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Now, let’s get into this week’s selection of fund ideas 👇
Thesis:
4imprint is the largest distributor of custom-printed promotional merchandise in North America, currently facing short-term challenges due to tariffs but poised for long-term growth and increased market share.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
4imprint is the largest distributor of custom-printed promotional merchandise in North America. Over time it has built its share to around 5% of this highly fragmented industry. Because many of the items distributed by 4imprint are manufactured in Asia, the share price was harmed by Donald Trump’s new tariff regime. Higher product costs will either need to be absorbed by the distributors or passed on to customers. 4imprint has historically taken share during tough times for the industry as it has buying power to negotiate with suppliers, greater marketing efficiency and higher brand awareness. Recent share price weakness, in our view, reflects the short-term issues but ignores the long-term market growth and 4imprint’s ability to take increased share.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Albertsons is a defensive yet growing company poised for growth post-merger uncertainty, with strong returns on capital and upsides not reflected in its current share price.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
This defensive yet growing company is finally free from the uncertainty of a failed merger with Kroger and can get back to being on offense. Albertsons offers strong returns on capital with a valuable real estate safety net (39% of stores owned), while stable market positions and potential asset sales (management already proved they will sell at the right price) create upside not reflected in today’s share price vs. a value per share closer to $30.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Alphabet Inc. is well-positioned for long-term growth despite potential risks from generative AI, leveraging its extensive ecosystem, AI expertise, and diversified revenue streams to maintain a competitive advantage.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We also continued adding to the parent company of Google, the world’s largest search and online advertising company, Alphabet Inc. While the company continues to hold high market share in search, it also owns the world’s leading video platform, YouTube, a leading hyperscaler, Google Cloud, a leading ad network, and optionality in a number of smaller subsidiaries like the autonomous vehicle company, Waymo. Generative AI models like ChatGPT have introduced a bear case for Alphabet for the first time in over 20 years, centering on the potential disruption of its core search business and massive advertising revenue stream. While Google has long held a near-monopolistic position in the search engine market, the rise of LLMs like ChatGPT could lead to a shift in user behavior and a potential erosion of Google’s long-standing lead. For long-term investors, the central risk is that generative AI-powered interfaces could fundamentally change how users seek information, bypassing traditional search results and threatening Alphabet’s most profitable advertising engine. However, Google has thus far only seen growth in the number of search queries supported by AI overviews and AI mode, which have also expanded the addressable opportunity to longer and more complex queries. Additionally, Google has seen paid clicks reaccelerate despite the rise of ChatGPT. More broadly, the bull case for Alphabet is multifaceted, leveraging its extensive AI expertise and vast ecosystem. Firstly, Alphabet’s DeepMind is a leader in AI research, with a superior talent pipeline and retention, allowing the company to attract top-tier talent and convert research into products at scale - see the recent Veo 3 video generation model release or the significant progress that Alphabet has made with its Gemini models. Second, in contrast to rivals like Meta, Alphabet’s diversified revenue streams and hardware investments, such as its custom tensor processing units, provide a crucial advantage. By developing its own full-stack AI infrastructure, from hardware to applications, Alphabet gains superior price-to-performance relative to general-purpose chips like GPUs. This approach enables a more cost-efficient scaling of AI workloads all else being equal. Third, Alphabet’s scaled user aggregation surfaces, offers a significant competitive moat. The company has a “billion user club,” with nine software products boasting over a billion users each, including Android, Chrome, YouTube, Gmail, and Google Maps. This massive, existing user base provides a substantial advantage by effectively lowering customer acquisition costs for new AI products. Critically, this scaled user base is a powerful magnet for developers, who are incentivized to build applications that integrate with Google’s AI engine to reach a vast audience. This flywheel effect - where users attract developers, and a robust app ecosystem attracts more users - strengthens Alphabet’s position at the heart of the AI landscape. A fourth forward-looking driver is the coming evolution in commerce, in which every piece of content becomes “shoppable.” With its scaled surfaces like YouTube and Google Maps, combined with advanced AI, Alphabet is uniquely positioned to capitalize on this shift. For instance, AI models could recognize products in real-time within videos or images, and via integrations with merchants, enable them to be shoppable just in time - this should strengthen Alphabet’s positioning in commerce. Lastly, the recent resolution in the Department of Justice case against Alphabet, which was close to a best-case scenario, removes a significant overhang from the stock. Getting everything Alphabet has to offer across its platform and ecosystem at a 23 times P/E multiple is attractive for long-term investors in our view.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Amazon.com is currently undervalued given its dominant e-commerce business and high-margin investments in areas like AWS and advertising, trading at a discount to the S&P 500 and Walmart despite strong cash flow potential.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
During the quarter, we initiated a position in the online retailer and cloud computing giant Amazon.com (AMZN). Until recently, Amazon traded at a meaningful premium to the S&P 500 Index and retail juggernaut peers. Management tends to invest capital in massive waves, which creates significant earnings noise. For example, AMZN doubled its retail distribution center footprint in 24 months following the COVID-19 pandemic, causing the company’s free cash flow and profit margins to drop. Today, however, the areas management is aggressively investing in — such as Amazon Web Services (AWS) and advertising— are high-margin businesses. That should lead to better long-term profitability despite likely short-term headwinds created by costs added ahead of incremental revenue.
Today, the company is spending big on AI infrastructure, which should allow it to sell more computing power via AWS while also making the company more efficient via process automation. Historically, Amazon was seen as more capital-intensive than large-tech competitors including Alphabet (Google), Microsoft, Oracle, and Meta (Facebook). Today, AMZN is the most capital efficient operator as measured by capital expenditures relative to sales. For example, a former holding is investing so aggressively that the company is free cash flow negative for the first time in the company’s public history. Yet the market has rewarded these investments with a much higher valuation.
When considering the value of its high-margin businesses like AWS, ads, and subscriptions, Amazon appears to be undervalued. In fact, based on our research and evaluation, we believe shareholders are getting AMZN’s dominate e-commerce business for free, providing a margin of safety. The retail business provides significant free cash flow that can be utilized for investments in higher margin businesses. Most businesses require capital to grow, but Amazon’s retail business grows with negative working capital meaning Amazon gets paid before they pay suppliers. The faster retail grows, the more cash available for attractive reinvestments.
The stock currently trades at a 15% discount to the S&P 500 and an even greater discount to Walmart based on enterprise value to EBITDA.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Arista Networks, Inc. is a leading provider of high-performance networking solutions crucial for data centers and AI infrastructure, uniquely positioned to capture market share with its best-in-class Ethernet solutions.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
This quarter, we re-established a position in Arista Networks, Inc., a leading provider of high-performance networking solutions for data centers, cloud providers, and enterprises. Arista’s advanced switching and routing platforms, powered by its proprietary software, offer enhanced scalability, automation, and flexibility. The company generates revenue through hardware sales bundled with software and post-contract support services, serving major cloud players like Microsoft, Meta and Oracle, along with a growing range of enterprise customers. We are witnessing an unprecedented buildout of AI infrastructure, where networking is becoming an increasingly critical component. While NVIDIA offers a comprehensive technology stack for AI data centers, Arista stands out as the leading networking company with best-in-class Ethernet solutions. Its products not only interconnect servers within data centers and link multiple data centers together but will also extend to emerging architectures that connect AI accelerators within the rack. We believe Arista is well positioned to capture a meaningful share of the data center networking stack as AI cluster builders prioritize performance optimization and vendor diversification.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
ASM International is a leading provider of essential semi-cap equipment for chip manufacturing, poised to grow earnings at a high-teens rate over the next five years due to the increasing demand for advanced semiconductor technologies.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Netherlands-based ASM International is a leading provider of essential semi-cap equipment for “front-end” technology processes used to build chips. ASM dominates the market for Atomic Layer Deposition, a technology increasingly needed for building logic gates on the smallest, “leading edge” chips. The AI boom is fueling ongoing advances in semiconductors, leading to smaller and more powerful chips. As this occurs, more of ASM’s ALD and other technologies get used in logic and memory fabs. Making chips gets harder every year. Semi-cap companies collaborate with fab operators to develop essential technology that propels civilization’s progress. We believe ASM’s business can grow earnings at a high-teens rate for the next five years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Bolloré is a simplified investment with strong underlying value from Vivendi and Universal Music Group, poised for significant upside given its attractive NAV compared to its current share price.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Bolloré was a detractor for the quarter but the underlying thesis is very much intact. Just a few years ago, Bolloré was a complicated conglomerate that had high leverage, an African port and logistics company, a European freight forwarding company, ownership in Vivendi SE, and ownership in Universal Music Group N.V. Today, the company has simplified its holdings to Vivendi and Universal Music Group plus significant net cash on the balance sheet from the sale of non-media assets. Universal Music group continues to be a strong component of value, and it is expected to be listed in the U.S. later this year or early next year. We believe that Bolloré’s net asset value (NAV) is worth mid-teens, and with the current share price in the mid-single digits, the investment represents an extremely attractive value. Meanwhile, the company continues to make moves to further simplify its structure.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Brady Corp. is a well-managed company wisely allocating capital through stock buybacks, increasing dividends, and strategic acquisitions, with strong growth potential in Aerospace and Data Centers, and a reasonable stock valuation.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
These are companies like Brady Corp. (BRC), a leading manufacturer of ID solutions and workplace safety products. In our view, the company is allocating capital wisely: They are actively buying back stock, consistently increasing dividends, and pursuing tuck-in acquisitions that complement their core business — all while maintaining low leverage. The company’s core business is identification solutions for commercial products, allowing clients to trace and track parts. Brady’s niche is printers and related consumables such as labels for rugged industrial markets. This has been a year of restructuring and cost cutting for Brady, which is part of the company’s self-help story. Recently, management has called out strong growth in Aerospace and Data Center end markets, with the Data Center strength focused on BRC’s wire marking business. We believe the company will begin to reap the benefits of these efforts starting next year, and in its most recent quarterly earnings announcement, Brady reported 2026 guidance that was above expectations. Still, the stock trades at a reasonable valuation. Our current price target for BRC would represent 18x our 2026 EPS estimate.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Capital One Financial Corporation is set to create significant value through its acquisition of Discover, leveraging its data-driven strategy and ownership of a competitive payment network to enhance earnings and growth opportunities.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
During the quarter, we invested in Capital One Financial Corporation, a leading credit card issuer. We believe Capital One’s acquisition of Discover is a game-changer that will create significant value through network ownership and market share gains. Founded in 1994 by Chairman/CEO Richard Fairbank and Nigel Morris, Capital One pioneered the use of data and analytics to market credit cards and underwrite loans. Instead of treating credit cards as a homogenous product like the rest of the industry, Fairbank and Morris used vast amounts of data paired with quantitative analysis to offer the right product to the right customer at the right price. Fairbank is an adept operator having made several important strategic decisions over the years, such as acquiring retail banks with stable consumer deposit franchises to eliminate the company’s dependence on the fickle wholesale funding market. In 2012, the company launched a comprehensive digital transformation initiative that, according to management, would “build a technology company that does banking instead of a bank that just uses technology.” By 2020, Capital One became the first major U.S. bank to fully exit its legacy data centers and move to the public cloud, enabling faster innovation and the use of machine learning and AI. Management recognized the importance of building their own applications, so they brought application development in-house and massively expanded the technology team to over 12,000 software engineers. Management’s strategic vision and tech-led approach have led to significant growth, with assets growing by 9 times over the last 20 years. This past May, Capital One completed a landmark acquisition of Discover. Discover’s key asset is a payment network that competes with Visa, Mastercard, and American Express. While Discover is much smaller than Visa and Mastercard, this combination provides Capital One with a closed-loop payment network and the ability to earn higher interchange fees by shifting Capital One’s debit cards over to the Discover network to avoid the Durbin regulated debit interchange cap. We estimate this additional revenue and other cost synergies will lift earnings by 15% within two years. Longer term, Capital One’s ownership of the card infrastructure could unlock other monetization opportunities, such as adding card issuers to the Discover network and becoming a more comprehensive fintech enabler. In addition, we believe Capital One is significantly overcapitalized with an estimated $17 billion of excess capital, representing 12% of the company’s market capitalization. We expect accelerated capital returns through higher dividends and a faster pace of share repurchases. We purchased the stock at less than 10 times our estimate of pro forma earnings power. Credit risk can weigh on the valuation multiple, but credit trends are healthy with delinquency and charge-off rates declining on a year-over-year basis. We think Capital One’s data-driven strategy, ownership of scarce assets, and leadership by a visionary founder-CEO will sustain strong earnings growth over the long run.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Coats is the global leader in industrial threads, recently strengthening its growth platform through the $770m acquisition of insole technology provider Ortholite.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Coats is the global market leader in industrial threads and structural components for the apparel and footwear industries. Over the past few years Coats has rationalised its portfolio, consolidated its manufacturing footprint and de-risked its pension liability such that it now has a strong platform for growth. The company has just announced the acquisition of insole technology provider Ortholite for $770m. The acquisition is highly complementary, adding scale to its footwear division while being accretive to growth and margins.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Contemporary Amperex Technology (CATL) is the world’s largest lithium-ion battery manufacturer, poised for significant growth due to its scale, innovation, strong market position in electric vehicles, and positive financial outlook.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We bought Contemporary Amperex Technology (CATL), the world’s largest manufacturer of lithium-ion batteries. Increasing use of its batteries in electric vehicles (EVs) and large-scale energy storage have been driving the Chinese company’s recent growth. CATL supplies batteries to nine out of the top 10 EV automakers globally including Tesla and BMW, as well as to domestic Chinese automakers where it has a dominant market position.
Our investment case rests on four key aspects:
1. Battery manufacturing is a scale and innovation game — mass manufacturing at scale is what Asia tends to do best. CATL has shown it can innovate to stay ahead of the game. It partners with a limited number of automakers and subsequently its scale and vertical integration allow it to produce every iteration of technology at the lowest cost. Few competitors have been able to keep up with the flywheel of innovating and scaling to drive down costs.
2. Fast growing end-demand segments — CATL’s main revenue-generating sectors of EVs and energy-storage solutions (ESS) are underpenetrated markets and growing quickly as electrification demand continues to grow.
3. Stable unit profitability — despite large fluctuations in raw material prices, innovation has allowed CATL to cut prices most years and it has been able to pass these benefits on to customers (battery prices have more than halved in China over the past three years) while maintaining unit profitability.
4. Strong balance sheet and positive cashflow generation — the company has just completed a large capital expenditure phase, building new factories in regions including Europe. In terms of valuation, assuming lower-than-consensus revenue growth of 15% per annum until 2027 and stable margins, with an unchallenging target multiple of 12x EV/EBITDA, we still get a target price that offers the potential for a 56% total return over the next three years.
Given the competitive advantages around the business and secular end-demand growth, CATL could surprise on the upside and the market may be prepared to pay a higher multiple for its growth.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
CrowdStrike Holdings, Inc. is a leading cybersecurity platform experiencing reacceleration in revenue growth through strong product adoption and customer trust, making it a core long-term investment with robust margins and cash flow generation.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Lastly, we added to our position in the leading cybersecurity platform, CrowdStrike Holdings, Inc. A year post the famous outage that grounded planes and impacted a broad array of the company’s customers, we can conclude that management has done an excellent job in the aftermath of the outage. CrowdStrike is now seeing a reacceleration in net new annualized recurring revenues driven by strong adoption of its new Falcon Flex offering, which enables customers to use multiple modules from the company without having to go back to procurement. Additionally, customer care packages provided in the aftermath of the outage also incentivized customers to use more of the platform, planting seeds for broader adoption over time.
We visited CrowdStrike’s West Coast office in September, to spend some time with management and drill down into the emerging growth areas and ability to consolidate more wallet share. We came away incrementally positive on several of the products, including Next-Gen SIEM (security information and event management), Cloud Security and Identity, as well as their opportunity in Security for AI. A week later we spent three days at Falcon, the company’s annual user conference, speaking with customers and partners, and attending its Investor Day. Key takeaways include: i) customer trust as high as we’ve seen; ii) CrowdStrike’s platform leverages its market leading endpoint product and best-in-class threat prevention capability powering its Threat Graph that collects and correlates the data across its large customer base, adding key contextual awareness, and; iii) utilizing this across a large and growing set of products on the back of strong innovation and a rapid customer feedback loop, helps customers plan and spend more with CrowdStrike over time. We continue to view CrowdStrike as one of the long-term winners in cyber and a core long-term durable grower with strong margin and cash flow generation.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Dino Polska is a strong supermarket operator in Poland, known for its focus on rural areas and solid fundamentals, positioning it well for long-term growth despite recent consolidation in its stock price.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Dino Polska is a leading operator of supermarkets in Poland. Its focus on rural areas, vertical integration, and low-cost regional products have enabled it to carve out a formidable niche for itself in the highly competitive Polish grocery retail sector. Following a period of strong share price appreciation, the stock underwent a phase of consolidation during the quarter. Nonetheless, beyond a slight miss to the second quarter’s earnings expectations, the company’s fundamentals remain solid, supported by resilient consumer demand, an accelerating pace of store expansion, and disciplined cost management. Looking ahead, we remain constructive on Dino’s long-term prospects, underpinned by its proven operating model and ability to effectively serve Poland’s expanding rural population.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Disco Corp is a leading Japanese company specializing in essential semi-cap equipment for back-end chip manufacturing, with strong growth potential driven by the increasing demand for advanced chip packaging in AI.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Disco Corp is a Japanese leader in essential semi-cap equipment for back-end chip manufacturing. The company specializes in dicing, grinding, and polishing silicon wafers, with equipment used throughout the semiconductor process—from initial cutting to final packaging. Back-end technology is increasingly important for AI, as advanced chip packages require extensive processing by Disco machines. We believe Disco can compound total returns at a high teens rate over the next five years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Dr. Martens is showing promising signs of recovery under new management with a focus on product diversification, appropriate distribution strategies, and positive cost discipline, presenting an attractive investment opportunity.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Confidence is quietly building in Dr. Martens’ new management team and its efforts to turn the business around thus far. Chief executive Ije Nwokorie has highlighted product diversification as a key strategic priority and we note with interest that the Adrian loafer (we are yet to persuade our own Adrian to buy a pair, but rest assured we are trying) was Dr. Martens’ best-selling product for a three-month period earlier this year. Cost discipline initiatives have been positive thus far and the other key pillar of the new strategy – which is to focus on ensuring the distribution channels used in each geography are appropriate (and thus recognising that in some markets wholesalers play a key role) – makes a lot of sense.
The revenue opportunity for Dr. Martens remains significant, in our view, thanks to strong growth in markets such as Japan and lots of ‘white space’ opportunities in the likes of China and India. Cost discipline should help to support margin expansion and free cashflow and as such from this juncture – a valuation of less than 1.2x enterprise value (EV) to sales – we think the risk/reward looks attractive and have been adding to the position.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Figma, Inc. is a leading subscription-based software platform that enhances collaborative design for both designers and non-designers, driving significant market share and revenue growth while emphasizing the importance of design in software development.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We also initiated a new position in Figma, Inc., a software business that offers both designers and non-designers a collaborative product to ideate, visualize, build, and ship software – to help companies deliver the best possible user interface in order to optimize user experience and overall customer satisfaction. With the expansion of its product portfolio over the last few years, the company has broadened its focus from traditional designers to non-designers creating a platform that helps teams across companies of all sizes share and explore ideas, align on a vision, visualize concepts, and translate them into coded products – all on a single, connected, AI-powered platform that collaborators around the world can access with a web browser (think “Google Docs” for everything that comprises software design).
Figma’s business model is 100% subscription based, with a land and expand approach to the over $30 billion TAM comprised of the global workforce engaged in software design. Figma has been taking share over the last decade and has become the dominant vendor in the design space, enabling it to grow well above market – thanks to the quality of its offering, replacing a variety of point solutions across the design and collaboration landscape. The company generated $749 million in subscription revenue, over 48% year-over-year with 30% adjusted free cash flow margins in 2024. The company’s unique product helped it reach an 80% market share within its core design end market (around 85% of revenue) with the key longer-term opportunity to extend into attractive non-designer adjacencies. We believe the company also has a significant opportunity in AI due to the accelerated pace of software development, the growing number of surfaces for creation, and the fact that humans would always be visual creatures, increasing the importance of design as the differentiator for customers. Dylan Field, Figma’s Co-Founder and CEO, further emphasized this during the company’s second quarter earnings call: “Design is now the differentiator. It’s how companies win or lose. And our goal at Figma is to build and expand our platform so we can do even more to unleash the taste and craft of our customers who together are shaping and defining this next era of digital products.”
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Gartner is poised for growth as its proprietary data and insights on technology trends, combined with aggressive stock repurchases, present an attractive investment opportunity despite market concerns about AI’s impact.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
While the market expressed concern about the impact of AI on Gartner’s business, we see no evidence that this is negatively impacting its value proposition. We believe that Gartner has a vast and growing set of proprietary data, generated by hundreds of thousands of interactions with buyers, sellers, and consumers of technology. Gartner’s proprietary insight extends to corporate technological roadmaps, enabling the company to assess future trends. Gartner also delivers tangible ROI (Return on Investment) for its customers through its contract review program; we estimate that for every dollar spent with Gartner, a customer can save up to $10 in lower procurement costs. In addition, we estimate that almost 95% of Gartner’s research business comes from customers that want to talk with or meet with an analyst or former CIO to have a partner help guide their decisions. We believe that AI should provide a tailwind for Gartner at this point, as every company in the world seeks help and insight to understand the risks and opportunities posed by AI. As a result, we believe growth trends should improve next year as U.S. public sector headwinds abate and sales force productivity strengthens. We believe the looming, uncertain impact of AI on most businesses should lead to additional interest in Gartner’s proprietary research, insights, and analysis.
We also expect the company to be aggressive in repurchasing stock to capitalize on its discounted valuation. We estimate that Gartner repurchased approximately $800 million in July and August, and it then added $1 billion to its outstanding share repurchase authorization in early September. Given the roughly $2 billion of cash on its balance sheet, ample debt capacity, and its significant ongoing free cash flow generation, we believe the company could potentially repurchase nearly 20% of its market cap over the next 18 months. We believe the current valuation is attractive for this largely subscription-based business with substantial recurring revenue.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Heartflow, Inc. is a promising medical device company leveraging AI to accurately diagnose heart disease, addressing a critical need in healthcare with significant growth potential and a strong competitive advantage.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Our second largest new purchase in the quarter was Heartflow, Inc., a medical device company providing an AI-powered engine to diagnose heart disease. Heart disease is responsible for 1 in 5 deaths in the U.S., and every 40 seconds someone has a heart attack creating an urgent need to quickly and accurately catch the disease before reaching this stage. Heartflow’s solution provides a minimally invasive way to catch blockages in the heart vessels, reducing both false negatives and false positives relative to standard of care today, thanks to their ability to measure the actual disease itself rather than surrogates and systems, which is the standard of care. Heartflow’s CEO, John Farquhar, at the Morgan Stanley conference in September: “30% of the time someone’s told they’re okay, they’re sent home, where in reality they’re not okay. They ought to be getting taken care of. And 50% of the time they’re sent downstream into the cath lab when they don’t need to be there.”
The company has a strong competitive moat, with a repository of 110 million images supplemented by human-aided training that has taken over 10 years to build. We also like the asset-light nature of the business, along with the margin expansion opportunity as the AI algorithm gets smarter with scale and data, enabling Heartflow to reduce the number of employee hours involved in real-time workflows.
Heartflow is also a big idea as it is still in the very early innings of its growth ramp. The company has over 600 peer-reviewed publications, its solution has been approved by the FDA, and its core product has 99% insurance coverage. The company is only low single-digit penetrated into its addressable market, and additionally is launching a new add-on product for plaque analysis that will utilize the same analytics backbone and thus comes in at extremely high incremental margins. We believe Heartflow is a model for the next generation of health care companies, which will be powered by big data and AI in order to make health care more efficient, less costly, and save lives on a broad scale, CEO at the Morgan Stanley conference in September: “And then longer term, we’re going to get into this asymptomatic opportunity... I do think one day the market’s going to move towards screening for heart disease like you screen for other big killers like cancer.” After following the company for several years and holding multiple meetings with management while it was still privately owned, we decided to participate in its IPO in August 2025.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Hugel is the South Korean leader in medical aesthetics, specializing in botulinum toxin and hyaluronic acid fillers, with an attractive investment case due to its valuation, efficient production, and anticipated international expansion.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Hugel is a medical aesthetics company and the South Korean leader in botulinum toxin and hyaluronic acid fillers used for facial contouring. The botulinum toxin market, which accounts for 54% of sales, has historically been highly concentrated globally. While the domestic landscape is more fragmented, Hugel has maintained its leadership position for the last nine consecutive years. Following a period of extremely strong performance, the company’s most recent quarterly net profit modestly undershot expectations, prompting a period of share price consolidation. However, Hugel’s attractive valuation, cost-efficient production, and consistent track record of execution present a compelling investment case. Looking ahead, new regulatory approvals in the U.S. are expected to accelerate Hugel’s international expansion, reinforcing its growth trajectory and enhancing its global competitiveness.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
InPost is a leading Polish logistics company specializing in Automated Parcel Machines, poised for multi-year growth despite temporary integration challenges following a recent UK acquisition.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
InPost is a Polish logistics company that pioneered the operation of Automated Parcel Machines (APMs) for e-commerce platforms. These machines offer a compelling value proposition: they reduce costs and complexity for merchants, enhance convenience and flexibility for consumers, and help governments and communities by lowering emissions and easing urban congestion. InPost commands a dominant 70% share of the APM market in its domestic market of Poland and is actively expanding overseas across continental Europe and the UK. While recent earnings growth turned negative as it digested a large acquisition of a loss-making logistics company in the UK, we view this as a temporary integration headwind. The strategic shift from traditional to-door delivery to APMs should unlock significant efficiencies and margin improvement. With e-commerce penetration growing, APM penetration increasing, and new market entries underway, we believe InPost is well-positioned for a multi-year growth trajectory. Meanwhile its margins, returns on capital, and free cashflow should normalize over the next three quarters, setting the stage for renewed expansion and long-term shareholder value creation.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
KKR & Co. Inc. is a leading alternative asset manager poised for growth with a diversified business model and strong fundraising capabilities, targeting $1 trillion in assets under management.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We increased the size of our position in **KKR & Co. Inc.**, as we took advantage of price volatility towards the end of the quarter. KKR is a leading alternative asset manager. The company manages $686 billion in assets across a diverse range of strategies in Private Equity (PE), Private Credit, and Real Assets. The company is in the middle of a three-year fundraising super-cycle, in which it expects to raise over $300 billion in new capital. KKR is a prime example of the shifting trends in the alternative asset management industry. Historically, the industry was characterized as buyout PE, typically in North America and Europe, while nowadays, alternative asset classes have significantly expanded including Real Estate, Infrastructure, and Private Credit. We think KKR will continue to be an industry leader as it has successfully diversified its business beyond PE into these other asset classes, and now boasts three scaled businesses (PE, Private Credit and Real Assets) that are each over $150 billion in assets under management and continuing to grow. Alongside the Asset Management business which generates highly recurring fees, KKR also has a large insurance company, Global Atlantic, which participates in the growing market for retirement assets, and a collection of long-term holdings in private business called Strategic Holdings.
We think KKR is poised to leverage its scale, strong track record, and relationships to continue building on this foundation as it scales towards $1 trillion in assets. This includes a more nascent opportunity in Private Wealth, where KKR is partnering with existing large firms such as Capital Group to rapidly scale its distribution capabilities. This is an investor class that has historically not been well served by alternative asset managers (aside from ultra-high-net-worth) and so presents a large growth potential, with retail assets estimated to be $150 trillion. We took advantage of a sell-off in the stock to add to our position, which was related to some concerns over potential weakness in Private Credit given bankruptcy headlines around one or two companies, although our belief is that these companies’ debt was not actually underwritten in the private markets. As compared to peers, we think KKR has arguably the most diverse earnings stream given its scale with multiple business models helping drive earnings growth, which we think gives the company many ways to win over the long term, across macroeconomic cycles.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Lam is well-positioned to capitalize on the structurally profitable SemiCap industry, leveraging its dominance in the Etch market and strong relationships with Memory customers to gain market share amid a recent upcycle.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Over the past decade, the SemiCap industry has consolidated, with 5 companies controlling almost 75% of the market. Lam is dominant in the Etch market, a process by which chips are created by selectively removing materials from the wafer to transfer patterns. Industry consolidation and improved customer profitability helped create a structurally more profitable SemiCap industry over time. Lam’s leadership position with Memory customers proved fortuitous, as many of the key applications used by those customers became mission-critical for manufacturers producing today’s leading-edge chips (even outside of the Memory industry). This leaves the company uniquely positioned to gain share in an industry that already benefits from structurally higher customer capital intensity and growing base of recurring revenue. A cyclical downturn and market volatility earlier this year gave us the chance to buy shares at a compelling valuation. A new upcycle and clear market share gains helped drive strong recent performance in the shares.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Legence Corp. is well-positioned for rapid growth in the engineering and maintenance services sector, primarily serving high-growth industries like data centers and healthcare, with a strong focus on energy efficiency and sustainability.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We initiated a position in Legence Corp. when the company went public in September. Legence is a leading provider of engineering, installation, and maintenance services for mission-critical systems in buildings. Legence has more than 60% of the companies in the Nasdaq-100 Index as clients, mostly in high-growth sectors that necessitate technically demanding buildings (i.e., no retail or multi-family). We think Legence is positioned to grow rapidly as data centers, manufacturers, pharmaceutical companies, hospitals, schools, and universities make investments in new and existing facilities to support growing demand and make them more energy efficient and sustainable.
Legence’s service offering focuses on complex systems including HVAC, process piping, and other mechanical, electrical, and plumbing (MEP) for new and existing facilities. The company is comprised of a highly specialized workforce, including 1,200 MEP engineers and energy consultants and approximately 3,400 HVAC and plumbing service technicians, fitters, electricians, and sheet metal workers. Legence combines both design and build services on a national scale, while the competition typically offers either engineering or installation and only on a regional basis. Legence has lengthy relationships with its top 10 clients, exceeding 26 years on average, evidence of the value the company provides.
Legence has a very strong business model with more than half of revenues coming from “high growth industries,” which includes customers in the data center & technology and lifesciences & health care end markets. The business is also primarily comprised of small projects (less than $10 million), which reduces risk. Additionally, no customer represents more than 4% of total revenues, a lower level than many of its peers whose top customers comprise 10% or more of their revenues. We also like that the mix of revenues skews towards retrofits, upgrades, and maintenance for existing buildings (around 68% of 2024 revenues).
We believe that spending in these end markets and key verticals, especially data centers, has the potential to grow in the double-digit range moving forward, which can help Legence maintain its strong organic growth profile (16%-plus CAGR over the last three years). We feel Legence can augment its growth through M&A, as they further consolidate this geographically fragmented industry.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Loar Holdings Inc. is a niche aerospace parts manufacturer with strong pricing power and a focus on growth through acquisitions, benefiting from a robust aftermarket sales model and a fragmented supply chain.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We recently initiated a position in Loar Holdings Inc., a niche manufacturer of aerospace parts. Loar boasts an 85% proprietary product portfolio, with over 50% of its revenues derived from aftermarket replacement sales. We believe this is perhaps the best market in the aerospace and defense industry, as evidenced by the experience of TransDigm, a similar company that has been a successful long-term investment for Baron Capital. We believe this market is especially attractive for several reasons. First, the aerospace industry is growing, with passenger miles increasing at a multiple of global GDP, or approximately 4% annually. Second, Loar benefits from strong pricing power due to the critical nature of its components, the absence of substitute products (owing to high proprietary content), and high barriers to entry. These components are both high risk and relatively low cost for airlines, which are reluctant to compromise safety for minimal cost savings. Most Loar parts cost less than $1,000. In addition, these parts require lengthy and costly approval by the Federal Aviation Administration. Given the high-variability, low-volume nature of aircraft components (millions of parts per aircraft, each with low production volumes), it is difficult for competitors to produce these parts. The aerospace supply chain is fragmented with many components supplied by smaller privately owned businesses that, in turn, sell to system integrators, Tier 1 or Tier 2 manufacturers, or large original equipment manufacturers. Loar has acquired many of these smaller firms with the goal of doubling their EBITDA over a three- to five-year time frame. Loar will continue to seek deals with a focus on: 1) aerospace and defense businesses; 2) proprietary content and processes; 3) significant aftermarket exposure; 4) niche markets or products with strong market positions; 5) the opportunity to cross-sell an existing portfolio of products; and 6) long-standing customer relationships. Loar’s strong M&A track record has been integral to its growth, with revenue and EBITDA compounding 17% and 18%, respectively, over the last five years, and 26% and 35% over the last decade. Given the strength of its business model and management team, we see a long opportunity for Loar to compound EBITDA organically in the mid-teens with a double-digit addition from M&A.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Lumentum Holdings Inc. is a leading photonics company poised to capitalize on the growing demand for advanced laser technologies in data centers and emerging markets driven by AI infrastructure.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We initiated a position in Lumentum Holdings Inc. this quarter. The company is a leading photonics and optical components company specializing in lasers (light emitters) used for optical communication within data centers. As data centers become larger and more communication-intensive, the industry is transitioning toward newer classes of laser technology, an area where Lumentum holds a leading market share. The supply of these advanced lasers remains structurally constrained, positioning Lumentum to exercise pricing power and gain share in the photonics industry. Moreover, Lumentum’s leadership in next-generation optical technologies, such as co-packaged optics (optical components integrated directly with silicon chips) and optical circuit switching (enabling direct optical routing without electrical conversion), positions the company well to capture emerging markets that could redefine data center architectures. These technologies enhance performance, reduce power losses, and expand the TAM for optical solutions. We believe Lumentum is exceptionally well positioned to benefit from both the secular growth of traditional optical communication and the emergence of new markets that open massive incremental opportunities in the buildout of the AI infrastructure ecosystem.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
MercadoLibre is positioned for long-term growth despite near-term profit pressures from elevated investments aimed at enhancing its ecosystem and competitive advantage, presenting an attractive risk-reward opportunity.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We believe MercadoLibre continues to have an attractive financial model which has been impacted over the past few years by an elevated investment cycle intended to strengthen the company’s ecosystem and long-term competitive positioning. Reported operating margins of 12.2% declined 210 basis points year-over-year, due primarily to the company’s decision to lower free-shipping thresholds, provide seller shipping discounts, as well as a higher portion of first-party sales and increased credit loss provisions. Margins benefited in part from operating leverage in both general-and-administrative and product-and-development expenses. Despite the decision to accelerate investments in the most recent quarter, margins have improved materially over the past few years from the low-to-mid single digits. We believe management has demonstrated its long-term focus and commitment to investing everywhere needed to add value for users, including greater selection, frictionless payment options, and reduced cost and increased speed of delivery. For instance, in its commerce business, the company opened six new fulfillment centers in the latter half of 2024, including five in Brazil that will increase same-day delivery cities by 40%, and the company anticipates opening a total of six more by the end of 2025. While its elevated investments over the past few years have pressured near-term profits, management remains focused on balancing the investments needed to further improve user experience and extend the company’s leadership in e-commerce and payments with maintaining a sustainable and profitable financial model. We believe the current market price embeds expectations for revenue and cash flow growth that are well below our long-term assumptions. As a result, we believe the shares trade at a significant discount to our estimate of intrinsic value and represent a compelling reward-to-risk opportunity.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Netskope, Inc. is a leading cybersecurity company specializing in Secure Access Service Edge (SASE), well-positioned for durable growth and significant margin expansion due to its unique architecture and strong customer retention.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
During the quarter, we initiated a position in Netskope, Inc., a leading cybersecurity company specializing in Secure Access Service Edge (SASE). SASE is a large, fast-growing IT category that converges several historically separate networking and security products, including data loss prevention, secure web gateways, cloud application access, and private network access. Netskope provides a unified SASE platform that inspects and secures all of a company’s data traffic—whether to the web, the cloud, or private applications—allowing it to enforce security policies, prevent data loss, and stop threats in real-time, all while enhancing network speed and performance. The company serves over 4,300 customers, including more than 30% of the Fortune 100.
The rising cybersecurity threat environment, proliferation of cloud and AI applications, and new regulatory requirements have made SASE a critical priority for large enterprises. Gartner expects the $15 billion addressable market today to nearly double by 2028. Netskope has been gaining market share in this space due to its next-generation technology. Unlike many peers who rely on public cloud infrastructure, Netskope spent years and hundreds of millions of dollars to build and operate its own global network of over 120 data centers. This gives the company full control over performance and results in faster connectivity for its users. Critically, Netskope’s founders designed the platform to deeply inspect and understand the “language of the cloud,” allowing for far more granular control over how employees interact with modern applications, including new generative AI tools. This unique architecture has resulted in strong win rates, accelerating revenue growth, and best-in-class customer retention, with a 96% gross retention rate.
We believe Netskope is well positioned for durable growth and significant margin expansion. New customer growth has accelerated, while the company maintains a healthy 117% net revenue retention rate as existing customers expand their usage. With the average customer still using only a fraction of Netskope’s 20-plus products, there is a long runway for continued wallet share capture. Furthermore, with the heavy capital investment in its global network largely complete, the company has begun to generate strong operating leverage. We expect this trend to continue as Netskope scales, driving substantial free cash flow generation and creating long-term shareholder value.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Novanta Inc. is a high-quality technology-oriented industrial company specializing in proprietary solutions for medical and advanced industrial manufacturers, poised for growth through innovative products and strong financials.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
This quarter, the Fund initiated a position in Novanta Inc., a supplier of proprietary technology solutions and subsystems to medical and advanced industrial original equipment manufacturers. Novanta combines deep proprietary expertise (about 750 patents) and competencies in precision medicine, precision manufacturing, robotics and automation, and advanced surgery to solve complex technical challenges.
Novanta’s key products include lasers, beam steering devices, high-precision motors, drives, and controls, robotic sensors and end-of-arm tooling, medical insufflators and endoscopic pumps, and vision and radio frequency identification solutions sold in a variety of applications. Products are generally solely sourced during long design cycles in which Novanta acts as an extension of its customers’ R&D function, with very sticky revenue from designed-in positions spanning multiple years.
Since 2012, Novanta has grown its revenues at a 12% CAGR and its EBITDA at 14%. Yet, lackluster organic growth recently driven by supply chain and tariff uncertainty and post-COVID demand fluctuations in key end markets has pressured the stock, presenting us the opportunity to invest at what we believe is a cheap multiple for a high-quality, technology-oriented industrial company on the cusp of reaccelerating growth via new products in the medical and robotics space. Additionally, with a strong balance sheet and active pipeline for M&A, we believe the company can double its $1 billion in revenue over the coming five years, with earnings growing faster driven by a continuous improvement culture driving 1% gross margin expansion annually, operating leverage over time, and strong free cash flow conversion.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Novo is expected to sustain its leading position in the rapidly growing GLP-1 market through continued innovation and optimization of pricing and supply strategies, despite competitive pressures.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Prior to the Cagrisema results, shares of both Novo and competitor Eli Lilly had already been under pressure as very robust GLP-1 growth was nonetheless below lofty market expectations, as well as post-election uncertainty regarding potential changes in US healthcare regulatory leadership. We believe the slower-than-expected growth doesn’t reflect any structural changes in the market or level of demand, as demand continues to far outstrip supply. Rather, we believe both companies are managing supply to ensure new patients can maintain uninterrupted treatment as they progress from starter doses to higher doses, and to ensure consistent weekly supply increases to stay off the drug shortage list, benefiting patient continuity as well as defending against pharmacies’ legal standing to market compounded versions of the therapies. Thus, while recent results may have reset near-term expectations, we believe there will be continued robust and consistent growth over the long term.
Regarding regulatory and access uncertainty, while we believe that both leading competitors will employ pricing as a lever for access, we view the balance between pricing decisions and resulting volume benefit will drive continued growth and drive incremental competitive advantages, allowing the leading GLP-1 therapies continue to further penetrate the market. There is no change to our view of the attractiveness of the market, where Novo remains a clear market share and innovation leader and the two incumbents maintain an ever-widening manufacturing scale advantage while demand continues to substantially outstrip current supply. We believe that by optimizing price and volume for access and market penetration, Novo continues to build economic scale advantages, enabling it to remain structurally the lowest cost producer in the world. In addition, as Novo continues to innovate differentiated therapies that provide incremental value over the standard of care/existing generation, we believe these new therapies will continue to command incremental pricing commensurate with the value they add to the health care system, even as undifferentiated therapies see increasing pricing pressure.
GLP-1 therapies are a quickly growing class of medications that were first indicated for type 2 diabetes and are now indicated for the broad obesity market and being further tested in a range of comorbidities, including heart failure, sleep apnea, MASH/NASH (metabolic dysfunction-associated steatohepatitis aka nonalcoholic steatohepatitis), and kidney disease. Wegovy, the brand name for Novo’s semaglutide molecule in obesity indications, is the first GLP-1 approved for obesity and is seeing rapid growth as patient demand from the approximately 130 million obese patients in the US and over 900 million obese people worldwide learn of the substantial weight loss benefits the treatment can provide. Ozempic, the brand name for Novo’s GLP-1 semaglutide molecule in the type 2 diabetes setting, is the latest generation non-insulin, once weekly, anti-diabetic treatment that can postpone the need for insulin for two-to-four years. Novo continues to transition patients to Ozempic from its prior generation, lower-efficacy and once-daily Victoza, which should further insulate the company from pending biosimilar competition for this earlier class. The GLP-1 market continues to innovate and grow rapidly, and Novo is at the forefront. While rival therapy Tirzepatide (brand name Mounjaro in Type 2 diabetes and Zepbound in obesity) from competitor Eli Lilly has posted very solid competitive data, we believe Novo will sustain its competitive position as a leader in the global duopoly. In addition to innovation, Novo’s results also reflect its success in its next generation therapies continuing to penetrate earlier into the treatment paradigm. With Novo’s leading clinical profile and continued dedication to innovation leveraging its growing scale advantages and established share of the GLP-1 market, we believe Novo will continue to maintain its leading position in the market.
While we expect Novo will maintain its strong market position, we believe both Eli Lilly and Novo will continue to innovate and compete in GLP-1s, driving increased penetration of the overall addressable market and sustaining double-digit market growth over our long-term investment horizon. We believe that Novo’s product differentiation and first-mover advantage will drive continued penetration across a growing range of obesity and comorbidity patients, contributing to double-digit growth in free cash flows. Despite competitive pressures, we believe continued innovation in products still in development as well as ongoing operational execution will enable the company’s continued long-term success. We believe the company’s shares are currently selling at a significant discount to our estimate of intrinsic value and offer a compelling reward-to-risk opportunity. We took advantage of near-term pricing weakness to add to our position during the quarter.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Phinia Inc. is an undervalued auto parts company with growth potential in the aftermarket and industrial markets, currently trading at 6x EV/EBITDA despite a forecasted increase in market share and revenue opportunities.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Another example is Phinia Inc. (PHIN), an auto parts company spun off from Borg Warner in 2023 that makes fuel systems for vehicle manufacturers and the after-market. In our opinion, the market has been overly pessimistic on PHIN’s outlook in the aftermath of President Trump’s ‘Liberation Day’ announcements on tariffs, and large insider purchases by the company’s CEO and two directors helped confirm our view. We believe PHIN has a variety of ways to win, especially relative to other companies in the auto parts category. In its legacy auto OEM business, PHIN is the third player in a three-company oligopoly that collectively controls roughly 80%-90% market share. The second-biggest player in this group has deemphasized this category since COVID-19, resulting in 4%-5% market share gains for PHIN. We believe this trend is likely to continue, and PHIN could control around 20% of the market by 2030, up from the mid-teens today. The company also has considerable exposure to the relatively stable after-market auto parts end-market, which accounts for approximately 40% of the company’s revenues and close to half of its operating profits. We believe Phinia’s after-market business could grow at a mid-single digit percentage CAGR with less cyclicality, as it is based on replacement of critical engine components. Additionally, PHIN has multiple revenue growth opportunities in under-penetrated end-markets such as aerospace, off-highway vehicles and hybrid vehicles that were overlooked as part of the much larger Borg Warner entity. Following PHIN’s spin-off, management has executed on cost savings initiatives to improve margins and used free cash flow to consistently buyback stock and de-lever the balance sheet. PHIN is hitting on all three of the main capital allocation criteria we look for, which gives us even more confidence. Yet the stock is trading at a modest 6x EV/EBITDA. We believe PHIN is being valued by the market as an OEM auto parts manufacturer even though that exposure is less than 30% of revenue. As PHIN’s aftermarket and industrial end-market exposures continue to grow, we think PHIN should trade in a multiple closer to after-market auto parts and industrial companies that trade in the 8-12x EV/EBITDA range.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Sage is a trusted cloud-native accounting provider that has strong market incumbency and pricing power, positioning it well for growth despite potential AI disruptions.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Sage has transformed from being an on-premise accounting software provider to a cloud-native provider of a wide range of accounting and finance services that are mission critical to its customers and deeply entrenched in their workflows. This incumbency creates strong barriers to entry and pricing power, and most importantly, Sage is a trusted and essential part of how its customers do business. The pushback to concerns of AI disruption is that total accuracy of data is critical to customers and we have observed through our own analysis that large language models (LLMs) are fundamentally and inherently predisposed by their probabilistic modelling to lack accuracy. The risk/reward trade-off therefore remains strong for Sage, given a large and structurally growing market for digitisation and automation of business and the high incremental returns on capital the company can generate as its revenues grow.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Synopsys, Inc. is a leading electronic design automation software vendor poised for significant growth following its acquisition of ANSYS, despite current challenges in its intellectual property business.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Synopsys, Inc. is a market-leading electronic design automation (EDA) software vendor serving the global semiconductor and systems markets. It operates in a global duopoly with Cadence Design Systems—like Visa and Mastercard in payments—with sizable competitive moats. Synopsys recently closed its acquisition of ANSYS, a long-time Baron investment. This acquisition should enable Synopsys to: (i) strengthen its simulation offering through a fully integrated platform across planning, designing, simulating, and testing chips—increasingly important for helping customers manage complexity and reduce costs; (ii) expand into adjacent markets like automotive and industrials, supporting long-term growth; and (iii) realize substantial cost synergies that will drive operating leverage. With low double-digit organic revenue growth and significant operating leverage from ANSYS synergies, we believe Synopsys can more than double its earnings by 2030.
We initiated a starter position in Synopsys after shares sold off following the company’s third quarter earnings report and our in-person meeting with management. The company disclosed weakness in its intellectual property (IP) business, which represents about 18% of total revenue, causing it to miss consensus expectations and lower full-year guidance. IP weakness stemmed from two primary sources: (i) lower sales to Chinese customers after the U.S. Government banned, then lifted, sales restrictions into China, creating uncertainty that led customers to pause or delay purchases; and (ii) weakness from heightened uncertainty around Intel, the company’s largest customer, which saw reduced demand for its leading-edge fabrication platform and associated Synopsys IP sales. Management’s guidance assumed worst-case scenarios for both issues. More importantly, management argued convincingly that both headwinds are temporary, caused by factors outside the company’s control, and neither structural nor due to market share loss. IP remains a long-term secular growth business.
Meanwhile, the rest of Synopsys’ business—both EDA and simulation from the ANSYS acquisition—continues to perform well. Given ever-increasing chip complexity and surging demand from AI, we believe the company is well positioned for steady improvement across its entire business in the coming years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Taiwan Semiconductor Manufacturing Company Limited (TSMC) is a leading-edge semiconductor manufacturer with a 90% market share, positioned to benefit from AI adoption and capable of raising prices despite geopolitical uncertainties.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Our largest add during the quarter was Taiwan Semiconductor Manufacturing Company Limited (TSMC) as we continued to build our position. We believe that while near-term uncertainty is heightened due to the developing China-U.S. geopolitical relations, TSMC’s competitive positioning in leading-edge semiconductor manufacturing remains unmatched with a 90% market share (and 65% overall). TSMC’s unique positioning in the market is underlined with the company’s ability to raise prices as demand for its next generation nodes continues to be robust – this should also enable TSMC to offset any margin pressures from cost inflation or the headwinds from opening fabs in the U.S. at an accelerated pace. We also believe that TSMC will benefit from a long duration of growth as the adoption of AI continues to accelerate. Note that TSMC will benefit regardless of the ultimate market share split between NVIDIA, Advanced Micro Devices, OpenAI or Anthropic and whether application-specific integrated circuits would garner any significant market share. It’s the ultimate picks and shovels supplier to AI.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Tencent Holdings is a leading Chinese technology company with strong growth potential, driven by its diversified offerings and the popularity of its WeChat app, despite ongoing economic challenges.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
Tencent Holdings is one of China’s largest technology companies with leading positions in gaming, social media and payments. The Portfolio last exited Tencent in 2022 amid a weak Chinese macro-economy and a political initiative to suppress and subjugate the Technology sector. Some of these pressures have since eased, while the economic headwinds remain (though may be easing). Despite these headwinds, Tencent has remained a consistent growth business, compounding revenues at an 11% CAGR over the past 3 years and Earnings Per Share (EPS) at 36% CAGR. While gaming represents the largest contributor to profits and remains a good business, the real growth driver in the years ahead should be the WeiXin (WeChat) app which has ~ 1.4B users who spend on average 90 minutes per day in the app. This strong position allows Tencent to offer services like e-commerce, payments and entertainment while also serving up high value advertisements. AI should also benefit other units of Tencent including its public cloud, its large language model, its gaming business, and its business productivity software. All together we believe Tencent can grow revenues sustainably at a low-double digit rate and EPS at a mid-teens rate.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Wix.com Ltd. is expanding its position by acquiring Base44, a promising AI-driven no-code app builder, despite short-term stock declines following strong growth indicators and attractive long-term valuation.
Source: https://drive.google.com/file/d/1Gb3XlglcrQ5MkKhkYu1qxW6arikLtg5A/view?usp=drivesdk
Analysis:
We also added to our position in the website builder, Wix.com Ltd. Shares responded negatively to the company’s second quarter results despite reporting accelerating key performance indicators - its Q1 2025 cohort was the best post COVID-19 cohort growing 12% year-on-year, while the Q2 2025 cohort was even better at over 14%, and the July cohort grew 20%. Wix also announced the acquisition of Base44 - which is a microcosm of the acceleration in entrepreneurship generative AI enables. Base44 is a vibe-coding startup that was founded by Maor Shlomo, a 31-year old Israeli, in January 2025 by himself, raised no capital and yet was able to get first revenues in March, become profitable in May, and reached $3.5 million annual recurring revenue (ARR) in June. Wix acquired it for $80 million (with additional undisclosed earnouts to keep Maor onboard for the next four years at least), and the company guided to $40 million to $50 million ARR for Base44 by year-end 2025 - with Similarweb data released later in the quarter showing a potential acceleration to these numbers. Vibe-coding is essentially the new generation of no-code app builders. It enables users to build a SaaS app without coding at all - by just telling an AI what you want to build. Shlomo described how instead of using external SaaS apps for managing Base44, he would use Base44 to build custom apps, enabling him to save money. While there is a range of outcomes of how successful it could become in a crowded space, Base44 opens a new opportunity for Wix, and if it succeeds, it could become fairly significant and quickly - we are seeing ARR growth rates in the AI space, like we have not seen elsewhere. Apart from Base44, the stock remains attractively valued for the opportunity with free cash flow margins approximating 30%, and a mid-teens growth profile, trading at a 13 times EV/FCF multiple.
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.
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