For those who haven’t tested it yet: HFBestIdeas.com is now live.
It currently includes:
Access is free for now — you just need to create an account:
https://HFBestIdeas.com
I built it to make it easier to explore fund ideas, discover new managers, and access original sources quickly.
If you try it, I’d be happy to hear your feedback.
Now, let’s get into this week’s selection of fund ideas 👇
Thesis:
B3 is a promising investment opportunity in Brazil’s integrated exchange sector, positioned to benefit from the country’s evolving financial market and acquired at an attractive valuation during a period of weakness.
Source: https://drive.google.com/file/d/1jELxV7c_VFsl7OETwCFMesa4SvkobL5_/view?usp=drivesdk
Analysis:
We initiated a position in B3, Brazil’s sole integrated exchange operator, which provides trading, clearing, settlement, and data services across equities, derivatives, and FX. The country is relatively early in its adoption of asset classes and financial products relative to other emerging and developed market bourses and we expect this maturation to benefit B3’s earnings. We were able to take advantage of weakness in Brazil to buy this business at an attractive valuation.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Baker Hughes is a well-positioned energy technology firm poised to capitalize on rising global demand for natural gas and LNG projects, while improving margins and leveraging its diversified portfolio across energy and industrial sectors.
Source: https://drive.google.com/file/d/1l03oMSlZcAKgChiccOOPnTscRufscAIp/view?usp=drivesdk
Analysis:
Baker Hughes is an energy technology firm with a diverse portfolio of technologies and services spanning the energy and industrial value chain. The company operates through two main segments: Industrial & Energy Technology (IET) and Oilfield Services & Equipment (OFSE). The IET segment offers a wide range of domain expertise, technologies, software and services for energy and industrial customers, including solutions for clean power, geothermal, hydrogen and emissions abatement. The OFSE segment designs and manufactures products and provides services for onshore and offshore oilfield operations, while also expanding its capabilities to address the energy transition. We believe Baker Hughes is well-positioned to capitalize on the rising global demand for natural gas and LNG projects, benefiting from its LNG franchise and critical turbomachinery. The company is also improving its margins and cash flow conversion, with EBITDA margins projected to be high teens in 2025 and targeting ~20%+ over the next few years. Additionally, Baker Hughes is accelerating its AI data center power infrastructure buildout, leveraging its NovaLT series gas turbines. The company’s diversified business model, including its industrial technology arm, provides stable revenue streams. The acquisition of Chart Industries enhances its IET strategy, creating a comprehensive offering in high-growth areas. Lastly, Baker Hughes’ backlog provides multi-year revenue visibility. We believe that the current valuation is attractive based on accelerating growth opportunities from the company’s IET segment and the associated higher-margin aftermarket services business.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Becton Dickinson is a leading medical supply company poised for growth and value unlocking through strategic simplification and a strong focus on recurring revenue.
Source: https://drive.google.com/file/d/1weTfLJpdURuEKw_PdD1iavk9wn1_UJi9/view?usp=drivesdk
Analysis:
Becton Dickinson is a medical supply and device company, selling low-cost medical essentials. Products include vascular access devices, pre-fillable syringes, and catheters, to name a few. Becton is the leader in most of its product lines and often competes in oligopoly market structures. Their management team has been executing on a strategy to grow and simplify the business. This has been successful but is obscured by noise in the financials caused by the pandemic, portfolio actions, and other temporary factors, providing us with an opportunity to buy a quality business at an attractive price. We believe execution on the company’s growth strategy and pending business separation will unlock value, with management targeting over 5% annual organic revenue growth and continued margin expansion in the coming years. Manufacturing scale is a key competitive advantage, with the company manufacturing billions of devices annually. Driven by healthcare utilization, the business is durable. Post their separation of biosciences and diagnostics solutions business in 2026, ~90% of revenue is recurring in nature (consumables). The valuation is attractive given the company’s defensive attributes and growth potential.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Bharat Electronics Limited is a leading defense electronics manufacturer in India positioned for 15% to 20% earnings growth over the next three to five years due to strong government support and rising defense budgets.
Source: https://drive.google.com/file/d/1RvUvvTIHXwdG8JJOJzaxrz4E0oAE2v15/view?usp=drivesdk
Analysis:
During the quarter, we also increased exposure to our global security/supply chain diversification theme by building a position in Bharat Electronics Limited (BEL), a leading defense electronics manufacturer in India with approximately 60% market share. The company is also the second largest Defense Public Sector Unit under India’s Ministry of Defense. BEL develops a wide range of equipment and systems in fields such as defense communication, radars, tank electronics, electro optics, arms and ammunition, and unmanned systems. Most of its revenue comes from the Indian government and government-related entities, with customers including India’s Army, Navy, Air Force, and state governments. As a system integrator, BEL has consistently invested in research and development while implementing cost-reduction measures, resulting in industry-leading profitability metrics. In our view, BEL is well positioned to benefit from the Indian government’s policy initiatives to encourage indigenous design, development, and manufacturing of defense equipment. We are also excited about other growth drivers for the company, including India’s rising defense budget and the growing export and non-defense opportunities. We expect BEL to deliver 15% to 20% compounded earnings growth in the next three to five years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Birkenstock is a globally recognized footwear brand with a rich history, experiencing significant growth and profitability under new management since 2009, and poised for continued expansion in revenue and geographic reach.
Source: https://drive.google.com/file/d/1IbzsOcMcKiS2wNXE3DFBjdcE50zIBHFs/view?usp=drivesdk
Analysis:
In the third quarter we purchased shares of Birkenstock Holding plc. Birkenstock is a global footwear brand with roots dating back to 1774. The brand is most known for its iconic “Arizona” and “Boston” sandals, and the brand has been embedded in U.S. culture since the 1960s and 1970s. Although the Birkenstock brand has been around for over 250 years, in 2009 the Birkenstock family brought in its first outside management team led by Oliver Reichert. Under new leadership and vision, the business has been transformed from a family-owned, production-oriented company into a global, professionally managed enterprise committed to growing the Birkenstock brand. Following the addition of outside management, Birkenstock revenues have grown at a 20% CAGR from fiscal 2014 to fiscal 2025. In 2025, the company generated revenues of €2.1 billion with profitability margins in the mid 30% range. This combination of an iconic brand with high growth and industry leading profitability makes the Birkenstock brand a unique asset.
Unlike almost all other footwear brands, Birkenstock manufactures its products in-house with over 95% of its products manufactured in Germany. This provides Birkenstock with better quality control and less external risk. Birkenstock products are sold both direct and through wholesale partners. Wholesale represents roughly 64% of sales and Birkenstock products were sold in 6,000 selected wholesale partners in over 75 countries ranging from orthopedic specialists to major department stores, to high-end fashion boutiques. The remaining 36% of sales are generated direct-to-consumer, with the vast majority sold through e-commerce. The company has just 90 stores, which we expect to continue growing.
Birkenstock’s strongest, most developed regions are the Americas and Europe, which represented 53% and 36% of revenues in fiscal 2022, respectively.
We believe that Birkenstock will be able to grow revenue in the mid-high teens over the medium term. The company’s growth should be driven by continued growth in its core styles, an expanding year-round product mix, growing the number of stores, and geographic expansion, particularly in the APAC region. We also believe that Birkenstock will be able to maintain its industry leading profitability due to high brand awareness, vertical integration, and the high proportion of products sold at full prices.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Boston Scientific is a global leader in medical products with strong growth potential driven by its innovative Farapulse and Watchman platforms, likely achieving mid-teens earnings growth over the next 3-5 years.
Source: https://drive.google.com/file/d/1z8qoiaOFSBDrSktA3iitUAJz0-2xhiZh/view?usp=drivesdk
Analysis:
We also acquired a 2% position in Boston Scientific, a global leader in medical products that treat various cardiovascular and other conditions. Over the last two years they have witnessed a meaningful acceleration in their growth profile based on two primary catalysts: their Farapulse platform for pulse field ablation (PFA) and their Watchman platform for atrial appendage. PFA is a newer medical procedure used to treat atrial fibrillation that is less invasive, more precise and faster than more traditional ablation procedures and with fewer risks than medication. We believe PFA is likely to become the standard of care in this treatment paradigm and Farapulse is poised to be the market share, is a permanent implant designed to reduce the risk of stroke in patients with atrial fibrillation, represents a meaningful and accelerating percentage of their revenues. With an overall revenue growth rate in the low double-digit range combined with modest margin expansion, we expect Boston Scientific has the potential to grow their earnings in the mid-teens over the next 3-5 years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Bread Financial is a competitive investment opportunity in the white-labeled credit card and lending market, with strong management and favorable valuation compared to industry leader Synchrony Financial.
Source: https://drive.google.com/file/d/1sk2W81etKCgg4B9_7lK0Rs4i0Hzpwpw4/view?usp=drivesdk
Analysis:
Bread Financial provides white-labeled credit cards (private label or co-branded) and ‘buy now, pay later’ lending as well as related loyalty program and marketing services for brand partners in North America including AAA, the NFL, Ulta Beauty, and numerous others. It also offers high yield deposit accounts to consumers under its own Bread Financial brand. It is neither the largest in its industry nor do we think of it as the leader. That acknowledgement goes to a company called Synchrony Financial which is five times larger than Bread. We know Synchrony well and in fact own it today, just not in our flagship fund. Bread’s management team is strong and the board is shareholder aligned. Once we introduce valuation, Bread is superior to Synchrony at current share prices such that today it is one of the largest holdings in the flagship fund.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Breedon is a vertically integrated building materials company with a strong position in the UK and Ireland, currently facing weak demand but well-positioned for future growth in both markets.
Source: https://drive.google.com/file/d/1B3VXqoYozuaJ_HgIU_8q9sqUWYjmrIE0/view?usp=drivesdk
Analysis:
The history of Breedon goes back to 2008 when investment firm Marwyn Capital and Peter Tom, a veteran of the aggregates industry, floated the shell company Marwyn Materials on AIM. The intention was to consolidate the building materials industry. The consolidation has now largely played out, with Breedon being the number four player in the UK cement industry and number three in Ireland.
Breedon follows a vertically integrated business model. In practice, this means they own two large cement plants, supplied by their own limestone, and producing ready-mixed concrete from their own cement and aggregates. They are also active in further downstream operations such as road surfacing. Aggregates and cement are Breedon’s two most profitable products, but the additional downstream assets allow them to capture margin across the value chain.
The company is currently suffering from weak end market demand in the UK, with demand for ready-mixed concrete being at a 60-year low. It seems unlikely that demand can get much worse, especially given the government’s focus on housebuilding. It also looks likely that the supply side will improve, with carbon border taxes and the phase-out of free CO2 allowances reducing capacity. Breedon is well positioned for tighter environmental standards, with their Irish cement plant being one of the most modern plants in Europe. Overall, Breedon has already replaced around half of the feedstock in its cement operations with alternative fuels.
As the consolidation has largely played out in the UK and Ireland, Breedon has recently entered the US market. The US still has many small independent operators and acquisitions seem to be available at reasonable valuations. Ultimately, the target is to replicate the company’s vertically integrated model.
Given the demand recovery potential for the UK and the growth outlook for the US, we believe the company’s valuation at just 10x price-to-earnings is attractive.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Cidara Therapeutics, Inc. is developing a long-acting antiviral drug for flu prevention that has shown promising efficacy and safety in clinical trials, targeting a market of over 100 million people in the U.S.
Source: https://drive.google.com/file/d/1XtdDUvD0aqAHyaZHF6mLoSr0F9piJ2xS/view?usp=drivesdk
Analysis:
We bought shares of Cidara Therapeutics, Inc., a biotechnology company that is developing an antiviral drug to prevent flu. Cidara’s drug is not a vaccine. Rather, it’s a long-acting antiviral with the potential to be a single-dose, universal preventative against all flu strains. The drug acts by binding to a target on the virus cell surface, inhibiting the virus from replicating. In June, Cidara announced positive top-line results from its 5,000-plus person Phase 2b clinical trial evaluating its drug for the prevention of seasonal flu in healthy unvaccinated adults. A single dose of the antiviral gave up to 76% protection from symptomatic influenza over 24 weeks compared to placebo. The drug was also well-tolerated with no safety issues. By comparison, on average, flu vaccines cut infections by only about 40%, depending on the season, and vaccine efficacy is just 10% to 20% in the immunocompromised population. Cidara recently started enrolling a Phase 3 trial in adults over age 65 and in people over the age of 12 with high risk co-morbidities or immune compromised status. The company’s addressable market consists of more than 100 million people in the U.S. Management also believes the cost of manufacturing the drug will enable the company to achieve an attractive gross margin.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
EssilorLuxottica is a dominant eyewear company with unmatched vertical integration, a strong portfolio of iconic brands, and innovative initiatives in wearable technology and health solutions that enhance its growth potential.
Source: https://drive.google.com/file/d/1f66Jal8c9Cp9qkIOL641JBV2w6WRc3xa/view?usp=drivesdk
Analysis:
During the quarter, we also initiated a position in EssilorLuxottica SA, the world’s leading eyewear company with unmatched scale and vertical integration across lenses, frames, retail, and distribution. The company’s dominance stems from its global portfolio of iconic brands (Ray-Ban, Oakley, and luxury fashion licenses), its extensive retail network, and its stronghold in prescription lenses where it commands an industry-leading market share. This integration provides pricing power, recurring demand, and high margins. Beyond its core business, EssilorLuxottica is innovating into new addressable markets: Ray-Ban Meta smart glasses position it as a pioneer in wearable technology; Stellest myopia control lenses address a massive global health challenge affecting children; and Nuance Audio hearing-enhancement eyewear opens a large underserved market in mild-to-moderate hearing loss. Together, these initiatives add significant optionality and growth potential to an already dominant eyewear franchise.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
GDS Holdings Limited is a compelling investment opportunity due to its strong market position in China’s mission-critical data center sector, benefiting from the growth of AI, cloud computing, and digital trends, with a projected cash flow surge and significant upside potential.
Source: https://drive.google.com/file/d/1RvUvvTIHXwdG8JJOJzaxrz4E0oAE2v15/view?usp=drivesdk
Analysis:
During the quarter, we reinitiated an investment in GDS Holdings Limited, an operator of mission-critical data center facilities in China and internationally with core customers such as Alibaba, Tencent, Baidu, ByteDance, and Kuaishou. China is in the early stages of scaling its AI ecosystem along with rising cloud computing penetration, digital payments, and short-form video trends, which should provide growth tailwinds for data center operators like GDS. The company’s competitive advantages stem from access to large-scale power in Tier-1 cities in China supporting latency-sensitive applications, a long track record of development for timely customer deployments, and leading market share in the third-party carrier-neutral data center space. Our history with GDS since its 2017 IPO is strong. A recent visit to Asia to tour its new data center campus in Malaysia allowed us to engage with the executive team of GDS International (renamed “DayOne”). Extensive market due diligence was also conducted with several global competitors in Singapore. DayOne’s impressive private capital raise positions it for ongoing valuation growth given its attractive outlook. Over the next 12 to 18 months, we foresee the value of this business meaningfully increasing to $15 to $20 per share, with planned business listing in the upcoming year. The contracted cash flow growth, expected to ramp from approximately $200 million to $1 billion over the next two years, underscores an underappreciated aspect of the investment. Consequently, we are investing at only 11 to 12 times EBITDA for GDS’ mainland China business, reflecting a significant discount to global peers and indicating considerable upside potential.
Furthermore, GDS recently listed a subset of its assets into a public REIT vehicle, which is now valued at more than 20 times cash flow.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Greggs is a well-positioned, vertically integrated food-on-the-go operator with strong brand loyalty, facing short-term challenges but having substantial growth potential through new store openings and a solid financial outlook.
Source: https://drive.google.com/file/d/1weTfLJpdURuEKw_PdD1iavk9wn1_UJi9/view?usp=drivesdk
Analysis:
Greggs is a vertically integrated food-on-the-go operator with over 2,650 shops across the UK. Greggs sells products which are low ticket, consumed immediately, and often replenished during the day. The company’s strong brand and differentiated business model have created loyal customers and long-term market share gains. Elevated cost inflation and growth investments have coincided with a demand slowdown, weighing on the near-term outlook and pressuring the stock. While sales growth and margins are likely to take a step back in the interim, given investments being made across the business (supply chain, innovation, employees, channels/partnership), we think the company has a long runway for new store openings. The company is cresting the peak of their supply chain investment cycle this year, management remains disciplined, and they are in an excellent financial position with cash flow set to inflect thereafter. We view the valuation as too low relative to their long-term prospects.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Insmed is poised for sustained profitability following the FDA approval of its bronchiectasis treatment, brensocatib, while also advancing its promising pipeline in respiratory diseases.
Source: https://drive.google.com/file/d/1PMpefMirMlaBIGe0DqBt60Zx_blYiXNk/view?usp=drivesdk
Analysis:
The newest addition to our biotech holdings, Insmed, has achieved a major milestone with the recent FDA approval of brensocatib (brand name: BRINSUPRI) for bronchiectasis—with a clean label and strong pricing. This marks the first approved therapeutic option for patients with this chronic lung disease, whose quality-of-life burden is comparable to that of chronic obstructive pulmonary disease. We anticipate a rapid adoption curve that should push the company toward sustained profitability. The attraction, however, goes well beyond a single drug. The second pipeline asset, TPIP, has now achieved key clinical validation in pulmonary arterial hypertension as well as idiopathic pulmonary fibrosis, reinforcing its potential as a transformative therapy for patients suffering from deadly lung diseases. Combined with its already approved ARIKAYCE for Mycobacterium avium complex lung disease, the launch of brensocatib and the progress of TPIP are helping Insmed build a powerful respiratory disease franchise—a disease-focused strategy that has proven lucrative for other biotech leaders. Despite a recent rally following BRINSUPRI approval and TPIP clinical readouts, shares remain well below our estimate of their intrinsic value, leaving substantial room for multi-year appreciation. Insmed is led by its long-time CEO Will Lewis, who took the helm when the company’s market capitalisation was under $100 million (now $30 billion). During his tenure, the company has created significant shareholder value through disciplined R&D bets. A continuation of this strategy should lead to further value creation that the market is not pricing into the shares.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Intuit is well-positioned for growth in the small business accounting market due to its dominant market share, innovative features, and the integration of Gen AI agents, leading to projected mid-teens revenue and high-teens earnings growth.
Source: https://drive.google.com/file/d/1z8qoiaOFSBDrSktA3iitUAJz0-2xhiZh/view?usp=drivesdk
Analysis:
We initiated a new position in Intuit, a solutions business which houses Quickbooks accounting software, payroll and payments services mostly for small businesses. The company has a dominant share of the small business accounting and do-it-yourself tax software market. Even so, we believe there remains an attractive runway for growth as many small businesses still do not use accounting software, and Intuit has been adept at introducing new features and services to make its products easier and more “intuit”ive to use. Gen AI agents fit neatly into the company’s offerings to help guide small businesses in managing their finances and business software easily, which frees up time for them to run their businesses, and also see the introduction of AI agents into their Quickbooks offerings enhancing selling prices. We expect Intuit to grow revenue at a mid-teens rate and earnings at a high-teens rate going forward.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
James Hardie Industries is enhancing its market position and shareholder value through the acquisition of The AZEK Company, expanding its product offerings and operational efficiencies in the residential construction sector.
Source: https://drive.google.com/file/d/18FTgR-fmcUfgNYGbydszSGEQ7Le6iCf6/view?usp=drivesdk
Analysis:
James Hardie Industries (JHX), manufactures Fiber Cement and Fiber Gypsum products (siding, backerboard, etc.) used primarily in residential construction (newbuild and repair/remodel). JHX acquired the existing portfolio company, The AZEK Company (AZEK), which provides JHX with a broader product offering for distributors, contractors and homeowners, positioning the company for market share gains in an expanded addressable market. Operating synergies, merger cost synergies and enhanced scale efficiencies should further enhance the shareholder value creation potential.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Kinsale Capital Group is a rapidly growing specialty insurance company in the U.S. excess and surplus market, known for its disciplined underwriting approach and technology-driven cost advantages.
Source: https://drive.google.com/file/d/1sk2W81etKCgg4B9_7lK0Rs4i0Hzpwpw4/view?usp=drivesdk
Analysis:
Kinsale Capital Group is a specialty insurance company operating in the U.S. excess and surplus market. While they are not the largest in the industry – that honour goes to Lloyds of London with over 17% market share – Kinsale has about a 2% market share but is growing very quickly. The company was founded 15 years ago and is still run by the founder and his long tenured team. They have an underwriting approach and discipline that provides them with significant advantages. As well, they are as much a technology company as they are an insurance company and, as a result, have a profound cost advantage relative to the competition, that we believe is sustainable. It is an example of a highly intelligent company that we believe will continue to make the right decisions for their shareholders for the long term. We added Kinsale to the portfolio last year and expect to remain shareholders for a long time, subject, of course, to valuation.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Kiwoom Securities is a leading online broker in Korea that has achieved over 30% of retail inflows despite a competitive market, offering compelling long-term returns potential even at a low valuation.
Source: https://drive.google.com/file/d/1s7S1X3-1LrhNx6fry32BdCaym_j1UU2t/view?usp=drivesdk
Analysis:
Korea’s leading online broker, Kiwoom Securities, presents an illustrative example of this dynamic. The brokerage industry in Korea is fiercely competitive, with razor-thin commission rates, in a stock market that hasn’t seen any meaningful tailwinds in decades. Despite this meager environment, Kiwoom has managed to carve out a dominant position, capturing more than 30% of retail inflows into domestic equities over the past five years. That market leadership has translated into a return on equity (ROE) averaging 18% over the same period. However, shares in Kiwoom have long been available far below book value—globally rare for an online broker, and especially for one of Kiwoom’s quality and market position. Alongside shares in Kiwoom, we also own shares in its parent entities, Daou Technology and Daou Data, both of which derive most of their underlying value from their stakes in Kiwoom. Shares in the Daou names are discounted further still, trading at a more than 50% discount to the (in our view already undervalued) Kiwoom holdings. We believe shares in both Kiwoom and the Daou names could provide compelling long-term returns for shareholders, even if the “Korea discount” were to persist and Kiwoom’s valuation remains depressed. But what does it mean for Kiwoom and the Daou companies if the promised reforms are successfully delivered? We think the benefits could be threefold. First, for a broker, strong market performance and positive investor sentiment should drive higher trading volumes resulting in faster growth in profits. This has been the case for Kiwoom in the first half of 2025, as the company has generated a nearly 20% ROE over the period. In a healthier market environment with greater participation, we expect this strong performance to endure. Second, Kiwoom’s capital allocation continues to improve. The company has set out a strategy focused on ROE, and has raised its payout ratio, including buybacks, from the low teens to roughly 30%. Both Daou Technology and Daou Data have also increased their dividends accordingly. As part of the broader push for improved capital efficiency across Korea, all three companies are likely to continue taking steps to enhance their capital allocation strategies. Third, there is room for valuations to meaningfully improve. Kiwoom still trades near book value, despite a long-term ROE in the mid-teens. If tax reforms enhance the attractiveness of Kiwoom’s dividend, the combination of high returns on equity, improved capital allocation, and low valuations could draw investors’ interest, and drive a re-rating of Kiwoom’s valuation. While Kiwoom’s success so far has been positive to see, the key risk, in our view, lies in corporate culture. Kiwoom is no longer the disruptive upstart it once was; it has grown into a mainstream financial institution with substantial profits and a sizeable balance sheet. The crucial question is whether it can retain its entrepreneurial DNA or succumb to the inertia of incumbency. We will continue to monitor this closely.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Kuaishou Technology is a differentiated short video platform in China with strong user engagement and potential for significant earnings growth driven by AI advancements and e-commerce integration.
Source: https://drive.google.com/file/d/1RvUvvTIHXwdG8JJOJzaxrz4E0oAE2v15/view?usp=drivesdk
Analysis:
We increased exposure to our digitization theme by initiating a position in Kuaishou Technology, China’s second-largest short video platform with over 400 million daily active users. While often perceived as an inferior version of Douyin/TikTok, Kuaishou is in fact differentiated by its unique community-driven ecosystem and deep engagement among users from lower-tier cities. We believe the short-video economy has room for multiple players as creator and audience segmentation deepens, and market concerns over user fatigue or competition are overstated. The company’s monetization engine continues to strengthen, increasingly aided by AI, with steady improvements in ad efficiency, engagement, and margins, alongside accelerating contributions from e-commerce. We expect mid-to-high-teens earnings growth for its core business over the next few years and see the stock as materially undervalued. In June 2024, Kuaishou introduced Kling, an AI video generation model comparable to OpenAI’s Sora, which benefits from Kuaishou’s proprietary short-video database - with over 40 million videos uploaded daily - giving it a unique edge in training and fine-tuning. We see Kling as an emerging growth driver with strong platform synergies and long-term monetization potential.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Madrigal Pharmaceuticals is a biotech company focused on treating metabolic dysfunction-associated steatohepatitis (MASH) with its FDA-approved drug Resdiffra™.
Source: https://drive.google.com/file/d/1HGUqcmNugGQMXfuAvveCl0rEVcB8h28Y/view?usp=drivesdk
Analysis:
Madrigal Pharmaceuticals is a commercial-stage biotech company focused on treating metabolic dysfunction-associated steatohepatitis (MASH)—a serious liver disease with significant unmet need—through its lead drug, Resdiffra™. As the first and only FDA-approved treatment for MASH with moderate to advanced fibrosis (F2–F3), Resdiffra offers clinically meaningful efficacy and a favorable safety profile. During the quarter, we increased our position in Madrigal Pharmaceuticals to a small CropSM, driven by the successful launch of its F2–F3 therapy and effective execution in pricing negotiations with insurers. With an active sales force and growing market presence, we have increasing confidence in Madrigal’s ability to serve the F4 MASH (compensated cirrhosis) patient population, pending future approval of its therapy for that stage.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Nomura Holdings, Inc. is a leading financial services conglomerate in Japan, well-positioned to benefit from the country’s interest rate normalization and structural growth in household investment flows.
Source: https://drive.google.com/file/d/1f66Jal8c9Cp9qkIOL641JBV2w6WRc3xa/view?usp=drivesdk
Analysis:
We increased exposure to our Japan interest rate normalization theme by initiating a position in Nomura Holdings, Inc., Japan’s leading financial services conglomerate with operations in wealth management, global markets, investment banking, and asset management. Nomura’s strong domestic franchise gives it unique access to the country’s vast household savings pool, while its established corporate and institutional relationships support cross-selling across businesses. The firm is also diversifying internationally, recently expanding its global asset management platform and strengthening its trading capabilities to capture rising market volatility. We believe Nomura is well positioned to benefit from structural growth in Japanese household investment flows, global assets under management expansion, and resilient wholesale earnings, making it an attractive long-term investment.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
NVIDIA and Broadcom are poised for sustained growth in earnings, projected at around 20% per year over the next 3-5 years, driven by strong demand for AI chips and related infrastructure.
Source: https://drive.google.com/file/d/1z8qoiaOFSBDrSktA3iitUAJz0-2xhiZh/view?usp=drivesdk
Analysis:
That is specifically what has occurred for NVIDIA and Broadcom. While the sheer magnitude of demand for AI chips, servers and networking equipment was something that we clearly underappreciated, new incremental data points over the past few months lead us to conclude the current boom in AI chips and related hardware will likely continue for the foreseeable future giving us greater conviction over the trajectory of future earnings for both NVIDIA and Broadcom. These new data points included: Oracle’s $30 billion annual revenue cloud contract (6/30), U.S. tax incentives reinstating 100% bonus depreciation for short-lived assets, boosting data center investment (7/4), Meta’s pledge to invest “hundreds of billions” in multi-gigawatt data center clusters (7/14), and Google’s capex hike to $85B for 2025, with more planned for 2026 (7/23). These data points combined with our existing fundamental research led us to believe that the growth potential for companies remains strong even as growth moderates from the extremes of the past few years—Oracle’s recent earnings results (highlighted earlier) reinforce that belief and our decision to trade both names into the Portfolio earlier in the quarter. NVIDIA produces the fast chips (GPUs) that are able to process compute intensive tasks like Gen AI training models extremely efficiently, are very flexible so can be used for any various workloads, and as a result are in high demand as the hyperscalers build out their Gen AI infrastructure. We believe NVIDIA has a very strong competitive moat, which is partly about the speed of their chips, but also the entire ecosystem they have built around them (programing language, training models and networking equipment). Broadcom is the other major player in the AI chip market and the leading provider of custom chips. The company captures a significant share of enterprise spending in this area. As Gen AI use cases mature, and as inference workloads become a bigger piece of the compute pie, we expect that custom chips (and Broadcom’s in particular) will account for a larger share of the total market. We also expect they will be able to grow their earnings by ~20% for the next 3-5 years and believe their multiple in mid-to-high thirties is fair. We anticipate that both companies will be able to generate earnings growth at ~20% per annum over the next 3-5 years and that their P/E multiples in mid-to-high thirties were fair valuations for the level of expected future earnings growth. We still believe that these companies are cyclical, but we don’t expect the downcycle in the next few years. If anything, the spend intent from their largest customers seems set to continue unabated and there is risk to any company that stops investing while their competitors push forward in a Gen AI world.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
On Holding is a disruptive Swiss designer of premium footwear and apparel poised for market share growth through increased brand awareness and expansion into new sports categories.
Source: https://drive.google.com/file/d/13-n9iyMVGiUO53E8wqUY7LNYmGC_TZlw/view?usp=drivesdk
Analysis:
Our largest addition was On Holding, a disruptive Swiss designer of premium footwear and apparel that currently has ~2% share of the global athletic footwear market. We believe the company is well-positioned to continue gaining market share through a combination of growing its brand awareness and wholesale presence. We also see room for it to increase its brick-and-mortar footprint and expand beyond running into new sports and apparel categories. While consumer spending cycles and competition remain risks, we are encouraged by the company’s premium-positioned brand, which is currently resonating with consumers.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
OneMain is a leading player in nonprime personal lending with potential for growth and resilience despite a challenging macro environment.
Source: https://drive.google.com/file/d/1weTfLJpdURuEKw_PdD1iavk9wn1_UJi9/view?usp=drivesdk
Analysis:
OneMain is a scale leader in nonprime personal lending. Although they have a messy corporate history, our research suggests that in most key areas they are superior to their peers. We believe with a few years of clean results and an improved macro environment, this company could be reframed as a differentiated, high-quality financial. Given organic growth opportunities in personal lending, and newer areas such as credit card and direct auto, we believe they can grow organically in the mid-single digits with operating leverage, while at the same time returning significant capital through a large dividend and episodic buybacks. Although the current macro environment has stressed their core consumer and pressured net charge offs, we believe the income statement alone provides sufficient protection from an adverse outcome in nearly all reasonable scenarios, with further protection on the balance sheet in a tail risk scenario. The macro backdrop has given us the opportunity to own this industry leading business at an attractive valuation.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Pony AI Inc. is a leading player in the emerging multi-billion-dollar robotaxi market in China, positioned for rapid growth through advanced technology, strategic partnerships, and regulatory approvals.
Source: https://drive.google.com/file/d/1f66Jal8c9Cp9qkIOL641JBV2w6WRc3xa/view?usp=drivesdk
Analysis:
As part of our China value-added theme, we initiated positions in Pony AI Inc. (Pony.ai) and GDS Holdings Limited. Pony.ai is a global leader in autonomous mobility. We expect China’s robotaxi market to evolve into a multi-billion-dollar industry over the next 5 to 10 years, fueled by advancing AI technology, supportive government policies, and a superior user experience. The company is well positioned as an early mover, becoming the first corporate entity to secure regulatory licenses to operate fully driverless vehicles in all four Tier-1 cities in China. This achievement reflects Pony.ai’s industry-leading technology and exceptional safety track record, backed by millions of accumulated driverless miles. Pony.ai’s latest-generation autonomous vehicle, set to roll out in the second half of 2025, delivers a 70% bill-of-materials cost reduction, which we believe will allow the company to rapidly scale robotaxi commercialization. Leveraging strategic partnerships with automotive giants like Toyota, GAC, and BAIC for mass production, Pony.ai’s robotaxi fleet is projected to scale to tens of thousands of vehicles over the next five years. In our view, this expansion will enable the company to achieve strong network effects and highly profitable unit-level economics. Over the long run, we expect Pony.ai to maintain dominant market share and strong pricing power, given the robotaxi industry’s formidable barriers to entry, including cutting-edge technological requirements, substantial capital investment, and extensive regulatory approvals. While Pony.ai’s near-term focus remains on the vast China market, the company has already forged collaboration agreements to extend its robotaxi services worldwide, including in Europe, Asia, and the Middle East. In our opinion, Pony.ai’s cost advantages and technological leadership will make it highly competitive against global peers in these new markets.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
PPG Industries is a leading coatings provider with strong historical returns trading at a discount due to growth concerns, while Solventum is a promising medical device spinoff from 3M poised for improvement as an independent company.
Source: https://drive.google.com/file/d/1jqsnUVPr8wZCGfjYrpfu5mHRud4in-ON/view?usp=drivesdk
Analysis:
During the quarter, we initiated a new position in PPG Industries, a leading coatings provider. PPG boasts enviable franchises across multiple coatings markets and has generated attractive returns on capital historically. Shares are currently trading at a discounted valuation due to concerns around tepid organic growth relative to peers. We see these concerns as overly discounted in the valuation and expect growth to improve over time as some key end markets recover from cyclical pressure. We also initiated a new position in medical device company Solventum, a recent spinoff from 3M. Concerns around operational challenges and margin pressure caused by the separation from 3M, in addition to high financial leverage, resulted in an attractive entry point. We expect the company to benefit from self-help opportunities going forward as an independent company and see a clean balance sheet after recently divesting a non-core asset at a premium valuation. We trimmed TE Connectivity, CVS Health, and Citigroup all on strength.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Primo Brands Corporation is a leading bottled spring water company with a strong market position and growth potential, currently facing temporary integration challenges but expected to generate significant free cash flow in the future.
Source: https://drive.google.com/file/d/1IbzsOcMcKiS2wNXE3DFBjdcE50zIBHFs/view?usp=drivesdk
Analysis:
During the quarter, we established a new position in Primo Brands Corporation. Primo Brands owns the leading bottled spring water brands and the nation’s largest home and office water delivery service. The company was formed through the November 2024 combination of Primo Water and Blue Triton Brands. Primo Brands is fully vertically integrated. It owns or leases water supply (springs and municipal water sources), treats the water, bottles it, transports it to hubs, and distributes it last-mile to retail or the home. Primo Brands goes to market with 13 different brands. It has 7 brands that are over 100 years old, and 4 that date back to the 1800s. Primo Brands also owns high growth premium brands such as Saratoga and Mountain Valley Springs.
We think the stock is attractive for several reasons. First, the company benefits from strong barriers to entry. In the retail channel, brand recognition, distribution capability, and scale are the principal competitive advantages that have led to Primo Brands’ number one market share position in the water category, ahead of large beverage companies such as Coca-Cola and PepsiCo. In home and office delivery, Primo Brands has unrivaled route density that results in powerful local economies of scale and protects its 70%-plus market share. Second, there are tailwinds driving growth in water consumption. Consumers are becoming more health conscious and are trading sugary soft drinks for water. The aging municipal water infrastructure in the U.S. is also leading more people to seek out high-quality spring and purified water.
We built our position after the stock traded sharply lower following a second quarter earnings release that revealed challenges stemming from the integration of Primo Water and Blue Triton. As part of the merger, management identified opportunities to save costs through the elimination of redundant manufacturing plants and distribution branches. Execution of this plan during the first half of 2025 led to unexpected service disruptions in the home and office delivery segment. The problems were caused by changes to five-gallon jug availability and adoption of new technology systems used by drivers to manage their deliveries. These issues negatively impacted the timing of highly calibrated routes and led to a temporary reduction in on-time, in-full delivery rates. In response to these challenges management is sacrificing margin to win back churned customers and is delaying plans to increase prices. The business is now trading at what we believe is a very attractive multiple of fundamental earnings power. We believe management has a good handle on these transitory headwinds and expect the business to return to its normal rate of growth in the coming quarters. Primo Brands is poised to generate significant free cash flow in the years ahead, and we believe the stock will warrant a materially higher valuation once the company solves these current challenges.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Robert Half is an attractive value opportunity due to low job turnover affecting staffing demand, while Signify is poised for earnings recovery as demand rebounds following its transformation to LED products and strategic market improvements.
Source: https://drive.google.com/file/d/19N2abvGW1HTbrS1cAPtG2tuOkzXwMkRU/view?usp=drivesdk
Analysis:
We initiated a position in Robert Half, a leading provider of staffing and consulting services focused on finance and accounting functions. The share price has been impacted by low job turnover weighing on demand for staffing services, creating an attractive value opportunity. We also added Signify, a global leader in general lighting solutions. The company has undergone transformation over the past decade from Conventional Products-focused to LED products focused (now ~90% of the business). Their North America Professional market is also going through a turnaround since the acquisition of Copper Lighting in 2019. Demand is currently cyclically depressed across many of Signify’s end markets. However, we believe earnings are on track to recover as demand rebounds given Signify’s market leadership and sensible strategy execution.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Roivant Sciences Ltd. is a biotechnology company that develops focused subsidiaries called “Vants” to create pipeline drugs, with promising prospects for significant upside based on recent successes and ongoing projects.
Source: https://drive.google.com/file/d/1XtdDUvD0aqAHyaZHF6mLoSr0F9piJ2xS/view?usp=drivesdk
Analysis:
We bought shares of Roivant Sciences Ltd., a biotechnology company which builds subsidiaries or “Vants” to develop specific pipeline drugs. The company’s Vants are set up to be highly focused and very nimble. Roivant has proven the model with success with Telavant, a Roivant subsidiary that developed a TL1A antibody for inflammatory bowel disease and which was sold to Roche in 2023 for $7.1 billion. In our view, the most interesting current Vants include Immunovant Inc., Priovant, and Genevant. Immunovant (publicly traded as IMVT and Roivant owns 51% of the company on a fully diluted basis) is developing IMVT-1402, an FcRn antibody that will compete with argenx’s Vyvgart. We think IMVT-1402 has the potential to be first-in-class in Graves disease and difficult-to-treat rheumatoid arthritis, which could drive substantial upside. Most recently, Priovant reported positive Phase 3 results for brepocitinib in dermatomyositis, setting it up to become a blockbuster oral drug in this hard-to-treat condition. We think brepocitinib will likely also work in its Phase 3 non-invasive uveitis study. Genevant conducts research on lipid nanoparticle (LNP) drug delivery technology, and together with Arbutus (another Roivant subsidiary) owns foundational intellectual property in this area. Genevant and Arbutus are involved in litigation with Moderna and BioNTech around their use of LNP in covid vaccines. We think Genevant has a reasonable argument against Moderna and await results from the jury trial next spring. If successful, this could result in a multi-billion-dollar award which would further bolster Roivant’s balance sheet ($4.5 billion of cash) that the company can use to continue to support its pipeline and ongoing business development. Overall, we expect several data readouts in the coming years to de-risk multiple blockbuster opportunities, further proving the Roivant business model can generate upside.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Shin-Etsu Chemical Company is a global leader in PVC, silicones, and polysilicon wafers with strong market positioning, high cash flow potential, and growth drivers from AI and recovering demand.
Source: https://drive.google.com/file/d/1_orFM0NzTseuFhjANspsRL2P6d2B3JN3/view?usp=drivesdk
Analysis:
We initiated a position in Shin-Etsu Chemical Company, a global leader in three key businesses (PVC, silicones and polysilicon wafers), each operating in consolidated markets with high barriers to entry. In PVC, most of Shin-Etsu’s assets are in the US, benefiting from low-cost power and natural gas, placing the company at the bottom of the global cash cost curve. While demand has been weak due to a sluggish US housing market, signs of rates peaking and resilient household balance sheets can support a recovery. In silicones, used across construction, autos, electronics, and healthcare, demand typically grows at twice GDP. The market outside China is highly consolidated, and recent overcapacity in China has pushed prices to breakeven levels, but with closures and cancelled expansions, conditions are improving. Finally, in polysilicon wafers, Shin-Etsu is the leading player in 300mm diameter wafers, the standard for advanced nodes. Demand spans autos, gaming, smartphones, PCs and data centres, with AI emerging as a structural driver. AI servers require three times more silicon than traditional servers, offering a powerful tailwind. The company is priced at 16x forward earnings with high single digit growth, 20% of the company’s market capitalisation in cash, and potential upside from corporate action.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Shopify is a leading global commerce technology platform that empowers businesses to thrive in e-commerce through innovative solutions and strong international growth.
Source: https://drive.google.com/file/d/1zKTpzKfDMIakj2vzs-MWI9rQOAZmKi9b/view?usp=drivesdk
Analysis:
Shopify is a global commerce technology company that empowers businesses of all sizes to start, scale, market, and operate efficiently through a comprehensive, multi-channel platform. The company’s focus is to make commerce better for everyone by providing simple, reliable tools and services that enhance the shopping experience for consumers and streamline operations for merchants. Shopify’s business model includes recurring subscription solutions and merchant success-based solutions, supporting millions of merchants across more than 175 countries. The platform enables seamless management of products, sales, and customer relationships across online, physical, and social channels, with a focus on continuous innovation and robust infrastructure to help merchants thrive in a competitive market.
We see Shopify as the dominant force in e-commerce enablement, benefiting from the secular shift toward online retail and the growing ecosystem of merchants seeking direct-to-consumer channels, consistently gaining market share as competitors lose ground. We think the company’s financial momentum is robust, with revenue growth accelerating and record gross merchandise volume, while structural profitability and strong free cash flow illustrate its scalable model. Shopify’s expanding suite of merchant solutions deepens customer engagement and increases revenue per merchant over time. International expansion is a key driver, with global revenue and gross merchandise value (GMV) outpacing North America and local competitors. We also see high customer retention fueled by integrated merchant services that create significant switching costs, supporting long-term platform stickiness. Shopify’s aggressive investment in AI—through features like Shopify Magic, Sidekick, and strategic partnerships—powers innovation and personalized shopping experiences. The platform’s extensive merchant base and thriving app ecosystem reinforce its competitive moat, making Shopify a flexible and difficult-to-replicate ‘commerce OS (Operating System)’ for millions of businesses worldwide. We recognize that the stock trades at a premium to SaaS peers but view the company’s acceleration in revenue growth from increasing market share in both North America and international markets, a widening competitive moat, and increasing profitability through higher revenue per customer as supportive of the premium valuation.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Sociedad Quimica y Minera de Chile S.A. (SQM) is strategically positioned to benefit from the long-term growth in lithium demand due to global electrification trends, supported by its premier assets and diversified portfolio.
Source: https://drive.google.com/file/d/1RvUvvTIHXwdG8JJOJzaxrz4E0oAE2v15/view?usp=drivesdk
Analysis:
As part of our sustainability/ESG theme, we initiated a position in Sociedad Quimica y Minera de Chile S.A. (SQM), one of the world’s largest and lowest-cost producers of lithium, a critical material for EVs and energy storage systems. Our investment thesis is anchored in the structural, long-term growth in lithium demand driven by global electrification and decarbonization trends. SQM’s premier assets in the Salar de Atacama provide a lasting cost advantage, underpinned by exceptionally high lithium concentrations and a solar evaporation process that supports industry-leading margins through all phases of the lithium cycle. Following a sharp correction in 2023, we believe the lithium market is emerging from a cyclical trough. Importantly, China’s recent “anti-involution” campaign, aimed at curbing destructive price competition and enforcing production discipline, marks a potential turning point for industry supply behavior, setting the stage for a healthier, more sustainable pricing environment. Beyond lithium, SQM’s diversified portfolio, notably its stable and high-margin iodine business, adds earnings resilience relative to pure-play peers.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Synopsys is a market leader in electronic design automation (EDA) that we opportunistically added to our portfolio following a temporary revenue miss that caused a 30% share price decline, positioning it for strong long-term earnings growth driven by the democratization of chips and Gen AI capital expenditures.
Source: https://drive.google.com/file/d/1z8qoiaOFSBDrSktA3iitUAJz0-2xhiZh/view?usp=drivesdk
Analysis:
We opportunistically initiated a new position in Synopsys as well, who are a market leader in electronic design automation (EDA), notably utilized by semiconductor companies to design chips. They had an uncharacteristic miss on reported revenues during the quarter, stemming from what we believe to be temporary issues, that resulted in over a 30% decline in their share price. We opportunistically used that steep decrease to add what we believe is a great business to the Portfolio, that is a direct beneficiary from the secular tailwinds of ‘the democratization of chips’ and Gen AI driven capital expenditures (CAPEX) and who we anticipate will deliver mid-to-high teens earnings growth over the long-term.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Uber is a compelling investment due to its significant growth potential, strong brand recognition, and favorable valuation despite the long-term threat of autonomous vehicles.
Source: https://drive.google.com/file/d/1z8qoiaOFSBDrSktA3iitUAJz0-2xhiZh/view?usp=drivesdk
Analysis:
Additionally, we acquired a new position in Uber during the quarter. We have followed Uber for many years and believe their scale, network effects, growth opportunities and market position, combined with their current valuation make a compelling investment thesis. They have become one of the most recognizable consumer brands in the world and anticipate nearly $200bn in booking transactions for 2025. Over the past three years, they have compounded revenues at 36% Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) at 69% and Free Cash Flow (FCF) Margins have gone from negative to mid-teens. While the threat of autonomous vehicles looms and is likely weighing on the valuation, we believe that threat is many years away and so view that risk as low, and we expect Uber to compound earnings at ~20% each year over the next five years. In fact, we think the fastest way for autonomous vehicle companies to scale is to partner with a large and highly utilized platform like Uber who has dominant market position where it competes.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
With its asset cap lifted and turnaround efforts bearing fruit, Wells Fargo is positioned for renewed balance sheet growth, operational efficiency, and robust shareholder returns—making it a compelling value play with multiple catalysts for long-term appreciation.
Source: https://drive.google.com/file/d/1-Q7_fbuUqLeRoLMPrsu9g6YPNhNvFyk9/view?usp=drivesdk
Analysis:
Headquartered in San Francisco, California, and founded in 1852, Wells Fargo is one of the country’s largest and most established financial institutions. With total assets near $2 trillion, the company provides a wide array of banking and financial solutions across the U.S. and key international markets. Its operations span four primary business segments—Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management—which serve a diverse client base ranging from individuals and small businesses to multinational corporations and institutional investors.
Historically, Wells Fargo was among the most profitable and efficient major banks, known for its low-cost funding and strong returns on equity and assets. However, a series of consumer-related scandals that came to light in 2016 weighed heavily on its results and reputation, ultimately leading the Federal Reserve to impose a $1.95 trillion limit on the bank’s assets. In June 2025, the Fed lifted that cap, citing significant progress in the firm’s risk management and compliance practices. The removal of this constraint represents a major turning point, enabling the bank to return to balance sheet growth and compete on a more level footing with peers. Under CEO Charlie Scharf (appointed in 2019), management has streamlined the organization, invested in technology and reinforced governance standards—initiatives that, in our view, have strengthened Wells Fargo’s long-term resilience and rebuilt the foundation for sustainable growth.
High-Quality Business
Some of the quality characteristics we have identified for Wells Fargo include:
A low-cost, stable funding base, with over 80% of liabilities funded by deposits, including a significant portion in non-interest-bearing accounts;
Improved operating efficiency, driven by meaningful reductions in headcount and non-core expenses since 2018;
Well-diversified revenue profile across key business lines, including lending, investment banking, and wealth and investment management;
A demonstrated ability to return capital to shareholders through consistent dividends and substantial share repurchases, now further supported by the lifting of regulatory restrictions.
Attractive Valuation
We believe Wells Fargo’s current stock price is offered at a meaningful discount to our estimate of intrinsic value. With the asset cap now lifted, the bank is poised to pair renewed balance sheet growth with improved operating leverage and disciplined cost control. While share repurchases may moderate as capital is redeployed to support asset growth, we expect continued strength in dividend returns along with incremental improvements in fee income and efficiency. In our view, these factors should support a higher level of normalized earnings over our investment time horizon.
Compelling Catalysts
Catalysts we have identified for Wells Fargo, which we believe will cause its stock price to appreciate over our three- to five-year investment horizon, include:
The lifting of the Federal Reserve’s $1.95 trillion asset cap, which removes a major growth constraint and enables Wells Fargo to expand its balance sheet for the first time since 2018;
Continued recovery in wealth management and investment banking revenues as brand perception strengthens and client engagement deepens;
Expansion of fee-based businesses and the opportunity to recapture market share across core lending and advisory services;
Enhanced capital return to shareholders through higher dividends and sustained share repurchases, supported by normalized regulatory requirements;and
Improved operating leverage and earnings potential following years of restructuring, strategic investment in technology and disciplined cost control.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
XPO is well-positioned for margin expansion through improved service levels and strategic leadership initiatives, even in a challenging freight environment.
Source: https://drive.google.com/file/d/13-n9iyMVGiUO53E8wqUY7LNYmGC_TZlw/view?usp=drivesdk
Analysis:
Finally, XPO, the fourth-largest less than truckload (LTL) provider in North America, adds to our cyclical growth exposure. Under new leadership, including the addition of a chief operating officer with 25+ years of experience in the LTL industry, the company is improving service levels and should be able to drive better pricing. Combined with an improved business mix and new additional services, XPO is poised to expand margins. While the company would benefit from renewed transport demand, its self-help efforts should enable XPO to outperform peers should a tepid freight environment persist.
Check here for the latest results, quarterly call and analysts' estimates.
Everything you read here is for information purposes only and is not an investment recommendation.
No comments:
Post a Comment