value.

BSD Analysis:
Ariel presents a value-oriented bull case for Brink's Company, highlighting strong operational execution with record revenue and operating profit. The manager emphasizes management's strategic focus on customer experience improvements and productivity enhancements as key drivers. Growth initiatives in digital retail solutions and ATM managed services position the company to benefit from evolving payment trends. The reaffirmation of full-year guidance demonstrates management confidence in the business trajectory. Ariel's valuation analysis suggests the stock trades at a significant discount to private market value, indicating potential upside. The combination of strong fundamentals, strategic positioning in secure logistics, and attractive valuation creates a compelling risk-adjusted opportunity.

Pitch Summary:
Toy manufacturer, Mattel, Inc. (MAT), also advanced in the period. Although the retail environment remains challenging, MAT delivered a solid earnings beat and maintained full-year guidance. The successful release of the Barbie movie is expected to generate over $125 million of gross billings this year from film royalty payments while boosting the franchises' consumer products. These results continue to highlight MAT's progress towards expanding its entertainment offering and executing on its strategy to grow market share, improve profitability and generate higher levels of cash flow. In our view, MAT remains an undervalued asset with attractive growth prospects for its Barbie and Hot Wheels brands, as well as its Disney Princess and Frozen toy lines, Trolls and the global launch of Monster High.

BSD Analysis:
Ariel maintains a bullish stance on Mattel, emphasizing the company's successful execution of its entertainment-driven strategy. The Barbie movie's success demonstrates the power of the company's IP monetization, generating significant royalty revenue while driving consumer product sales. The manager highlights Mattel's progress in expanding beyond traditional toys into entertainment, which should improve margins and cash flow generation. Key growth drivers include the strength of core brands like Barbie and Hot Wheels, plus licensed properties from Disney. The fund views current valuation as attractive given the company's brand portfolio strength and entertainment expansion strategy. Management's ability to beat earnings while maintaining guidance in a challenging retail environment reinforces the investment thesis.

Pitch Summary:
Live entertainment, media and technology company, Sphere Entertainment Co. (SPHR) was the top contributor during the quarter. Shares jumped following news the Las Vegas venue was on track to open in late September and costs were in-line with expectations. Additionally, the company delivered a profitable fourth quarter relative to the loss posted a year ago. While the Sphere venue will take some time to reach its full potential, the company is planning to have events 365 days a year. In addition to hosting concert residencies, marquee sporting and corporate events, The Sphere Experience will debut in October, consisting of a series of exhibits chronicling technology's impact on the development of human potential. Management also believes there is a significant opportunity for advertising and sponsorship on the Exosphere (the Sphere's exterior) as well as licensing interior VIP hospitality suites. Meanwhile, U2 opened to great fanfare on September 29th – sending shares even higher into the month of October. In our view, the Sphere's new experiential immersive venue and the company's two regional sports and entertainment networks present a long-term opportunity, which remains meaningfully underappreciated at current trading levels.

BSD Analysis:
Ariel presents a bullish thesis on Sphere Entertainment, highlighting the successful opening of their Las Vegas venue and return to profitability. The manager emphasizes the venue's year-round event potential and diversified revenue streams including concerts, sporting events, corporate functions, and The Sphere Experience exhibits. Key catalysts include advertising opportunities on the Exosphere exterior, VIP hospitality licensing, and the successful U2 residency launch. The fund views the immersive entertainment concept and regional sports networks as undervalued long-term assets. With the venue now operational and generating positive cash flows, Ariel believes the market has not fully recognized the company's experiential entertainment model and growth potential.

Pitch Summary:
CoStar Group, Inc. provides marketing and data analytics to the commercial and residential real estate industries. Shares detracted from performance after the company's financial results were negatively impacted by lower non-subscription revenues, which resulted from a significant drop in commercial real estate sales volumes. We are optimistic that volumes will recover. More importantly, we believe trends in the company's core subscription offerings remain excellent, and we are encouraged by growing traction in CoStar's nascent residential offerings. We estimate CoStar invested around $230 million in this initiative in 2022 and is targeting a total investment approaching $500 million in 2023. While this is a significant upfront commitment, we believe residential represents a transformative opportunity for CoStar. We believe the company's proprietary data, its compelling value for residential home brokers, and best-in-class management position it to succeed in this endeavor.

BSD Analysis:
Baron maintains a bullish stance on CoStar despite near-term pressure from declining commercial real estate transaction volumes affecting non-subscription revenues. The manager emphasizes that core subscription offerings remain strong, providing recurring revenue stability. The key investment thesis centers on CoStar's transformative residential real estate opportunity, with management investing $230 million in 2022 and targeting $500 million total investment in 2023. Baron views this as a significant but worthwhile upfront commitment given the large addressable market. The competitive advantages include proprietary data assets, compelling value proposition for residential brokers, and best-in-class management execution. Baron expects commercial real estate volumes to recover while the residential initiative provides a new growth vector for long-term value creation.