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Now, let’s get into this week’s selection of fund ideas 👇
Alphabet (GOOGL US) by Artisan Global Value Strategy
Amphenol (APH US) by Bristolgate US Equity Strategy
Arthur J. Gallagher (AJG US) by Ariel Focus Fund
Becton, Dickinson and Company (BDX US) by Hinde Group
BTS Group (BTSB SS) by Kavaljer Quality Focus
Contemporary Amperex Technology – CATL (300750 CH) by Artisan Sustainable Emerging Markets Strategy
Cooper Companies (COO US) by Diamond Hill Mid Cap Fund
FedEx (FDX US) by Diamond Hill Large Cap Fund
FedEx Corporation (FDX US) by Ariel Global Fund
First Financial Bancorp (FFBC US) by Gator Capital
Fiserv, Inc. (FI US) by Ariel Focus Fund
FTAI Infrastructure (FIP US) by Tourlite Capital
Hengli Petrochemical (HLPH US) by Artisan Sustainable Emerging Markets Strategy
HSBC Holdings (HSBA LN) by Clearbridge International Growth EAFE Strategy
Hurco Companies (HURC US) by Diamond Hill Small Cap Fund
KBC Group (KBC BB) by Clearbridge International Growth EAFE Strategy
LifeCore (LFCR US) by Greenhaven Road Capital
Loblaw Companies (L CN) by Bristolgate Canadian Equity Strategy
Meta Platforms (META US) by Artisan Global Value Strategy
Minth Group (425 HK) by Ariel Global Fund
MonotaRO (3476 JP) by Wasatch International Select Fund
Netflix (NFLX US) by Loomis Sayles Growth Fund
Reddit (RDDT US) by Artisan US Mid Cap Growth Strategy
ServiceTitan (TTAN US) by Artisan US Mid Cap Growth Strategy
Shopify (SHOP US) by Loomis Sayles International Growth Fund
Solventum (SOLV US) by Mayar Capital
SUMCO Corporation (3436 JP) by Ariel Global Fund
Tesla (TSLA US) by Loomis Sayles Growth Fund
TIC Solutions (TIC US) by Tourlite Capital
Toro Company (TTC US) by Diamond Hill Mid Cap Fund
Vanquis Banking (VANQ LN) by Rockwood Strategic
Veracyte (VCYT US) by Artisan US Mid Cap Growth Strategy
Vitec Software (VITC LN) by Deep Sail Capital
Wisetech (WTC AU) by Loomis Sayles International Growth Fund
Woodward Inc. (WWD US) by Artisan US Mid Cap Growth Strategy
Thesis:
Alphabet is investing heavily in capital expenditures for growth and AI development, but its returns are declining, reflecting the challenges of transitioning from its legacy search business to new ventures like Google Cloud and Gemini.
Source: https://drive.google.com/file/d/1ZsG9M1h3B7t-2xWAlwjVEoELq_CjDaLP/view?usp=drivesdk
Analysis:
Let’s take a look at Alphabet, one of our long-standing holdings. We estimate Alphabet will spend $85 billion in capex this year. From 2021 through 2025, we estimate a cumulative spend of about $225 billion. How can we assess the return from this spending? Its EBIT was about $78 billion in 2021, and we believe it should end up around $135 billion this year. Clearly, the business continues to grow rapidly. But the business’s returns are falling. Alphabet’s return on capital employed (ROCE) was 74% pretax in 2021. In 2025, we estimate it will be 51% and at the margin, clearly much lower. Multiple factors are driving the returns down. The search business’s returns during its exponential growth phase were probably well over 100%. As it has matured and the company has continued to invest, returns have certainly fallen. New ventures such as Waymo are losing money. YouTube and Google Cloud are both growing and are likely lower returning businesses than the legacy search. And, of course, the massive AI spend going into its cloud business and into building out Gemini is probably earning very low returns, if any. But large-scale capital investments don’t usually generate immediate returns. In the cloud business, Alphabet is adding capacity, which it will then sell. The capital is in the ground, and the revenue is on the come. Google Cloud is growing very rapidly and is probably worth half a trillion dollars now, according to some. (We could debate that valuation, certainly.) As for Gemini, it’s unclear how the revenue model will evolve. Currently, Alphabet sells Gemini subscriptions and uses Gemini to supplement search results through its Gemini AI summaries. We doubt Gemini subscriptions generate more than a few billion dollars of revenue, a drop in the bucket relative to Alphabet’s total revenue base and its capital spending.
Some portion of Alphabet’s capex spend is clearly defensive. The search business is probably worth $1.5 trillion to $2 trillion. Is it not rational to spend hundreds of billions to build its AI capabilities and defend itself from disruption from another AI competitor? Of course it is. So, as owners, we believe it is reasonable for Google to spend heavily on AI given its opportunity in cloud and its investment in Gemini, which may prove to be a large business at some point but is essential to defending the search business from disruption for now. But are the returns great on a standalone basis? For now, probably not.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Amphenol is a high-quality, defensible franchise with strong growth potential and robust dividend growth driven by its proprietary technology and demand in the Information and Datacom segment.
Source: https://drive.google.com/file/d/12U5PKUG-kTGTSDvktuxmEhzzoj3u6JQy/view?usp=drivesdk
Analysis:
Amphenol is a leading global designer, manufacturer, and marketer of high-technology interconnect, sensor, and antenna solutions. We believe APH is a high-quality, defensible franchise. Its proprietary technology, vertical integration, customer intimacy and entrepreneurial speed translate into pricing power, sticky share and outsized margins across diverse end-markets. Over the last 10 years, through organic and M&A driven investment, the company has grown sales at a 10% CAGR and EPS at a 13% CAGR, supporting attractive and consistent dividend growth. We expect continued high dividend growth supported by the ongoing strength of APH’s underlying businesses. Specifically, its Information and Datacom (I&D) segment is seeing strong demand from the global datacenter build out and we believe consensus forecasts for this segment are underestimated.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Arthur J. Gallagher & Co. is well-positioned for continued growth and margin expansion following the successful acquisition of AssuredPartners and favorable conditions in the global insurance market.
Source: https://drive.google.com/file/d/1wGlQS2HCePWMSDBffao4e7jsgmYbPp-x/view?usp=drivesdk
Analysis:
We added Arthur J. Gallagher & Co. (AJG), the world’s largest insurance broker focused on middle-market clients. Shares came under modest pressure during the quarter due to a delay in closing its $13.4 billion acquisition of AssuredPartners. The deal ultimately closed in August 2025, with management now projecting stronger synergies than initially anticipated. Looking ahead, we believe AJG’s scale, specialized expertise, and highly scalable platform position it well for continued organic growth and margin expansion. The resilience of the global insurance market further supports its long-term outlook, reinforcing our confidence in AJG as a core holding.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Becton, Dickinson and Company is an attractive special situation investment poised for value unlocking through a spin-off and merger with Waters Corporation, anticipated to enhance its stock valuation significantly.
Source: https://drive.google.com/file/d/1NewhwGra1onIapv7jvZoMdXGnrzlWtEQ/view?usp=drivesdk
Analysis:
We initiated a long position in Becton, Dickinson and Company common stock (NYSE: BDX) during the quarter. BDX is a special situation investment. It is our first new position since 2022.
Founded in 1897 as a partnership to sell thermometers and syringes, Becton Dickinson (“BD”) has grown through product innovation, geographic expansion and acquisitions into a global, diversified medical technology company with annual revenue of more than $21 billion. Examples of the company’s products include peripheral intravenous catheters, infusion pumps and dedicated disposables; prefillable syringes, hemodynamic monitoring systems, molecular testing systems for infectious diseases, flow cytometry instruments, biological grafts, peripheral vascular stents and urine catheters. BD’s products are used by hospitals, doctors, life science researchers, clinical laboratories, the pharmaceutical industry and individuals. Ninety percent of hospital patients encounter at least one of the more than 45 billion medical products BD manufactures each year. Just over half of Becton Dickinson’s revenue comes from the U.S. and a little less than a quarter comes from Europe.
There is a lot to like about Becton Dickinson. In many of its product lines, BD has leading — if not monopoly-like — market shares that have been stable for decades. Those high market shares allow BD to benefit from economies of scale in manufacturing, logistics, sales and research and development and sales. BD’s market power is clearly evident in the levels of its gross margin (54.7%), returns on tangible equity and return on tangible invested capital (40%+). BD shines even brighter in terms of the predictability of its performance. Most of its products are essential for delivering low-priced yet necessary medical supplies and devices that enjoy stable demand from well-funded organizations. BD generates more than $5 billion in gross profit across four key categories: product, product type, purchaser, end user and geography. BD sailed through the Global Financial Crisis, growing its reported revenue and operating income each year from 2007 to 2010.
BD falls just short of a great business though. The downside of having extremely high market shares in mature product categories is that growth opportunities from existing products are constrained. BD expects its addressable markets to grow at a weighted average rate of around 5% annually. It aims to achieve organic revenue growth in that range over time. It would be a stretch to say BD’s growth opportunities are “abundant” based on the growth of its addressable markets alone. BD’s track record at developing and successfully scaling new products and creating value through acquisitions is not quite strong enough to push the company over the abundant growth opportunities threshold.
All that is to say while BDX is a special situation investment, it is an especially attractive special situation because BD is almost a great business.
On July 14, BD announced an agreement to monetize its Biosciences & Diagnostics Solutions businesses, which account for $3.3 billion or 15% of its revenue, through a Reverse Morris Trust transaction with Waters Corporation. BD will spin-off those businesses to shareholders and the spun-off entity will simultaneously merge with a subsidiary of Waters. BD shareholders will receive approximately 38.4 million shares of Waters Corporation common stock (NYSE: WAT) — or roughly 0.13 shares of WAT for each share of BDX — as a result of the transaction. BD will also receive $4 billion in cash from the Biosciences & Diagnostics Solutions businesses funded by newly-issued debt prior to the spin-off. Based on the current market price of WAT, $385.3, the total consideration shareholders will receive represents nearly 40% of BD’s market capitalization. The total consideration to be paid by Waters for the Becton Dickinson Biosciences & Diagnostics Solutions businesses amounts to approximately $18.8 billion, or roughly $65 per share of BDX. The transaction is expected to close by the end of the first quarter of 2026.
The transaction should unlock meaningful value for BD shareholders. The life science-oriented businesses BD is divesting are distinct from the rest of BD’s medical supplies and devices businesses. BD’s stock price has never fully captured their value. The transaction not only tax-efficiently monetizes the Biosciences & Diagnostics Solutions at an attractive valuation but also removes the overhang on BD’s stock from certain growth-related concerns associated with the Biosciences & Diagnostics Solutions businesses.
The $18.8 billion in cash and stock BD and its shareholders are poised to receive represents an attractive valuation for the Biosciences & Diagnostics Solutions businesses in an absolute sense and is highly accretive to BDX’s current market valuation multiples. The total consideration represents 5.7x revenue and more than 25.0x the estimated after-tax net operating profit of those businesses. In contrast, BDX currently trades at 3.4x EV/revenue and 13.0x P/E. On a pro forma basis, the New BD is trading at less than 10.0x what it will likely earn per share in fiscal 2026. That is simply way too cheap for an almost-great business with mid-single digit long-term growth outlook and margin expansion opportunities that should boost EPS growth into the high-single digits over the next several years.
The Biosciences & Diagnostics Solutions businesses are a primary source of the growth challenges that have weighed on BD’s stock recently. Demand trends for life science instruments were never overly robust over the past several years and in a lull since 2023. The COVID-19 pandemic created a boom-bust cycle for demand for many types of diagnostic instruments and research tools as well as for funding for early-stage biotechnology companies, an important customer segment for life science instruments. Demand from China, the second largest market for life science instruments, has also been tepid due to slowing economic growth, geopolitical tensions and increased competition from Chinese-based life science instrument manufacturers. Cuts to government funding for research and academic institutions more generally have further weighed on demand. Organic revenue growth for the Biosciences & Diagnostics Solutions businesses in fiscal 2025 came in at -4.0% and -0.7%, respectively, dragging BD’s overall organic revenue growth down from +3.9% to +2.9%. Separating those businesses and their near-term growth challenges from BD will remove a meaningful overhang on BD’s stock.
Including the consideration BD and its shareholders are poised to receive for the Biosciences & Diagnostics Solutions businesses, BDX would be more fairly valued at around $300 per share. Completion of the transaction with Waters during the first quarter of 2026 will be an important catalyst for unlocking that value. Share repurchases will also help. BD repurchased $1 billion of stock in fiscal 2026. It plans to allocate at least half of the $4 billion of cash it will receive through the transaction with Waters to share repurchases. BD’s free cash flow could support another $1 billion to $2 billion of repurchases over the course of fiscal 2026. More generally, BD’s management and board seem committed to smashing the buyback button for as long as the stock remains undervalued. BD also plans to host an analyst day to outline its strategy for the “New BD” at some point in 2026. Finally, certain transitory growth headwinds affecting “New BD” — pro forma organic growth in fiscal 2025 came in at +3.9%, below BD’s long-term target of 5%+ — should dissipate over the coming quarters. All these factors should help BDX make progress toward a more fair valuation by the end of 2027.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
BTS Group is a global consulting firm currently facing a downturn but expected to benefit from new AI initiatives and is trading at a low valuation, offering a substantial margin of safety for long-term investors.
Source: https://drive.google.com/file/d/1L-wXbIWbOIvHRekiWpiOrqCZ2EKnVk-A/view?usp=drivesdk
Analysis:
BTS is a global consulting firm specializing in strategy implementation through simulation software and has a long history of profitable growth. The company is currently in a downturn with weaker development in North America, but new AI initiatives are expected to drive significant efficiency gains and strengthen profitability going forward. The stock is trading at a very low valuation relative to its history, creating a substantial margin of safety for long-term investors.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Contemporary Amperex Technology (CATL) is a leading manufacturer of lithium-ion batteries for electric vehicles, essential for the global energy transition towards electrification and clean energy.
Source: https://drive.google.com/file/d/1B6HDUVxNOcTnd7Umr7ck3tEiyAoEUdgj/view?usp=drivesdk
Analysis:
During Q3, we initiated a position in Contemporary Amperex Technology (CATL), the world’s largest manufacturer of lithium-ion batteries for electric vehicles and a growing player in the energy storage system market. The company leads the battery manufacturing industry in both cost and technology, supported by competitive advantages in scale, vertical integration and advanced R&D capabilities. In our view, CATL plays a pivotal role in the global energy transition—lithium-ion batteries are central to electrified transportation, while energy storage systems enhance the reliability and efficiency of renewable power sources like wind and solar. We believe CATL is well positioned to benefit from the accelerating global shift toward electrification and broader adoption of clean energy solutions.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Cooper Companies is a medical devices firm poised for growth in the contact lens market and positioned to benefit from favorable trends in women’s health, despite current challenges in CooperSurgical.
Source: https://drive.google.com/file/d/1p7OdyiQVyKiDrGmzHQFiI-iZYk9zFDKZ/view?usp=drivesdk
Analysis:
Cooper Companies is a medical devices company operating CooperVision, a global leader in contact lenses, and CooperSurgical, a leader in women’s health and fertility care. We anticipate the contact lens industry will remain healthy and has an ample runway for growth as customers trade up for higher quality lenses. Further, Cooper Companies has an opportunity to take modest share in the contact lens business. CooperSurgical currently faces cyclical headwinds but operates in an end market that should benefit from several secular tailwinds. The company recently made heavy investments in manufacturing capacity. Given the appealing outlook, we capitalized on slower revenue growth in both CooperSurgical and CooperVision, which we view as transitory, to initiate a position.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
FedEx is poised for improved profitability through cost cuts and a strategic spinoff of its LTL business, presenting an attractive long-term investment opportunity despite recent challenges.
Source: https://drive.google.com/file/d/1NZZfpuFmdMKio6WaVGtOkDvP0-g9aTz0/view?usp=drivesdk
Analysis:
FedEx has materially cut its structural costs and has plans for further cuts — which we think could result in a more efficient and profitable parcel business as volumes recover in the period ahead. The company’s LTL (less-than-truckload) business is the industry’s largest by revenue and has the second-highest margins — and FedEx plans to spin it off in June 2026, which will subsequently give us exposure to a high-quality business positioned for growth as industrial production improves. FedEx shares have been pressured recently amid an extended freight recession — we capitalized on the opportunity to initiate a position in a high-quality business with an attractive long-term growth outlook at a compelling discount to its intrinsic value.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
FedEx Corporation is a global leader in package delivery poised for growth through cost efficiencies, a spin-off of FedEx Freight by June 2026, and potential operational improvements, despite some macroeconomic risks.
Source: https://drive.google.com/file/d/144yrjlx6kOziCf_A2TDg3h3nWo4VTxZD/view?usp=drivesdk
Analysis:
We added FedEx Corporation, a global leader in package delivery, operating in a stable, competitive market alongside UPS. Despite macro uncertainty, under new leadership the company has made progress improving margins through cost efficiencies. A major catalyst is the planned spin-off of FedEx Freight (LTL) by June 2026, which could unlock significant value given LTL peers trade at much higher valuations. This move also will allow FedEx to sharpen its focus on the core delivery business, where margin improvements could help close the gap with UPS. Additional catalysts include the upcoming anniversary of the United States Postal Service contract termination in October 2025, clarity on tariffs, and a potential cyclical recovery. While risks such as economic slowdown and tariff impacts remain, we think FedEx offers upside through operational improvements, portfolio simplification, and the potential for a re-rating as investor confidence builds.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
First Financial Bancorp is a well-managed commercial bank trading at a cheap valuation with strong fundamentals and growth potential, making it an attractive investment opportunity.
Source: https://drive.google.com/file/d/19erGyNrZkLCW6EJ82Uwis0JBNenRd7bY/view?usp=drivesdk
Analysis:
In September, we purchased a position in First Financial Bancorp (“FFBC”). First Financial is an $18 billion asset commercial bank headquartered in Cincinnati, OH. We think FFBC is a well-run commercial bank that is trading too cheap. We don’t think FFBC is extraordinary, but we believe it is a better than average bank and small-to-mid cap bank stocks are attractive.
Cheap valuation – FFBC shares are trading at the same stock price as 2016, but the bank is going to earn twice as much per share as it did then. FFBC’s P/E multiple has declined from 18x to 8x. Absolute valuation is cheap.
High return on asset bank – FFBC has a return on assets (“ROA”) of 1.40%. This is a solid number and reflects a high performing commercial bank. Banks that successfully generate such a high ROA tend to have strong fundamental characteristics: 1) they have high percentage of fee-related revenues, 2) they have higher than normal spreads from either cheap deposits or premium loan yields, or 3) they operate very efficiently. Banks with ROAs in this range have historically traded at higher valuations.
Discount to other high-performing commercial bank peers – With a Return on Assets (“ROA”) of 1.40% and a Return on Tangible Common Equity (“ROTCE”) of greater than 20%, FFBC trades at a lower valuation than comparable high-performing bank peers.
Good mix of fee-related businesses – FFBC has several fee-related businesses. These businesses help contribute to the bank’s high returns. Having these businesses should help the bank’s valuation. They also can grow without capital investment.
A solid credit culture – We believe FFBC has a solid credit culture and a plain vanilla loan portfolio. Net charge-offs have ranged from 10 bps to 33 bps over the last 10 years.
Smart expansion of footprint through acquisitions – FFBC announced two small acquisitions this summer that help expand the bank’s footprint into the Cleveland and Chicago markets. We like how both acquisitions are smaller and give the bank a platform to have strong organic growth in these new markets. We also like the low prices paid for both acquisitions.
Financial projections from recent mergers may be conservative – We think FFBC management understated the positive financial impact of the BankFinancial acquisition in Chicago. It is normal for a bank to ignore potential revenue synergies when calculating the financial impact of an acquisition. However, BankFinancial loans and securities earn low yields. FFBC will liquidate these portfolios and reinvest the proceeds into higher yielding assets, but FFBC management did not include this upside in their financial forecast of the acquisition. We believe reinvesting BankFinancial assets could add 20 cents per share of earnings to FFBC’s 2026 earnings per share.
CEO has sold a bank previously – Archie Brown is the CEO of FFBC. He came to FFBC after selling his previous bank, MainSource Financial, to FFBC. We like banks run by executives who have sold banks previously. They are more likely to sell again.
General tailwinds for regional banks – As we stated in the previous section of the letter, there are tailwinds for regional banks: 1) a steeper yield curve and lower short-term rates, 2) loan repricing of loans made before 2023, 3) a more benign regulatory environment that will reduce compliance costs and reduce management’s time focused on responding to request from regulators, and 4) a more active M&A environment, which will increase investor interest in the sector.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Fiserv, Inc. is a leading global provider of payment processing and financial services technology solutions, offering a rare opportunity to invest in a best-in-class business poised for growth amid strong demand for innovative financial technology.
Source: https://drive.google.com/file/d/1wGlQS2HCePWMSDBffao4e7jsgmYbPp-x/view?usp=drivesdk
Analysis:
We also purchased Fiserv, Inc. (FI), leading global provider of payment processing and financial services technology solutions. The company possesses unmatched scale and cross-selling abilities across its businesses, including its core financial technology solutions, merchant acceptance and payment processing. Additionally, these innovative technologies are deeply entrenched in client operations, providing attractive and predictable recurring economics representative of a wide moat, high switching cost service business. A recent pullback in the stock provided an attractive entry point. Shares came under pressure due to investor concerns around Clover volumes decelerating. However, the deceleration was due to one-time items and growth is expected to accelerate later this year. In our view, FI offers a rare opportunity to own a best-in-class financial technology business that should benefit from the secular demand for innovative financial technology.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
FTAI Infrastructure (FIP) is poised for significant growth, potentially exceeding $15 per share, driven by strategic acquisitions, anticipated EBITDA increases from its infrastructure assets, and upcoming catalysts, despite initial market concerns over leverage.
Source: https://drive.google.com/file/d/1bCz_IXlw5rsO-0Q3WMYUeVJHsUVO86UJ/view?usp=drivesdk
Analysis:
FTAI Infrastructure (FIP) announced a transformative transaction involving the acquisition of Wheeling & Lake Erie Railway Company and refinancing of its holding company debt. The market initially reacted negatively, largely due to high headline leverage and the issuance of preferred equity warrants tied to the new combined “RailCo.” However, this reaction overlooks the long-term value creation potential. Many of FIP’s infrastructure assets are still ramping toward full earnings potential or remain under development, temporarily inflating leverage metrics. Management guided for normalized EBITDA of $200 million for the new Transtar “RailCo,” implying a value of more than $10+ per share for FIP shareholders at a conservative 12x multiple. Additionally, Repauno secured new cavern permits for Phase 3, enhancing its strategic value. Phases 1 and 2 are expected to generate approximately $90 million in EBITDA, while the Phase 3 expansion could add an additional $100 million within two years. A conservative 10x multiple implies Repauno could be worth $12+ per share to FIP. We are also anticipating a potential data center agreement at Long Ridge. At $165 million in EBITDA, Long Ridge could be worth approximately $6 per share of equity value to FIP, with an executed data center deal potentially adding another $6 per share in upside. We believe FIP could exceed $15 per share as multiple catalysts unfold over the next year.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Hengli Petrochemical is a compelling investment due to its fully integrated platform, efficient asset base, and strategic focus on China’s growing polyester and plastics sector.
Source: https://drive.google.com/file/d/1B6HDUVxNOcTnd7Umr7ck3tEiyAoEUdgj/view?usp=drivesdk
Analysis:
By exiting this position, we freed up capital to purchase Hengli Petrochemical, China’s largest privately listed petrochemicals company. Hengli Petrochemical operates a fully integrated platform across the value chain, allowing it to capture margin at every stage. Its industrial park model, where chemical and material production are colocated and connected via pipeline infrastructure, drives significant cost and logistical efficiencies. The company’s asset base is among the newest and most efficient in China, following the completion of a multiyear capex cycle. With minimal expansionary spending expected going forward, Hengli Petrochemical should be well positioned to generate strong free cash flow. We believe the company’s strategic focus on domestic markets, particularly China’s growing polyester and plastics sector, makes it a compelling investment.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
HSBC is well-positioned to capitalize on growth in Asian wealth management, benefiting from strong mainland Chinese investment and offering attractive returns through high dividends and share buybacks.
Source: https://drive.google.com/file/d/1ONFQCLJ-UyO5XILycu2ly43mko6X2NUe/view?usp=drivesdk
Analysis:
HSBC has an outstanding franchise in Hong Kong and the U.K. and is well-placed to capture the structural growth opportunity in fast-growing Asian wealth management. HSBC benefits from a strong inflow of mainland Chinese money due to the larger investment opportunities and higher rates which the Hong Kong dollar enjoys through its peg with the U.S. dollar. We believe the market underestimates the company’s return potential, which is supported by one of the highest dividends and share buyback programs among global banks.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Hurco Companies is a global industrial technology firm with a strong investment opportunity due to its significant revenue exposure to European defense and industrial sectors through its premium, value, and precision CNC machine tool brands.
Source: https://drive.google.com/file/d/1PtY3m9n7da5eMlV8j48FyOOokqxnF-m-/view?usp=drivesdk
Analysis:
Hurco Companies is a global industrial technology company specializing in computer numerical control (CNC) machine tools and interactive controls for the metal-cutting industry. The company serves job shops and manufacturers across the aerospace, defense, medical, energy, and transportation sectors through three distinct brands: Hurco (premium brand), Milltronics (value brand) and Takumi (precision brand). Hurco’s strategic positioning creates a compelling investment opportunity given it has over 50% revenue exposure to Europe, which positions the company well to benefit from European defense and industrial investment.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
KBC is a growing diversified banking and financial services provider with a successful cross-selling model and a strong capital position for potential distributions and acquisitions.
Source: https://drive.google.com/file/d/1ONFQCLJ-UyO5XILycu2ly43mko6X2NUe/view?usp=drivesdk
Analysis:
We also repurchased shares of KBC, a diversified banking and financial services provider catering to consumers and businesses in Belgium, the Czech Republic and smaller Eastern European markets. The company’s assets under management are growing and fee revenues are growing above net interest income. We believe its cross-selling model successful in Belgium can be replicated in other markets. KBC’s strong capital position also allows for capital distributions or a bolt-on acquisition.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
LifeCore (LFCR) is a company whose promising developments and potential revenue growth are overshadowed by a misguided negative market reaction to a recent shelf offering filing.
Source: https://drive.google.com/file/d/10xsedjsY-7Wpy8KC27107CSaY1fl22y6/view?usp=drivesdk
Analysis:
LifeCore (LFCR) provides the simplest example of good news meeting bad price reaction. On September 23rd, the company filed an S-3 allowing it to register (sell) up to $150M in securities. “Shelf offerings” like this allow public companies to register a large amount of securities (stock, debt, warrants, etc.) up front and then “take them off the shelf” to sell gradually over time without having to re-file each time. The market reacted as if LFCR had just sold all $150M in stock in one fell swoop, and shares traded down more than 10% on the news. The third quarter marked the one-year anniversary of LifeCore being current on their financials and, thus, was the first time that this management team could put such a shelf offering in place. Given LifeCore’s +/- $280M market cap in mid/late September, $150M is a sizable number, but the size of the shelf was determined based on a peer group identified by LFCR’s financial advisors. I think it was a non-event and reflective of a prudent board and a financially current company – certainly not a “sell the company down 10% and don’t look back” moment. Note: as of this writing, we are a month past the filing, and note that LFCR has yet to actually sell any new stock.
On the good news front (though not reflected in price), during Q3, LifeCore announced a number of customer wins that included the signing of a late stage clinical GLP-1 program, showing traction for their sales efforts in which they have invested heavily. President Trump has continued to push forward on re-shoring pharmaceutical manufacturing with a 100% tariff on imports of branded or patented pharmaceutical products starting October 1, 2025, unless the manufacturer is building a new facility in the United States. This is, admittedly, loose enough to drive a truck through but must be helpful in nudging supply chain decisions towards the U.S. and LifeCore.
To provide another voice to the valuation case for LFCR, Craig-Hallum’s analyst wrote in their October 17th note,
“the company’s recent addition of a GLP-1 opportunity (among others) could drive a ramp in revenues that fills the current 45K annual unit capacity in five years. In that scenario we assume the company is able to achieve ~$300M in revenue with a 30% Adj. EBITDA margin. Discounting this value back and attaching the approximately 20x multiple CTLT (not covered) was acquired for and LFCR is worth ~$46/share, or ~6x the current price.”
All the indicators that we are looking for, except a rising share price, are in place for LFCR’s revenue to begin ramping in the second half of 2026 and continuing do so for several years, all of which would bring operating leverage and minimal capital requirements. Based on our analysis, LifeCore has made substantially more progress in 2025 and with its future opportunity than a -10% share price implies.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Loblaw is Canada’s largest grocery retailer, known for its diverse store formats and integrated approach in food retail, pharmacy, and digital commerce, with strong potential for consistent returns and dividend growth.
Source: https://drive.google.com/file/d/1pakHt14GB8K1xYmDZcswHYaQu40DHlMe/view?usp=drivesdk
Analysis:
Loblaw, a subsidiary of George Weston Limited is Canada’s largest grocery retailer and a national leader among the traditional supermarket industry. The company operates over 2400 stores across Canada under store banners: Loblaws, Shoppers Drug Mark/Pharmaprix, No Frills, Real Canadian Superstore, Fortinos, Zehrs Markets, Provigo, Maxi and T&T Supermarket. The company’s integrated approach combines food retail, pharmacy services, and digital commerce. They’ve successfully developed a multi-format value architecture with discount, conventional and premium stores under different banners. Loblaws’ leading loyalty program PC Optimum allows for personalized offerings in combination with PC Financial. We believe the company can continue to execute its strategy through various economic cycles, delivering attractive returns and dividend growth.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Meta is significantly increasing its capex investments, targeting $70 billion in 2023, with strong incremental returns expected from AI enhancements, despite some initiatives currently lacking economic value.
Source: https://drive.google.com/file/d/1ZsG9M1h3B7t-2xWAlwjVEoELq_CjDaLP/view?usp=drivesdk
Analysis:
Meta, another long-time holding, is similar. This year, the company is targeting capex investments around $70 billion, which is over 4X higher than what it spent in 2019. Over the past five years, its cumulative capex investments have totaled $180 billion. Over the same period, EBIT has increased 2.7X from $30 billion to $81 billion. Its ROCE has declined, but it remains exceptional in the high 30s. We estimate the incremental returns are in the 25%–30% range—a level well above the threshold for value creation (and a level that can only be described as aspirational for most companies). Similar to Google, it’s difficult to parse how much of the business’s growth was directly related to the increased investments. Certainly, many of its initiatives (e.g., Reality Labs and Meta AI glasses) are not generating any economic value yet. But Meta’s situation is unlike Google’s in one important way: Its AI spending should be largely incremental, driven by improving the core business and/or creating new business opportunities. It is likely to earn good returns by using AI to improve both content recommendations and the monetization of its core products through advertising. The returns from its investments in areas like Meta AI chatbots or AI glasses are less clear, but if successful, they should still be largely incremental to the core business.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Minth Group Ltd. is a compelling investment due to its strong position in the automotive supply chain, growth potential in electric vehicles, and strategic diversification into robotics and eVTOLs, making it an attractive entry point after recent share price dips.
Source: https://drive.google.com/file/d/144yrjlx6kOziCf_A2TDg3h3nWo4VTxZD/view?usp=drivesdk
Analysis:
We added Minth Group Ltd., a leading global supplier of automotive components with growing exposure to the European electric vehicle supply chain through its rapidly expanding battery housing business. Strong relationships with original equipment manufacturers and significant revenue growth potential through 2029 underpin a compelling investment case. Operating leverage is expected to drive margin and earnings expansion. Beyond automotive, Minth’s strategic entry into humanoid robotics and electric Vertical Take-Off and Landing aircrafts (eVTOLs) introduces meaningful optionality. A recent dip in share price driven by profit-taking and tariff concerns offers an attractive entry point ahead of several potential re-rating catalysts over the next year.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
MonotaRO is a promising company with a strong service proposition and growth strategy, poised to gain market share among both small and large business customers in Japan.
Source: https://drive.google.com/file/d/1ZQAWqSLlBtk32pRUQ1Tz8oQQxD4JsfGI/view?usp=drivesdk
Analysis:
While MonotaRO’s results were a little disappointing, we have a lot of conviction in the company, as evidenced by its large position size in the portfolio. We believe MonotaRO has an outstanding service proposition and scale advantage compared to other distributors in Japan, which should allow it to take market share. Further, we like the company’s strategy to grow its business among several client segments. The firm has many small and medium-sized business customers that have purchased only one item or an item each year. However, a relatively new CEO is laser-focused on these customers, and we like her strategy of using data to enhance relationships so that these customers turn to MonotaRO more frequently. We also believe there’s potential for MonotaRO to continue to increase market share among large businesses. W.W. Grainger, Inc., a U.S. industrial distributor, has an ownership stake in the firm. The Grainger team has been working with MonotaRO to make it more effective at winning business with large enterprises. We expect those efforts to bear fruit in the coming years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Netflix is poised for significant growth as it capitalizes on the shift to streaming, increasing its share of global consumer spending and improving operating margins, making it a compelling investment opportunity.
Source: https://drive.google.com/file/d/10TgsGmPI9GsZlCu4lo1uTSRzWqdgO7J7/view?usp=drivesdk
Analysis:
We believe SVOD will continue to benefit from a secular shift from linear television to streaming entertainment due to growing global penetration of broadband internet connections, the proliferation of internet-connected devices, and consumers’ desire for on-demand personalized entertainment at prices that are generally significantly below paid TV. As a leading provider of SVOD, we believe Netflix will take its share of global consumer entertainment spending from about 3% today to over 5% over our long-term investment horizon, contributing to low-double-digit growth in revenue. We expect substantial recent investments in content will moderate, and we believe the company will benefit from higher gross margins as its content library is leveraged over a growing global subscriber base. We recently increased our longer-term projected operating margins for Netflix, driven by our expectation of greater scale benefits, and we now expect Netflix to generate longer-term operating margins in the mid-to-high-30% range, up from approximately 30%, previously. As a result, we expect both operating profits and free cash flow will grow faster than revenues, in the mid teens. We believe current market expectations substantially underestimate the strength of Netflix’s business model and its ability to generate sustainable growth in free cash flow over our long-term investment horizon. As a result, we believe the shares trade at a significant discount to our estimate of intrinsic value and offer a compelling reward-to-risk opportunity.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Reddit is a rapidly growing social networking platform with strong user engagement, significant revenue growth, and untapped advertising potential, positioning it well to capitalize on generative AI advancements.
Source: https://drive.google.com/file/d/19phIn7Otu_E-Urwe_7yFJ3xE7zIB8-hH/view?usp=drivesdk
Analysis:
Reddit is a leading platform for community-driven social networking and online discussion, known for its highly engaged user base. Its interest-based model provides unique signals for ad targeting, while its vast repository of authentic, user-generated content positions it to benefit as generative AI reshapes the search landscape. With revenue up 78% year over year and an adjusted EBITDA margin of roughly 30%–33%, Reddit’s strong Q2 performance reflects solid execution. The company is still in the early stages of building out its advertising capabilities, so it has ample opportunity to further monetize its engagement. Additionally, it is in the process of renegotiating its data deals with the large language model providers, which we believe is another source of potential upside to the profit cycle.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
ServiceTitan is a leading vertical software provider for underserved trade sectors, focusing on full workflow management and offering growth opportunities through customer acquisition and upselling.
Source: https://drive.google.com/file/d/19phIn7Otu_E-Urwe_7yFJ3xE7zIB8-hH/view?usp=drivesdk
Analysis:
ServiceTitan is the leading vertical software provider for the trades (e.g., plumbing, HVAC, electrical), a sector historically underserved by technology. The company focuses on residential and commercial services that manage the full workflow—from lead generation to payment. Revenue comes from subscriptions and usage-based payment processing. We see multiple opportunities for growth, including acquiring new customers, upselling existing ones and expanding into additional trades. We took advantage of a recent pullback to start a GardenSM position.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Shopify is poised for significant long-term growth driven by omnichannel commerce, strong competitive advantages, and increased operating leverage, leading to faster growth in profits and cash flow than revenues.
Source: https://drive.google.com/file/d/18up-HbSKV8NFL2Vp3tIjgc9CJpFX2rf7/view?usp=drivesdk
Analysis:
We believe Shopify will benefit from several secular growth drivers, all focused on driving merchant and commerce growth. While most of Shopify’s revenue and GMV is linked to e-commerce, we expect omnichannel commerce will also become a growth driver for Shopify. We believe merchants will look to have an integrated software solution for all of their commerce needs, which we expect will benefit Shopify by expanding its addressable market to all retail commerce while simultaneously increasing client stickiness. As a function of strong secular growth drivers and numerous competitive advantages, we believe Shopify can sustain mid-to-high-teens total revenue growth over our long-term investment horizon. While we expect investments to remain elevated in the near-term, over time we believe Shopify will benefit from increased operating expense leverage in all expense categories, including product and development, general and administrative, and sales and marketing. As a result, we expect operating profits and free cash flow to grow faster than revenues over our forecast period, in excess of 20% compounded annually. We believe current market expectations are substantially underestimating the company’s multiple long-term secular growth drivers and the strength of the company’s business model and competitive positioning. As a result we believe the shares trade at a significant discount to our estimate of intrinsic value and offer a compelling reward-to-risk opportunity.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Solventum is a newly spun-off healthcare company from 3M, well-positioned for growth and innovation despite inheriting a challenging financial situation, and is focused on simplifying its portfolio and enhancing operational efficiency.
Source: https://drive.google.com/file/d/1CnlzAI7Aivu7BY9j6b_2KtZ7miZzGIbo/view?usp=drivesdk
Analysis:
For a company born out of “Minnesota Mining and Manufacturing,” ending up in wound dressings, sterilization checks and health-IT is not the most linear of journeys. 3M’s name reflects its 1902 origins as a failed corundum mining venture that pivoted into abrasives and, over the century, into a broad portfolio of industrial, healthcare and consumer products. A diversified and well-respected company, 3M has for decades been seen as a bellwether for the US economy for decades.
Over the past few years, however, 3M has been weighed down by litigation around its historic production of polyfluoroalkyl substances (PFAS), which are water-, oil- and heat-resistant chemicals that was manufactured by 3M until 2022 and which has found to be toxic. These substances, sometimes referred to as ‘forever chemicals’ have been found in rivers and water systems across the world, and 3M is facing large financial settlements in the court system.
To create some financial breathing space, 3M spun off its health care products business in April 2024. This spin off, named Solventum, paid a midnight dividend of approximately USD 8b to 3M, cutting its parent’s net debt from over USD 11b to USD 3b, a much more manageable figure for a business producing USD 5-6b in operating income. There was also some industrial logic to the action: innovation is more important in the healthcare supply business than in the industrial and consumer businesses 3M operates, and is also less cyclical. By separating Solventum, 3M allowed the business to pursue a new capital allocation strategy.
Solventum inherits brands and know-how that were long embedded in 3M Health Care. It organizes around four operating areas: Medical Surgical (infection prevention, wound care, sterilization assurance), Dental Solutions, Health Information Systems (coding, revenue cycle, analytics), and Purification & Filtration. Shortly after listing, management moved to reshape that portfolio: in February 2025 Solventum agreed to sell the Purification & Filtration unit to Thermo Fisher for about USD 4.1 billion, with proceeds earmarked chiefly for debt reduction.
We like Solventum for a number of reasons, quite apart from its valuation. 3M Health Care was historically 3M’s most profitable business as well as its most stable.
The business grew its sales organically at a rate of over 4% even during the past seven years when the parent grew less than 2% organically, the business grew at over 2% A testament to the non-cyclical nature of Solventum’s end markets.
The company’s financial inheritance was far from ideal, with a balance sheet stretched with debt and with significant investment requirements in order to separate Solventum from the rest of the 3M’s manufacturing and distribution operations. But the sale of the purification & filtration business should take leverage down to a much more comfortable 2-2.5× net debt/EBITDA, leaving Solventum with room to invest in the rest of the business to help it stand up as an independent entity and re-ignite the innovation growth engine.
CEO Bryan Hanson has a clear strategy for the company. His plan has three visible pillars: simplify the portfolio (e.g., the filtration divestiture as well as a SKU reduction programme which has presented a near term headwind to sales), lift execution and cost efficiency (“Solventum Way” restructuring, including headcount reductions and operating discipline), and concentrate resources in categories where the company has defensible positions and can take market share. Additionally, once the necessary investments have been made, Solventum are targeting 80% free cash flow conversion, which will provide room for management to distribute cash to shareholders via buybacks or, as was the case when it was part of 3M, with regular dividends.
Activist pressure has helped sharpen and pressured the acceleration of Hanson’s agenda at Solventum. Nelson Peltz’s Trian disclosed a significant stake in mid-2024 and has argued for further simplification, including evaluating separation of dental and software assets to concentrate on the medical surgical core, alongside deeper cost work. The Thermo Fisher transaction and debt pay-down align with that posture.
There is much work yet to do at Solventum before it earns its stripes as a stable compounder: it needs to demonstrate its ability to grow its organic business by re-igniting the new product innovation culture that 3M used to be famous for. It needs to continue the (so far successful) global ERP implementation, and it needs to continue to build out its manufacturing and distribution abilities as an independent company, all while navigating some pretty hefty M&A activity. But we are encouraged by the early signs of management’s ability to execute on these multiple operational tasks, and look forward to seeing how the company progresses in the coming years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
SUMCO Corporation is well-positioned for growth due to rising Edge AI adoption, capacity expansion, and stable pricing, with a double-digit free cash flow yield indicating it is undervalued.
Source: https://drive.google.com/file/d/144yrjlx6kOziCf_A2TDg3h3nWo4VTxZD/view?usp=drivesdk
Analysis:
We bought SUMCO Corporation, a leading supplier of advanced silicon wafers used in both central and graphic processing units (CPUs and GPUs). We believe SUMCO is well-positioned to benefit from Edge AI adoption and a broader semiconductor recovery. The company is completing capacity expansion initiatives and expects stronger free cash flow over the next 18 months. Long-term agreements support stable pricing and volume, while limited supply of advanced wafers underpins future growth. With a double-digit free cash flow yield, we believe SUMCO is undervalued and poised for upside as fundamentals improve.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Tesla is well-positioned for long-term growth due to increasing electric vehicle adoption, advances in autonomous driving technology, and strong profit potential from high-margin software offerings.
Source: https://drive.google.com/file/d/10TgsGmPI9GsZlCu4lo1uTSRzWqdgO7J7/view?usp=drivesdk
Analysis:
We believe the secular growth driver for Tesla is increasing penetration of electric vehicles as a share of global automotive sales. Around the world, EVs accounted for a low-double-digit percentage of new light vehicle sales in 2024, with penetration rates ranging from high single digits in North America to low double-digits in Western Europe and almost 30% in China. We believe the pace of EV adoption will accelerate, driven by advances in battery technology that will drive cost parity, lower ongoing cost of ownership for consumers, government incentives, and numerous global initiatives to phase out internal combustion engine sales over the next two decades. Tesla is a global leader in battery EV sales. The company recently had low-teens unit share, which is down from high teens in 2024 as a result of the refresh of the Model Y at the start of the year, while the company maintains around 25% revenue share, and a much higher share of industry profitability. While we expect competition to increase substantially, we believe Tesla’s brand, focus, technology leadership, and strong ongoing consumer demand will enable the company to maintain a leading global market position.
In late 2024, the company debuted FSD version 13 that was used to power the Cybertruck and the unmanned Model 3 and Model Y as the company announced its robotaxi strategy. FSD 13, which represents the first version of FSD software based solely on AI training on the company’s super computers, delivered a step change improvement in autonomous driving capabilities. The company is expected to release FSD 14, which we believe will further extend FSD capabilities as the company makes progress toward unsupervised FSD. We believe most consumers will ultimately adopt FSD functionality over the long term. Tesla’s software offerings carry profit margins that are significantly greater than the current company average, and we believe they will drive strong profit growth. Over time, we believe uptake of high-margin software capabilities, which we believe can increase from a negligible percentage of profits today to approximately 25%, will contribute to expanding the company’s operating margins. We believe the assumptions embedded in Tesla’s share price underestimate the company’s significant long-term growth opportunities and the sustainability of its global market share. We believe the company’s shares currently sell at a significant discount to our estimate of intrinsic value and thereby offer a compelling reward-to-risk opportunity.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
TIC Solutions is a resilient provider of asset integrity services with strong growth potential, especially after its acquisition of NV5, positioning it for significant value creation akin to APi Group.
Source: https://drive.google.com/file/d/1bCz_IXlw5rsO-0Q3WMYUeVJHsUVO86UJ/view?usp=drivesdk
Analysis:
TIC Solutions (formally known as Acuren) is a provider of asset integrity services, specializing in nondestructive testing (NDT), rope access solutions, and engineering and laboratory analysis to keep industrial facilities safe and compliant. Its recurring, regulation-driven inspection and maintenance work supports critical infrastructure such as pipelines, refineries, power plants, and aerospace components, making it a highly resilient and essential partner to customers.
TIC was taken public via a SPAC by Martin Franklin, who also brought APi Group (APG) public, a former Toulite holding. We see clear parallels between the two companies: both operate in regulatory driven, highly recurring service industries with strong free cash flow generation. APG’s share price has increased more than fivefold over the past six years, and we believe TIC may be at the beginning of a similar value-creation trajectory. The company recently completed a transformative acquisition of NV5, which we expect to drive meaningful cost synergies and cross-selling opportunities, similar to APG’s acquisition of Chubb Fire & Security business in 2021.
When we began purchasing TIC shares around an average of approximately $10 in August, our normalized 2027 estimates (post-NV5 integration) implied a teens free cash flow yield, comparable to where APG traded when we first invested in 2022. We see multiple catalysts over the next two years, including broader analyst coverage, strong execution on the NV5 integration, margin expansion, and incremental cross-selling benefits. In September, TIC’s share price spiked ~30% after being featured on a popular investing Substack. Even after this move, we continue to see meaningful upside from current levels.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Toro Company is a leading provider of turf and landscape management equipment with a strong market presence, and despite recent challenges, it is expected to achieve solid long-term growth.
Source: https://drive.google.com/file/d/1p7OdyiQVyKiDrGmzHQFiI-iZYk9zFDKZ/view?usp=drivesdk
Analysis:
Toro Company is a leading provider of equipment for turf and landscape management, snow and ice management and underground construction. It has leading market share and strong distribution and service networks that incentivize customers to replace like for like, generating a strong revenue source for the company. Amid a challenging macroeconomic environment and bloated channel inventories, recent results have been soft — however, we believe the long-term fundamentals remain intact and expect the company to generate solid results over the next 5 to 10 years.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Vanquis Banking is a leading provider of credit to financially stretched individuals in the UK, aiming for a significant profit turnaround and re-rating by leveraging its market position and recent management changes.
Source: https://drive.google.com/file/d/1Gxuixdw1faclAr0PV1IpDAKuUoQG4C9A/view?usp=drivesdk
Analysis:
Vanquis Banking £310mcap
Leading provider of credit to ‘financially stretched’ people (est. 20m in UK). Two main products: credit card and vehicle finance + smaller personal loans and growth area of 2ⁿᵈ charge mortgages.
Primary risk relates to execution of turnaround and any historic motor finance commissions-related liability, unclear what/if redress needed.
1.7m customers. No.1 UK with 15% market share. Regulated Bank. Former FTSE 100 Provident Financial and 100-year provider of ‘door-step lending’, now ceased.
FY ’24: Loans £2.3bn, retail deposits £2.4bn, Tier 1 ratio 18.8%. Net Interest Margin (NIM) 18.4%, Cost Income ratio 66%. Funded by deposits (Banking licence). Net Income £267.5m, costs £302m. Loss before tax £34.8m.
Recent negative cost impact from dealing with profit-seeking/opportunistic complaints management companies (£47m cost ’24), now falling. New team also cleaned up accounting/provisions etc.
Material opportunity to cut costs. Management target of £60m, upgraded by £15m and further £20m+ expected in ’26 post new tech system deployment.
Underserved market, with mainstream banks avoiding it and competitors without banking licenses (no deposit funding), plus removal of rapacious pay-day lenders.
New Chair, CEO, CFO and highly experienced senior hires.
ROTE loss in 2024, target “mid-teens” from ’27 onwards. Huge profit and re-rating recovery opportunity. Upside = >100%
Valuation: Current P/B 0.5x, target >1x P/B (minimum). Recovery DY >10%.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Veracyte is a molecular diagnostics company that enables noninvasive cancer testing, leading to significant revenue growth and expansion of its product offerings.
Source: https://drive.google.com/file/d/19phIn7Otu_E-Urwe_7yFJ3xE7zIB8-hH/view?usp=drivesdk
Analysis:
Veracyte is a molecular diagnostics company that provides noninvasive cancer tests, helping physicians make more informed decisions and avoid unnecessary surgeries. Its three approved and reimbursed tests are Decipher® (prostate cancer), Afirma® (thyroid cancer) and Prosigna® (breast cancer). Veracyte reported 14% year-over-year revenue growth to $130 million, driven by strong sales of Decipher® and Afirma®. This growth is fueling notable margin expansion and solid cash flows—a rarity among small- and mid-cap diagnostics companies. The company is working to expand Prosigna® in the US, advance its Percepta® Nasal Swab test for lung cancer risk assessment, and launch its Minimal Residual Disease platform in 2026 to detect residual cancer following treatment.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Vitec Software is an attractive long-term investment with strong growth potential, solid capital allocation, and a founder’s mindset, despite being reasonably to slightly overvalued at the current price.
Source: https://drive.google.com/file/d/1r_5jafoumrUUaGAxY7XSgB0IIz_MkUE3/view?usp=drivesdk
Analysis:
Long Ideas: Vitec Software. Vitec’s business model, end market, and management create an extremely attractive business. Vitec has all the characteristics that we look for in an investment, including substantial reinvestment options, a strong capital allocation strategy, and a founder’s mindset. We currently believe Vitec will consistently grow at a high rate while maintaining strong, stable margins for many years to come. At the current price, we view the shares as reasonably valued to slightly overvalued, but we think over time the value of the shares will compound at a high rate. We plan to own Vitec for many years to allow our capital to compound with its high growth.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Wisetech is poised for significant growth in logistics software and services, leveraging its dominant market position and the industry’s shift towards outsourcing, which will drive projected annual revenue growth of approximately 20% over the long term.
Source: https://drive.google.com/file/d/18up-HbSKV8NFL2Vp3tIjgc9CJpFX2rf7/view?usp=drivesdk
Analysis:
We believe Wisetech will benefit from secular growth in logistics software and services as companies increasingly move towards outsourcing and away from less effective in-house solutions. With virtually no comparable off-the-shelf competition to its unified global platform, Wisetech is the dominant market share leader in its legacy freight-forwarding market. We estimate the company now captures over 20% share of its addressable freight forwarding market, up from the mid-single digits five years ago, with gains coming at the expense of proprietary solutions or competitor offerings that addressed only limited industry functions or geographies. Through underlying industry growth, continued market share gains in its legacy freight-forwarding market, and ongoing penetration of other parts of the logistics industry performed by 3PLs, including warehouse management, land transportation, and cargo handling, we believe the company can generate compounded annual revenue growth of approximately 20% over our long-term investment horizon, with faster growth in operating profits and free cash flow as the company benefits from scale and operating leverage. We continue to believe the expectations embedded in Wisetech’s share price underestimate the company’s superior positioning and the sustainability of its growth. 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:
Woodward is a leading supplier of motion and control systems with strong aerospace exposure, poised for growth in the high-margin aftermarket for next-gen aircraft engines and recovering industrial segment.
Source: https://drive.google.com/file/d/19phIn7Otu_E-Urwe_7yFJ3xE7zIB8-hH/view?usp=drivesdk
Analysis:
Woodward is a leading supplier of mission-critical motion and control systems, with approximately two-thirds of its revenue derived from aerospace and defense. Its significant exposure to next-generation narrowbody aircraft engines positions the company to benefit from a high-margin aftermarket opportunity. As shop visits for these engines increase, we expect this segment to grow at an elevated rate for years, supporting long-term EPS growth potential. Meanwhile, Woodward’s industrial segment is showing signs of recovery, supported by strength in power generation, smart defense munitions and stabilization in China.
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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