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Now, let’s get into this week’s selection of fund ideas 👇
ACI Worldwide, Inc. (ACIW US) by The London Company
Allfunds Group (AFG SM) by Vela International Fund
Amazon (AMZN US) by Rothschild & Co LongRun Equity
Amentum Holdings (AMTM US) by Royce Invest
Arcosa (ACGL US) by Royce Invest
Cadence Design Systems (CDNS US) by Rothschild & Co LongRun Equity
Coats Group (COA LN) by Vela International Fund
COSMAX (192820 KS) by Sands Capital Emerging Markets Growth
CrowdStrike (CRWD US) by Titan Wealth
Cummins Inc. (CMI US) by The London Company
Eaton Corporation plc (ETN US) by TCW Concentrated Large Cap Growth Fund
Ebara Corporation (6361 JP) by Third Point
Exponent (EXPO US) by Royce Invest
Fever-Tree Drinks (FEVR LN) by Vela International Fund
Fiserv Inc. (FISV US) by Vulcan Value Partners
Galderma (GALD SW) by Sands Capital Global Growth
Gaztransport & Technigaz (GAZ FP) by Royce Invest
German American Bancorp (GABC US) by Royce Invest
Glacier Bancorp (GBCI US) by Royce Invest
Globant (GLOB US) by Vela International Fund
Intuitive Surgical (ISRG US) by Sands Capital Global Leaders
Iron Mountain, Inc. (IRM US) by TCW Global Real Estate Fund
JTC (JTC LN) by Royce Invest
Magna International Inc. (MG NA) by TAMIM Global Equities High Conviction
Mayville Engineering (MAYV US) by Royce Invest
Onto Innovation (ONTO US) by Royce Invest
Riken Keiki (6457 JP) by Royce Invest
Riken Keiki (6457 JP) by Baumann Capital
SK Hynix (000660 KS) by Third Point
SmartCraft ASA (SMART NO) by Royce Invest
Synopsys (SNPS US) by Rothschild & Co LongRun Equity
TowneBank (TOWN US) by Royce Invest
Toyoda Gosei (7282 JP) by TAMIM Global Equities High Conviction 0925
UFP Industries (UFPI US) by Royce Invest
UnitedHealth Group (UNH US) by The London Company
Thesis:
ACI Worldwide, Inc. is an attractive investment due to its critical payment software for financial institutions, limited competition, and strong fundamentals, trading at a discount with a market cap of approximately $5B.
Source: https://drive.google.com/file/d/1y5-YJAo_-hCuTKo8sgbJeMDMzYjSfUod/view?usp=drivesdk
Analysis:
ACI Worldwide, Inc. (ACIW) – ACIW’s core payments software enables banks, processors, networks, fintechs, and retailers to handle payments regardless of the channel. ACIW doesn’t move or process money, they sell the software to facilitate money movement. ACIW’s software is mission critical to financial institutions and competition is limited. Margins are attractive and capital spending needs are light. At 11x EV/EBITDA, we believe the stock is attractive and trades at a discount to intrinsic value. We have owned ACIW for years in the Small Cap portfolio. Fundamentals remain attractive and the market cap is now roughly $5B.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Allfunds Group is the largest European B2B funds distribution platform, poised for growth due to the shift towards open architecture models in the financial sector.
Source: https://drive.google.com/file/d/1shegol2Uvm-QIdgEMYokgAY5vMQ1FROi/view?usp=drivesdk
Analysis:
In the Financials sector, we added Allfunds Group, the largest European player in the B2B funds distribution platform with a 30% market share in the open architecture funds market. Historically, the market has been dominated by “captive” distribution, where private banks exclusively distribute in-house funds. Regulation and end-investor demand for broader selection of fund options have propelled a shift toward open architecture models, where distributors also offer third-party funds to clients. Open architecture distribution is growing faster than captive distribution and Europe penetration rates lag the US/UK levels, implying good growth remains. Strong top-line growth remains a key pillar of our investment thesis. The stock has fallen 45% from its 2021 initial public offering (IPO) and there have been takeover overtures which could speed the value realization process.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Amazon is an undervalued quality company with untapped potential in generative AI and attractive growth prospects in retail driven by logistics investments and an expanding Prime membership.
Source: https://drive.google.com/file/d/1ckFqwAPlJcJH2P-fuZ7n0uMzzcsNfADK/view?usp=drivesdk
Analysis:
Generative AI capabilities to support margin improvements at AWS. We see untapped potential in Amazon’s own generative AI technology, which has received too little attention, particularly regarding its potential to enhance margins across the group. We do not consider Amazon a turnaround story but rather an undervalued quality company. Beyond its cloud business, attractive prospects in retail include investments in logistics that should drive greater economies of scale over time. The continued expansion of Prime as an attractive membership model is set to accelerate retail revenue growth, particularly outside the US. This exemplifies the network effects that our investment approach consistently relies on.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Amentum Holdings is a newly formed public company with strong growth potential, driven by a merger, improving order win rates, and expected margin expansion, trading at an attractive valuation relative to peers.
Source: https://drive.google.com/file/d/1pva4kl5HNS_3y-A25Kv0nIYDTldLLGyw/view?usp=drivesdk
Analysis:
Amentum Holdings (NYSE: AMTM), the world’s second largest provider of government services, was formed through the merger of AECOM’s management services business and Jacobs’s government services units. Today, 80% of Amentum’s revenue comes from the U.S. government with the rest coming from international markets and commercial customers. When we began to invest in Amentum earlier this year, it was a new, relatively unknown public company with a highly levered balance sheet that traded at an 11% free cash flow (FCF) yield, which was much cheaper than its peers. Investors were not yet giving credit to Amentum’s expanded scale, higher than market growth potential, synergy potential as a combined entity, massive backlog, and low capital intensity. We believed that Amentum, with its strong free cash flows, could rapidly reduce its debt, after which it could start returning cash to shareholders. During the short time that we have held the stock, both the synergy capture from the merger and the reduction in debt come more quickly and at higher rates than many were expecting—and the stock has started reacting positively. Looking forward, we expect organic growth to accelerate over the next couple of years and outgrow its markets. Amentum’s advance will likely be driven by a) an improved order win rate, b) healthy growth in international markets, and c) cross-selling enabled by its expanded capabilities post the Jacobs merger. We also anticipate significant margin expansion over the next few years, spurred by a positive mix shift towards its commercial end markets—which is a small portion of its business today but carries higher margins than the company’s current average margins. We also expect Amentum’s multiple to expand, reflecting the higher-than-market growth, improved margins, and lower financial leverage. We plan on staying invested in until Amentum’s share price reflects our estimate of fair value.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Arcosa is strategically focusing on higher return growth businesses in U.S. infrastructure, particularly in aggregates and engineered structures, positioning itself for long-term earnings and cash flow growth through organic expansion and strategic acquisitions.
Source: https://drive.google.com/file/d/1hPP-O2_hlGt-ZNnWXvL3srSOj5urCs1q/view?usp=drivesdk
Analysis:
Arcosa supplies key materials and engineered structures for U.S. infrastructure. Over the past four years, management has implemented a return on investment-driven simplification plan focused on Arcosa’s less cyclical, higher return, growth businesses that now generate the bulk of its profits. In its Construction Products segment, Arcosa sells aggregates such as crushed rock, sand, and gravel, along with specialty minerals that are the core ingredients in concrete and asphalt, which are essential for construction and infrastructure projects. Aggregates businesses tend to be local monopolies because the low value/high weight nature of the product typically makes transport beyond a 50-mile radius cost prohibitive. Ownership of reserves and barriers to obtaining permits for new sites further limit competition. These factors keep pricing on a healthy upward annual trajectory. Solid long-term organic volume growth reflects Arcosa’s use of acquisitions and internal investment to intentionally position and expand its aggregates platform in states with healthy fiscal budgets, approved infrastructure spending plans, and/or net population growth such as Texas and Arizona.
Arcosa’s other growth business is Engineered Structures, where the company is a national, scale-advantaged producer of utility support structures and telecom towers. This business continues to see order strength and healthy backlogs driven by utility grid hardening and transmission expansion in the face of rising load growth, and next generation telecom network densification. To keep pace with demand, Arcosa is adding structures capacity in a capital-efficient manner by converting an underutilized wind tower facility.
Finally, management’s continued right-sizing of its remaining cyclical businesses—producing wind towers and barges—has positioned these units to realize solid operating leverage as volumes benefit from a more favorable investment backdrop. Overall, we continue to believe the positive, long-term secular trends and continued shift of Arcosa’s portfolio to higher ROIC businesses bode well for long-term growth in earnings and cash flow. With strong free cash flow that enables it to deleverage quickly after large deals and ample high return reinvestment opportunities, particularly in the still-fragmented aggregates business, Arcosa appears to have a long runway to continue compounding value.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Cadence Design Systems is a market leader in Electronic Design Automation software, essential for designing complex semiconductor chips that power modern technology, with strong growth prospects driven by AI adoption and increasing chip complexity.
Source: https://drive.google.com/file/d/1ckFqwAPlJcJH2P-fuZ7n0uMzzcsNfADK/view?usp=drivesdk
Analysis:
In this section, we take a closer look at one of our recent investments, Cadence Design Systems, a company that provides the essential tools to design the chips powering today’s most advanced technologies. Cadence Design Systems is a new holding in the LongRun Equity fund. The company perfectly fits our strategy of owning durable, high-quality compounders in structurally growing industries. Though not a household name, Cadence’s software and hardware tools are mission-critical for designing the semiconductor chips that power smartphones, computers, autonomous cars, Artificial Intelligence (AI) systems and more. In the following paragraphs, we’ll break down Cadence’s business model and investment rationale in clear and straightforward terms.
“Blueprint Software” for chips
When people think about AI, names like Nvidia, Google, OpenAI, or Microsoft usually come to mind. But how do these companies design the advanced chips that power AI? The answer leads to Cadence and Synopsys. These firms provide the essential software that makes designing cutting-edge chips possible - without it, modern AI simply wouldn’t exist. Electronic Design Automation (or EDA) software allows chip designers to plan, draw, and test the complex layouts of a semiconductor before it’s physically manufactured. It’s like a virtual workshop where engineers can simulate how a chip would function, identify errors, and optimise performance. Cadence’s tools cover different aspects of design – from digital circuits and signal processing to full systems-on-chip designs, ensuring that overall systems move through the main stages seamlessly from concept through to the step when they work. Designing a modern chip would be totally impossible without advanced EDA tools, and the semiconductor industry is the main customer.
As semiconductor R&D spending rises, Cadence captures a growing share of that investment. AI is a long-term trend, ensuring data centres evolve for decades, providing a steady tailwind for the business.
Chip complexity
Modern chips integrate billions of transistors and advanced architectures. This complexity makes design harder and more expensive, increasing reliance on Cadence’s tools. Customers often expand usage and adopt higher pricing because Cadence is more cost-effective than hiring more engineers. As a result, EDA tools are capturing a larger share of chip development budgets.
New entrants
Chip design is no longer limited to traditional semiconductor companies. Tech companies, automakers, industrial and device makers are all creating custom chips to gain an edge. Amazon designs its own processors, Google builds its own AI chips, and Tesla develops chips for autonomous vehicles. This influx of new players expands Cadence’s customer base and reinforces its role as a critical enabler in the “picks and shovels” economy of chip design.
Shift to system-level design
Products like electric vehicles and smartphones are complex systems, not just individual chips. Cadence is building tools that let customers design complete systems including chips, circuit boards, cooling and more on a single platform. This long-term strategy, called “Intelligent System Design”, could significantly expand Cadence’s addressable market and deepen relationships with system-focused customers.
In summary. AI adoption, growing complexity, new chipmakers, and system-level design create a strong, multi-decade growth runway for Cadence.
Competitive landscape: A stable duopoly
It’s impossible to discuss Cadence without mentioning Synopsys, its closest competitor. The two companies form a near-duopoly in the EDA industry, with a third player (Siemens, formerly Mentor Graphics) holding a much smaller share in certain niches. Cadence and Synopsys offer broadly comparable product suites and often compete for the same customers, but each has its historical strengths and focus areas. An informal analogy is that they are the “Coke and Pepsi” of chip design software, two very dominant vendors with a similar offering, where individual customer preferences and legacy decisions might dictate which one is used more. In practice, most large chip companies end up using tools from both Cadence and Synopsys. For example, a firm might use Cadence’s tools for analogue design and certain simulations but rely on Synopsys for digital synthesis or vice versa. This dynamic exists because each company’s tools might excel in particular sub-tasks, and chip engineers are pragmatic, they choose the best tool for the job.
Conclusion
Cadence and Synopsys are quintessential LongRun investments: market leaders with wide competitive moats, subscription- driven revenues, and exposure to powerful structural growth trends. Both companies reinvest heavily in innovation while maintaining high profitability, securing their roles as the “engine behind the engine” of modern technology. From smartphones and autonomous vehicles to the smallest chips and AI supercomputers, their tools quietly shape the semiconductors powering our digital world. We are pleased to own these durable compounders and expect them to deliver strong returns for the portfolio in the years ahead.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Coats Group is a 250-year-old leader in the global thread industry, now expanding into the footwear market with strategic acquisitions and a focus on enhancing margins for faster earnings growth.
Source: https://drive.google.com/file/d/1shegol2Uvm-QIdgEMYokgAY5vMQ1FROi/view?usp=drivesdk
Analysis:
Coats Group was added during the quarter and has the distinction of the longest operating history in the portfolio, over 250 years. Its key competitive advantage lies in its leadership and scale in the global thread industry, creating high quality threads that brands rely on to avoid costly production risk and to ensure garment durability. They are applying a similar strategy to the footwear industry, supplying key functional footwear components (i.e., insoles, heel counters and toe puffs), across the product spectrum: casual, luxury, sportswear, and performance. The company acquired OrthoLite this summer to move into the premium insole market. Besides trading below our intrinsic value estimate, the company can integrate and streamline its footwear assets to boost margins so earnings can grow faster than sales.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
COSMAX is the world’s largest original design manufacturer in cosmetics, poised to capture significant growth due to market fragmentation and rising demand for Korean beauty products.
Source: https://drive.google.com/file/d/1HI6sAh19EuC596c7LxQTSVsogrn-vh2w/view?usp=drivesdk
Analysis:
COSMAX is the world’s largest original design manufacturer (ODM) in cosmetics by revenue, producing over 1 billion products annually for more than 1,000 brands globally. The company serves a wide spectrum of clients, from multinational beauty conglomerates to emerging independent labels, with core strengths in color cosmetics and growing expertise in skincare. Several secular trends support COSMAX’s long-term growth. The ongoing fragmentation of the beauty market and rise of smaller brands have increased reliance on ODMs to accelerate time to market. Simultaneously, global demand for Korean beauty products continues to grow, benefiting Korean manufacturers at the expense of traditional multinationals. South Korea now ranks as the third-largest cosmetics exporter and the second-largest filer of beauty patents globally, reinforcing its innovation edge. COSMAX stands out for its unmatched scale, R&D depth, and advanced manufacturing capabilities. These advantages position it well, in our view, to capture a disproportionate share of growth as the beauty industry evolves.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
CrowdStrike is a leading cybersecurity company that offers cloud-native endpoint protection and has established itself as a critical player in a structurally expanding market essential for modern economies.
Source: https://drive.google.com/file/d/1Io2sZ1MFMLZaNAa4acrtvHE7eM0oklYB/view?usp=drivesdk
Analysis:
Cybersecurity is no longer a nice-to-have line item on IT budgets, but a foundational requirement for modern economies given the changing world we are in and the evolving nature of cyber-attacks as part of a rapidly evolving theatre of war between nation states. As demonstrated above, global cybersecurity spending is forecast to rise steadily in the high single to double digits annually as enterprises recognise the stakes as existential. Be it purely reputational damage and regulatory liability from downtime, to a business being unable to operate at all. In short, cybersecurity is now a structural growth market from an investment perspective, because it’s something that people, businesses and governments cannot live without. Enter CrowdStrike. CrowdStrike emerged in 2011 as an offshoot from McAfee, founded by George Kurtz and Dmitri Alperovitch, with the simple - but radical - idea that endpoint protection should be cloud-native from day one. Instead of layering bulky software onto each device, they created Falcon – a single platform that supplies users, direct from the cloud, with multiple security modules that run off the same data. It was elegant, scalable and, most importantly, effective. High-profile wins in attributing the Sony Pictures hack to North Korea and the DNC breach to Russia cemented its credibility. Since then, CrowdStrike has become the leader in modern endpoint security, with ~18% market share ahead of Microsoft. Its Falcon platform has expanded into over 20 modules covering identity protection, cloud workload defence, vulnerability management, log management and managed threat hunting. The firm’s Flex licensing model now underpins customer adoption by removing procurement friction, deepening module penetration, and producing higher-value, longer-term deals. On average, Flex customers use nine modules, with contract values rising sharply after renewal – largely due to initial discounts burning off as customers remain sticky at renewal time, as well as customers generally seeking more modules to improve their level of protection. For a company built on subscriptions-as-a-service (SaaS), that is exactly the kind of ratchet investors like to see. Organic growth has been supplemented by targeted acquisitions, such as Humio for log management, Preempt Security for identity threat protection, and most recently Pangea to extend AI detection and response capabilities. Execution has been matched financially with the company transitioning into GAAP profitability while retaining enviable gross margins north of 80% on subscriptions. The pièce de resistance, though, is CrowdStrike’s agentic AI, Charlotte AI. It is designed to act as a co-pilot for security teams: automating triage, threat hunting and response in natural language. Its effectiveness stems not just from model architecture, but from the trillion-plus proprietary data points CrowdStrike collects daily. The crucial differentiator in AI’s effectiveness is the amount and quality of data. Data, in the realm of AI, is a genuine moat, and no competitor has a comparable telemetry set spanning endpoints, identities and cloud workloads. CrowdStrike sits at the nexus of a structurally expanding market, with secular demand tailwinds and a business model that monetises breadth as well as depth. Financially, management guides towards >20% net new annual recurring revenue growth, 24%+ operating margins, and 30%+ free cash flow margins in FY27 – highlighting the operational leverage we seek in well-managed businesses. Risks are not absent though; these include Microsoft’s monopolistic bundling power which remains formidable, new upstarts lurking as ambitious challengers to specific modules, and cybersecurity companies being prone to negative headlines if they make just one mistake. But CrowdStrike has consistently demonstrated both innovation and execution to so far overcome these disruptions. Cybersecurity is no longer optional, and CrowdStrike provides critical infrastructure in a world where a single breach can cripple economies, throw hospitals into chaos and result in no food on your shelves. This is a potential crisis for which the likelihood will only grow, meaning the likes of CrowdStrike will only become more necessary – and hence a company we see as a core structural piece of our portfolio.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Cummins Inc. is a market leader in heavy-duty truck engines with strong customer relationships, a diverse revenue stream, and a solid position for future growth, making it an attractive investment opportunity.
Source: https://drive.google.com/file/d/1y5-YJAo_-hCuTKo8sgbJeMDMzYjSfUod/view?usp=drivesdk
Analysis:
Initiated: Cummins Inc. (CMI) – The global leader in heavy-and medium-duty truck engines, CMI benefits from strong customer relationships and a large installed base driving high-margin, recurring aftermarket revenue. Diversification into Power Systems adds stability through the trucking downturn, while a strong balance sheet and disciplined capital allocation support investment and shareholder returns. Positioned for an eventual rebound in truck demand and global growth, CMI’s scale, emissions expertise, and service network provide durable advantages. With shares near mid-cycle earnings, the stock offers an attractive entry point into a resilient, market-leading franchise.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Eaton Corporation plc is an intelligent power management company poised for growth due to its focus on high-margin electrical and aerospace markets, backed by strong secular tailwinds and a robust backlog of megaprojects.
Source: https://drive.google.com/file/d/14rtRf5EXWSFOHLx92yBI8nSLX0WWmdlv/view?usp=drivesdk
Analysis:
Eaton Corporation plc (ETN; Industrials; 1.85%**) – Eaton Corporation plc is an intelligent power management company that makes products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. The company has evolved from a highly cyclical, lower-growth industrial conglomerate to a higher growth, higher margin, less cyclical company focused on electrical and aerospace end markets, which largely operate as oligopolies. The company is levered to multiple secular tailwinds, including electrification, AI Datacenter buildouts, and reshoring. A large backlog of multi-year megaprojects announcements and long lead times provide multi-year visibility, and we believe the current share price does not adequately reflect the longer-term cash flow generation potential of the business.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Ebara is a leading supplier of semiconductor production equipment, particularly in chemical mechanical planarization, with significant growth potential in AI applications and a strategy to improve margins and shareholder value amidst undervaluation.
Source: https://drive.google.com/file/d/1lOLFF-IBAoi7fyUC8sz0_-UbhDBwiMpp/view?usp=drivesdk
Analysis:
Ebara (6361 JP) has a history in Fluid Machinery, selling standard pumps for water and sewage applications into buildings and custom pumps and compressors into energy and power markets. Today, more than half of the company’s profit comes from products serving the semiconductor industry. Ebara is a leading supplier of semiconductor production equipment, with the chemical mechanical planarization (”CMP”) tool as its primary product line. CMP tools polish wafers in order to guarantee structural uniformity throughout the manufacturing process. As nodes get smaller and gate structures more complex, CMP intensity is rising, with a particularly sharp rise in N3 to N2 given the introduction of new structures like gate all around and backside power. CMP is also a major beneficiary of the advanced packaging structures critical in AI semiconductors across both logic and memory, spanning from CoWoS to HBM and in particular 3D / hybrid bonded structures, where increased planarity and uniformity requirements drive a meaningful increase in CMP steps, complexity and process time. In our estimation, this makes CMP a relative AI winner within the Semiconductor Production Equipment space. In the near future, we see several AI XPUs as well as HBM adopting hybrid bonded structures, and Ebara would stand to substantially benefit. The CMP market has been a duopoly between Applied Materials and Ebara, with Ebara specializing in metal CMP while Applied Materials specializes in oxide CMP. As metal layers, where we feel Ebara excels, increase in importance for said structures, we see an opportunity for Ebara to gain share from Applied Materials. Despite these evident opportunities, Ebara trades at a substantial discount to its peers in the Semiconductor Production Equipment space. In our view, the company’s best-in-class product portfolio and attractive end market exposures are not reflected in a high and consistent margin structure, with group margins significantly lagging those of competitors. This margin underperformance is the result of what we see as both an overextended cost structure as well as unnecessarily discounted pricing relative to competitors. We are in active dialogue with Ebara’s new management team, which took over earlier this year, as well as the Board of Directors to enhance shareholder value. Our discussions include a plan to raise corporate margins by over 50%, close the valuation discount to peers by addressing portfolio complexity, enhance return of capital to shareholders through share repurchases given the company’s low valuation, strong balance sheet and ongoing cash flow generation, and improve corporate governance.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Exponent is a leading multidisciplinary consulting firm specializing in complex problem analysis, well-positioned for growth as technological innovation and safety concerns evolve.
Source: https://drive.google.com/file/d/1hPP-O2_hlGt-ZNnWXvL3srSOj5urCs1q/view?usp=drivesdk
Analysis:
Exponent is a leading multidisciplinary science and engineering consulting firm that applies scientific rigor and technical expertise to analyze complex problems across industries. Founded in 1967 as Failure Analysis Associates by a group of Stanford professors and engineers, the company pioneered the practice of uncovering the root causes of accidents, product failures, and process breakdowns. Exponent’s premium positioning stems from its combination of specialized expertise, diverse end markets, and a highly resilient business model. The company operates within a large and fragmented $800 billion engineering and scientific consulting market and has cultivated a reputation as the go-to advisor for highly complex, high-stakes matters, such as product recalls, regulatory inquiries, and litigation support. Roughly half of Exponent’s business is reactive and countercyclical—driven by legal disputes or accident investigations—while the remainder addresses proactive R&D, safety, and risk management initiatives. This balance provides stability through market cycles. The firm’s expertise is quite deep, with 70% of staff holding PhDs, creating high switching costs once embedded with clients. With more than 10,000 annual engagements across 2,000 clients and 85% repeat business, Exponent’s relationships are broad and sticky. We see Exponent as being well positioned for continued share gains as technological innovation and environmental and safety concerns become increasingly complex. Emerging technologies such as artificial intelligence, autonomous systems, advanced materials, and “forever chemicals” have all expanded the scope of problems requiring Exponent’s expertise. While the broader consulting industry faces margin pressure amid AI efficiency-driven automation that has been leading to fewer billable hours, we think that Exponent stands to actually benefit from AI proliferation, as its core work often involves sparse datasets and unprecedented problems that resist automation, resulting in diverse use cases where AI will drive higher demand for core failure analysis such as autonomous vehicles, AI-enabled medical devices, and risk modeling for data centers. Most recently, headcount, utilization, and growth have inflected positively after the company refocused its labor model. Equally important, Exponent remains poised to show solid growth and margin expansion via operational scale and utilization gains. Exponent’s business model is asset-light (CapEx accounts for roughly 2.5% of sales). The company carries a negligible amount of debt and consistently generates 20%+ ROICs. Exponent has grown solely organically, with no acquisitions in over two decades, preferring instead to emphasize intellectual capital development and disciplined reinvestment. The company is currently exhibiting a positive rate of change in its fundamentals. As such, we believe Exponent represents a premier platform for long-term compound growth in an era where technology, regulation, and risk are becoming increasingly intertwined.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Fever-Tree Drinks is poised for a return to healthier margins, closer to 20%, following its transition to Molson Coors for US production after facing challenges that reduced margins below 10%.
Source: https://drive.google.com/file/d/1shegol2Uvm-QIdgEMYokgAY5vMQ1FROi/view?usp=drivesdk
Analysis:
On the consumer side, we added Fever-Tree Drinks and Coats Group, both headquartered in the UK. Fever-Tree is a premium non-alcoholic mixers producer (tonic water is its largest product) which has signed a deal with Molson Coors to manufacture and distribute Fever-Tree mixers in the US. Fever-Tree took the moribund UK mixer market by storm from its inception in 2003. When it moved to the US in 2008, it shipped its finish product in the bottles we see on the shelf. Early on, this strategy did not matter as its growth in the UK drove operating margins above 30%. Over time, the US became its largest market, and the pandemic and supply chain bottlenecks led to skyrocketing costs driving margins below 10%—shipping finished product did not make sense anymore. A major part of our investment thesis is a return to healthy margins, closer to 20%, as the transition to Molson Coors supplying US product is completed.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Fiserv Inc. is a financially robust global payments solutions provider with high customer retention and substantial free cash flow, positioning it as a valuable investment opportunity.
Source: https://drive.google.com/file/d/1osbuqfBb45IAj8EuFP5rC4rXKZ0oPBqu/view?usp=drivesdk
Analysis:
Fiserv Inc. is a company we have successfully owned multiple times in the past. It is a global payments solutions and financial services provider. The business consists of two segments: merchant solutions and financial solutions. Each of these segments provides essential products and services to its customers. Fiserv’s products have high switching costs, which aids in customer retention and increases the stickiness of their revenue. The company expects to generate over $5 billion of free cash flow this year. The company is using its free cash flow to repurchase its discounted shares, which increases our value per share growth. Fiserv stock has declined meaningfully since we sold it earlier this year. Our value has remained stable. We are pleased to be able to own this wonderful business with a substantial margin of safety once again.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Galderma is well-positioned for long-term growth in the dermatology market, leveraging its strong brand, innovative products, and direct-to-consumer revenue model.
Source: https://drive.google.com/file/d/16Op4OtPu2w5v13tlJxpplcme4SLhokBC/view?usp=drivesdk
Analysis:
Galderma, a Switzerland-based dermatology company, sells facial injectables, skin care products, and pharmaceutical-grade therapies. Nearly 90 percent of its revenue comes from products that patients pay for directly, which helps insulate the business from insurance-related pricing pressures and government reimbursement risks. The company’s strong brand reputation, combined with a commercial strategy that emphasizes high-touch service for dermatologists, reinforces its leadership in this regulated market. In the United States, Galderma has continued to gain injectable market share by launching longer-lasting neurotoxins and deepening physician relationships. At the same time, its prescription therapeutics business is showing promise, led by Nemuxia, a new treatment for chronic skin conditions that has already delivered encouraging results. Looking ahead, Galderma is well-positioned to expand margins as high-growth, high-margin products scale and efficiencies from its recent spinout take hold. With steady growth in the broader dermatology market—especially in aesthetic treatments—the company’s specialized focus and global reach provide a clear path, in our view, for long-term, above-average earnings growth.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Gaztransport & Technigaz (GTT) is the leading provider of membrane-containment systems for liquefied natural gas (LNG), holding over 70% of the global market share and offering strong financial performance with a compelling growth outlook.
Source: https://drive.google.com/file/d/113_kx84GWnUnKEFoqy77SQdkSrUnFEzK/view?usp=drivesdk
Analysis:
Headquartered in France, Gaztransport & Technigaz (GTT) is the clear leader in membrane-containment systems for liquefied natural gas (LNG), with a more than 70% global market share. Its containment systems are fitted inside a vessel tank, designed to safely hold, store, and transport LNG at -163 degrees Celsius while keeping evaporation to a minimum. Poor containment performance raises boil-off and erodes cargo value; in extreme cases it can create life-threatening explosion risk, underscoring the value of GTT’s technology. GTT doesn’t manufacture tanks; it licenses its designs to shipyards and provides services—an asset-light, highly scalable model. Pricing power is reinforced by charterer specifications: large oil and gas companies often require GTT systems in vessel leases, prompting ship owners and yards to adopt that standard. GTT continues to be selected for new vessel design because of the long-term relationship that they build with oil & gas companies, who rely on GTT’s expertise to improve efficiency and get the most value from their LNG ships over time. GTT’s compelling value proposition to its sticky customer base translates into excellent operating economics: greater than 40% free cash flow margins, net cash, and a balance sheet with shareholders’ equity near 60%. Tight global yard capacity and funded LNG projects in Qatar and the U.S. have stretched GTT’s order backlog into the first half of 2028, de-risking near-term free cash flow and supporting the dividend. We think the company’s upside remains compelling if the shipbuilding cycle extends as additional LNG projects reach final investment decisions in 2026 and as older, legacy-engine vessels are replaced. In light of GTT’s market dominance, compelling economics, and secular growth runway, the current approximately 9% forward cap rate and roughly 6% dividend yield look attractive to us.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
German American Bancorp is a high-quality Midwest bank with strong returns on assets and equity, positioned for growth with a low valuation and promising earnings potential.
Source: https://drive.google.com/file/d/1IxRAU6oDXpvkvPc9GQ0qxx8s_TVVCiAA/view?usp=drivesdk
Analysis:
German American Bancorp (Nasdaq: GABC) is a midwestern bank headquartered in Jasper, IN with a Midwest footprint that also includes Kentucky and Ohio. In our opinion, German American is among the highest quality banks in the U.S. Their return on assets, typically in the 1.4%+ range, and returns on tangible common equity (which measures a company’s earnings relative to its tangible common equity) typically in the 15-20% range, are rare air in the industry. In addition to German American’s robust returns on capital, we love their conservative underwriting culture, which has resulted in consistently pristine credit. With only $8.4 billion in assets, German American is positioned to grow and take share for many years to come.
While the Midwest doesn’t receive the hype of markets like Texas, Florida, and other parts of the Southeast, we see ample growth in these markets, including being direct beneficiaries of onshoring and reshoring in the U.S. While not as active as Glacier on the M&A front, German American also does smart deals, and we expect that to continue, providing a lift to both earnings and returns over time. At around 10.5x forward earnings, German American is about as cheap as it’s been since 2011. (It was a hair less expensive in 2023.) With annual earnings growth expected in the 9-10% range, along with a healthy 3% dividend yield, we like the return potential even if we see no multiple expansion, though we think that’s unlikely to be the case.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Glacier Bancorp is a regional bank with a strong market share in smaller markets, excellent credit quality, and expected robust earnings growth due to improving net interest margins and strategic acquisitions.
Source: https://drive.google.com/file/d/1IxRAU6oDXpvkvPc9GQ0qxx8s_TVVCiAA/view?usp=drivesdk
Analysis:
Glacier Bancorp (NYSE: GBCI) is a regional bank with operations in Montana, Idaho, Utah, Washington, Wyoming, Colorado, Arizona, and, more recently, Texas. Although they have more than $29 billion in assets, they operate as a collection of small community banks in their markets. Glacier has an outstanding deposit franchise, enabled by their strong market share in smaller markets that the larger banks choose not to focus on. For example, they are the #1 bank in Montana with a more than 20% market share (which is high for a bank), while Wells Fargo, one of only two large banks with a top 10 market share in the state, is #4 at less than 9%. This strong market share gives Glacier one of the lowest cost of deposits in the banking industry.
Credit quality has historically been pristine at Glacier. While also a very high returning bank historically, Glacier’s record of robust profitability has been hit in recent years due to their liability sensitive balance sheet, meaning that their margins were hit as interest rates rose rapidly. However, that is now changing as rates have begun to come down, and net interest margin has improved for six consecutive quarters, leading to robust earnings growth, with Glacier expected to grow earnings 19% in 2025 and a whopping 55% in 2026, in part due to recent M&A, a core competency. The bank has a long track record of doing smart, value creating acquisitions, including two deals already announced and closed in 2025. Given the now vibrant M&A landscape, we believe Glacier will continue to augment their healthy organic growth engine with future activity. At roughly 13x forward earnings, the only time Glacier has been cheaper in the last 10 years was during the depths of the 2023 bank mini crisis, when it dipped to around 12.5x.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Globant is a leading global technology service company that has significantly declined in value post-pandemic, but is poised for growth as the focus shifts from cost-efficiency to product and experience.
Source: https://drive.google.com/file/d/1shegol2Uvm-QIdgEMYokgAY5vMQ1FROi/view?usp=drivesdk
Analysis:
In the Technology sector, we added Globant, a leading global technology (IT) service company, which was one of the first providers of design, engineering, and innovation services at scale. IT service providers did very well during the pandemic, as all corporations needed help designing IT solutions to handle the work-from-home load and the ever-evolving technology services landscape (i.e., transition from on-premises to cloud and AI deployment). Like many beneficiaries of the pandemic, a lull followed the boom, with slower sales and weakening earnings growth. Additionally, questions arise as to whether there will be any negative structural implications for the IT service industry, given the rise of AI. We feel these developments have been more than discounted by the over 80% decline in the stock price from its pandemic peak and the massive valuation de-rating, a 10-year average forward P/E of 40 times reduced to the current forward P/E multiple of 10 times. There are early signs that the mindset is now switching from costs/efficiency to product/experience, which is more indicative of a return to growth-oriented work.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Intuitive Surgical is the leading provider of robotic surgical systems, poised for strong growth as it expands its monopoly from niche to broader surgical procedures.
Source: https://drive.google.com/file/d/12oOYoZeDktb_nw_t2MGxzJbDzEzBu63_/view?usp=drivesdk
Analysis:
Intuitive Surgical is the leader in robotic surgical systems. The company’s da Vinci Robotic Surgical Systems enable surgeons to perform minimally-invasive surgeries (MIS) with a greater level of precision than traditional surgery. Intuitive Surgical holds a monopoly position within its industry, and we believe its position is well protected by its leading-edge technology, broad patent portfolio, as well as the high costs to switching systems. Going forward, we expect the company’s competitive position to transition from being the monopoly provider of robotics—a niche surgical category—to the dominant provider of robotics in a broader array of surgical procedures. Given the company’s technological leadership in the large, and growing, robotic surgical market, we expect the company will continue to grow at above-average rates over our investment horizon.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Iron Mountain, Inc. is well-positioned to benefit from growth in data centers, records management, and digital solutions due to its leading market share in the Asset Lifecycle Management industry.
Source: https://drive.google.com/file/d/18HDpOb-LCHQfDVcFr62CoW87damlhHzU/view?usp=drivesdk
Analysis:
Iron Mountain, Inc. (IRM; 2.71%**; Other Specialized Reits) - Iron Mountain (IRM) is the global leader in the records management industry, and has found an inflection in growth rate behind new growth ventures that include data centers, tech hardware recycling, international paper storage markets, and digital solutions (digitizing paper records, structuring the data, pulling AI insights from data). We believe that the company is well-positioned to benefit from recovery of the company’s datacenter segment, the durability of the Records Management Business, and the company’s leading market share in the very fragmented Asset Lifecycle Management industry.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
JTC is a leading independent provider of fund and trust administration with a strong track record of revenue growth and potential for industry consolidation amid private equity interest.
Source: https://drive.google.com/file/d/113_kx84GWnUnKEFoqy77SQdkSrUnFEzK/view?usp=drivesdk
Analysis:
We first talked about U.K.-listed JTC in our June 2024 podcast. It’s one of the leading independent providers of fund and trust administration for investment managers, global companies, and wealthy families—the sort of quiet backbone business that keeps global finance running smoothly behind the scenes. What we like about JTC is its reliability: The company earns steady, recurring revenues because its work revolves around regulatory-driven compliance, reporting, and governance, tasks that have to get done no matter what is happening in the markets. And once clients come on board, they rarely leave—not because they are locked in, but because switching providers can be messy and risky. One bad NAV report or missed regulatory filing can cause real financial and reputational damage to clients. As a result, clients stay for the full life of a fund or trust, which can easily stretch a decade or more. All told, this consistency and mission-critical service has enabled JTC to deliver an impressive 37-year record of uninterrupted revenue and profit growth.
Another key attraction was the industry’s consolidation potential. Despite its leadership position, JTC still holds a low-single-digit share of a highly fragmented global market dominated by small local firms and spinouts from accounting and law practices. That fragmentation has made the industry a magnet for private equity buyers, who in recent years have acquired every listed competitor, leaving JTC as effectively the last man standing. As we noted in our podcast, while our investment process is not predicated on takeouts, and we do not invest with that outcome in mind, we would not be surprised if JTC too became a target. And that is precisely what unfolded in late August, when JTC received interest from private equity firms Permira Advisors and Warburg Pincus, validation, in our view, of the scarcity value and enduring quality of the franchise. JTC’s board rejected multiple preliminary approaches from both firms, and under U.K. takeover rules they have until November 7 to either table a firm offer or walk away. Although the shares have already re-rated on the news, we think they remain attractively valued at roughly 17.0x next year’s EV/EBITDA (enterprise value over earnings before interest, taxes, depreciation, and amortization, an important valuation metric), which remains meaningfully below previous transaction multiples north of 20.0x.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Magna is the largest auto parts supplier in North America, offering value exposure to global auto demand and hybrid adoption, with strong earnings and a robust dividend yield.
Source: https://drive.google.com/file/d/1wyR_znZuWTDs-yJGaT0HV6eBZqvI0yJz/view?usp=drivesdk
Analysis:
Magna is the largest auto parts supplier in North America and the third largest globally, with exposure across body structures, seating, vision systems, and complete vehicle assembly. Beyond traditional components, its hybrid powertrain solutions stand out as a compelling growth area—an attractive “middle ground” between ICE and full EV adoption. FY25 net income rose to $1.2bn despite top-line revenue pressure, reflecting resilience and cost management. With a dividend yield above 4% and trading at under 9x forward earnings, the stock provides value exposure to global auto demand while offering optionality in EV and hybrid adoption. Recent wins, including new vehicle assembly mandates with XPENG, reinforce its strategic position in next-generation mobility.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Mayville Engineering is transitioning from cyclical heavy vehicle manufacturing to higher-margin data center infrastructure, supported by lean operations and a focus on domestic sourcing, aiming for significant sales growth in 2026.
Source: https://drive.google.com/file/d/1pva4kl5HNS_3y-A25Kv0nIYDTldLLGyw/view?usp=drivesdk
Analysis:
Mayville Engineering (NYSE: MEC) is a U.S.-based contract manufacturer, providing a broad range of prototyping and tooling, production fabrication, coating, assembly, and aftermarket services. The largest fabricator in the U.S., Mayville operates 26 plants across nine U.S. states. Manufacturing is 100% domestic and roughly 92% of the direct materials the company uses are sourced domestically. Contract pricing passes tariffs through, which helps insulate earnings before interest, taxes, depreciation and amortization, or EBITDA, while OEMs (original equipment manufacturers) reshore and consolidate suppliers.
Mayville has been quietly pivoting from the cyclical heavy vehicles and agricultural industries toward data center/critical power (DC/CP) infrastructure after acquiring Accu-Fab in 2025. New CEO Jag Reddy, whose experience includes stints at Danaher, ITT/Xylem, Pentair, and W.R. Grace, has been pushing lean manufacturing programs and value-based pricing while reorienting the company’s commercial funnel to DC/CP. The team booked $30 million of DC/CP awards in 3Q25, including cross-sell wins for battery-backup cabinets, power distribution units, static transfer switches, and busway components.
All of these are higher margin programs. Management expects DC/CP to approach around 20% of sales in 2026, with bid-to-revenue cycles as short as 8-12 weeks, which is much faster than legacy programs. Many of Mayville’s legacy end-markets are weak: Class 8 Commercial Vehicle (CV) business has been guided down by close to -28% in 2025 and another roughly -14% for 2026, but the company is actively redeploying capacity and headcount out of six CV-focused plants into DC/CP work. That’s been painful in 2025, but this move accelerates the mix shift to higher-margin, higher-velocity programs that can re-rate consolidated margins as they ramp in the first half of 2026.
Management is running a fairly simple playbook: Lean operations, price discipline, and thoughtful capital deployment. Mayville launched a footprint optimization in early August to consolidate three warehouses and one manufacturing facility by the end of 2026, a total charge that will run somewhere in the neighborhood of $5-$7 million. Near-term charges flow through the costs of goods sold, but the objective is fixed-cost relief and better utilization aligned to DC/CP growth.
3Q25’s free cash flow (FCF) was negative on non-recurring costs and the Accu-Fab close, but management reiterated their expectation of positive FCF in 4Q25, along with a plan to use the cash to pay down debt. Mayville’s net leverage was 3.5x at the end of September, management has targeted less than or equal to 3.0x by year-end 2026. CapEx remains contained (~$15–20 million in 2026) because more than 90% of the assets required to execute wins are in place. We expect the market to take notice as Mayville executes on its plan in 2026.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Onto Innovation is a leader in providing essential inspection, metrology, and lithography equipment for semiconductor manufacturing, with strong growth prospects driven by technological advancements and a robust product pipeline.
Source: https://drive.google.com/file/d/1hPP-O2_hlGt-ZNnWXvL3srSOj5urCs1q/view?usp=drivesdk
Analysis:
Onto Innovation provides inspection, metrology and lithography equipment that is critical for quality and process control in semiconductor chip manufacturing. Its broad portfolio of solutions and technologies are a key differentiator as Onto has solutions that are applicable across the chip-making process, from front-end wafer fabrication to middle and back end of the line applications, including advanced packaging. It holds the #1 or #2 position in most of the process control niches in which it currently offers tools with high barriers to entry given the long process of getting a tool validated and the high cost to customers of switching tool suppliers, particularly when ramping up to high volume manufacturing. The growth of Onto’s existing portfolio is fueled by secular trends such as increasing complexity of advanced node integrated circuit architectures (e.g., the shift to Gate All Around transistor design) and increasing use of advanced packaging approaches (e.g., chiplets and die stacking), both of which are vital to enabling faster, smaller, more capable and more energy efficient chips. These technology transitions mean that there are more points at which wafers and dies must be inspected for defects, along with other critical dimensions that must be measured given the higher cost of failure of a device once it’s been packaged. As a result, the amount spent on the types of process control tools Onto provides is growing as a percent of total semiconductor equipment CapEx.
Onto also has a proven track record of driving growth by expanding its addressable markets via new product development (its current pipeline would expand its sales opportunities by another $1 billion) or acquisitions (e.g., ONTO recently announced the purchase of Semilab’s materials analysis business, which further broadens Its technology offerings and is margin accretive). Finally, about 15-20% of Onto’s sales come from software, parts, and services sales to its installed base, which provides a less cyclical, annuity-like revenue stream.
We have owned Onto’s stock in other Royce-managed portfolios in the past and continued to follow its progress given its quality attributes, so our antennae rose when the stock fell significantly after the company announced 1Q25 earnings. Our subsequent due diligence led us to believe that the key investor concern—a missed incremental inspection business at a key customer—was not a permanent loss but rather an opportunity that could be regained later this year. (In its 2Q25 earnings report, management gave an encouraging update on its progress and improved the prospects for a reacceleration of sales and earnings growth in 2026.) We have also been encouraged by the addition of two high level executives and several engineers from rival Industry leader KLA corporation over the past 12 months. Onto appears to have multiple paths to achieve its targeted longer-term model, which could yield double-digit earnings growth and earnings power of over $8 share. We therefore felt that the stock’s risk/reward profile after its sell-off in May 2025 presented an attractive point to take an initial position.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Riken Keiki is a dominant Japanese industrial company specializing in safety systems for hazardous worksites, with strong recurring revenues and significant potential for global market expansion.
Source: https://drive.google.com/file/d/113_kx84GWnUnKEFoqy77SQdkSrUnFEzK/view?usp=drivesdk
Analysis:
Japanese company Riken Keiki is the unseen safety layer behind much of the world’s most dangerous worksites. Its fixed systems and wearable devices use more than 380 proprietary sensors to detect over 1,200 different gases, which keep chip fabs, refineries, and utilities both safe and operational. The equipment is built directly into site control systems, making it expensive, disruptive, and risky to tear out and recalibrate, which results in relationships that often last 10-15 years. Approximately 40% of Riken Keiki’s revenue and roughly half of its profits come from recurring and regulatory-driven maintenance services, as well as replacement sensors and other consumables, which must be replaced every 2-3 years.
These deep, ongoing ties with customers, reinforced by strict safety regulations, make Riken Keiki’s revenues stable and its customer base loyal. In Japan, Riken Keiki stands as the undisputed leader, holding a more than 50% market share and an even stronger 70% share in semiconductor gas detection—and that segment accounts for roughly 40% of revenue. The company generates over 40% of revenue from overseas markets but mostly remains a challenger brand, indicating that significant room exists for Riken Keiki to gain global market share. In recent years, the company has been leveraging its deep engineering expertise and reputation for reliability to win more market share beyond Japan, most notably in the fast-growing U.S. semiconductor market, where it shipped its first-ever orders this summer.
We view Riken Keiki as a classic example of a quietly dominant Japanese industrial champion leveraging its home-market strengths to build a global franchise. Despite its mission-critical role, growing recurring revenue streams, and expanding international growth prospects, the stock still trades at an attractive 9% forward cap rate. Analyst coverage also remains limited, with just two regional brokers following the name, leaving what we think is a durable, underappreciated compounder hiding in plain sight.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Riken Keiki’s vertically integrated, in-house sensor technology, service-driven design, and decades-earned brand trust in safety-critical environments create extreme switching costs and customer stickiness, underpinning durable mid-teens returns and long-term compounding.
Source: https://drive.google.com/file/d/1aVQyKCwwTHswguUJ2bUicOlxD6bYy_ia/view?usp=drivesdk
Analysis:
Riken Keiki is distinguished by its sensor technology developed over decades, achieving the highest accuracy levels. The management emphasizes that they produce all critical components in-house, including sensor cells, boards, and housings, ensuring a comprehensive integration from R&D to production quality and field services. This tight quality control enables direct customer feedback.
Time for a teardown:
To validate management claims, I purchased a used Riken Keiki GD-70D gas detector for €120 and conducted a teardown. This confirmed that critical components are manufactured in-house, with only non-essential parts sourced externally. The sealed unit design supports their service-driven model, contributing to their longstanding reputation for reliability.
Gotcha, so what’s the moat?
Riken’s moat combines brand trust in safety-critical environments, a massive installed base with high switching costs, a maintenance ecosystem that keeps customers locked-in, and deep engineering know-how that’s challenging to replicate. Once Riken is qualified and installed, it tends to remain for decades due to certification and retraining costs associated with changing vendors.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
SK Hynix is a market leader in high bandwidth memory with a significant growth outlook due to AI driving demand, while it trades at a substantial discount compared to competitors.
Source: https://drive.google.com/file/d/1lOLFF-IBAoi7fyUC8sz0_-UbhDBwiMpp/view?usp=drivesdk
Analysis:
SK Hynix (000660 KS) is part of a global oligopoly in DRAM memory alongside Samsung Electronics and Micron. This cyclical market has historically exhibited both demand and price volatility, but we believe it is in the early innings of de-commoditization. AI workloads have been driving substantial growth in high bandwidth memory (“HBM”) where Hynix is the market leader with over 50% market share. Unlike traditional commodity DDRx DRAM, HBM exhibits greater elements of differentiation and design cycle stickiness which we believe will both enhance through-cycle returns as well as dampen earnings volatility for the industry. Since the beginning of the AI buildout two years ago, HBM bits have been substantially outgrowing GPU units. Despite this growth, AI compute today, in particular inference, continues to be memory constrained, and we expect HBM volumes to continue to outgrow AI XPUs for the foreseeable future. Looking forward to upcoming GPU and ASIC designs, we see larger processors being developed to pack more HBM onto each XPU’s expanded shoreline.
Because of its complexity, HBM carries a 4-5x premium over traditional DDRx DRAM pricing. Therefore, while HBM made up just ~5% of industry bits in 2024, it already accounted for ~20% of DRAM industry revenue. As the market leader, Hynix is overexposed to HBM, where the product contributed to 8% of the company’s DRAM bits but nearly 30% of DRAM revenue last year. The HBM mix continues to grow for Hynix, and as of 2Q25 HBM made up 14% of DRAM bits and over 40% of DRAM revenue. At the same time, complexity for HBM continues to rise as we transition from HBM3e this year and to HBM4 next year, which will provide inflationary ASP pressure offsetting legacy product price declines. In addition, and in spite of growing fears around Samsung’s resurgence in the HBM market, we believe the growing HBM complexity will widen Hynix’s lead over its competitors.
Despite its technological leadership, SK Hynix is trading at a mere 7x 2026 Price-to-Earnings multiple versus competitors Micron and Samsung at 10x to 12x, and a similar discount on book value multiples. By purchasing SK Square (402340 KS), the holding company which owns a 20% stake in SK Hynix, investors can buy SK Hynix at a nearly 60% discount or only 3.5x P/E. 95% of SK Square’s NAV comprises of SK Hynix shares and cash; management have shown commitment to closing the NAV discount and are selling non-core stakes and repurchasing stock.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
SmartCraft ASA is a growth-oriented digital toolkit for Nordic and UK SMEs in the construction sector, providing essential software solutions for increased profitability and compliance, with significant market penetration potential.
Source: https://drive.google.com/file/d/113_kx84GWnUnKEFoqy77SQdkSrUnFEzK/view?usp=drivesdk
Analysis:
Oslo-listed SmartCraft ASA is the digital toolbox for the Nordic and UK building and construction trades. Its core customer is the family-run small to medium-sized enterprises (SMEs), such as electricians, plumbers, and other craftsmen, who live with heavy regulation, burdensome paperwork, and thin margins. SmartCraft replaces pen-and-paper and generic software with purpose-built tools that save time on administrative work, sharpen planning and budgeting, and make documentation effortless. For less than the price of a phone bill (generally under $1 per user per day), SmartCraft’s 13,000+ customers gain stronger profitability and regulatory compliance. As one user puts it, “If we couldn’t have the software for one day, then our whole structure would fail.” Customers depend on SmartCraft’s solutions, so they rarely leave and are happy to pay recurring subscription-based revenues, which make up more than 90% of SmartCraft’s total revenues. Yet penetration of industry-specific software is estimated to be just 10-15%, leaving a long runway of growth as regulation intensifies, and a new generation embraces digital workflows. Backed by a debt-free, net cash balance sheet and the stewardship of Valedo, a respected Swedish private equity operator, SmartCraft has grown more than 20% annually over the past five years, earns around 20% ROIC on average, and has completed over a dozen acquisitions. We initiated our position after a cyclical dip took shares below the 2021 IPO price, even as operating earnings were roughly 60% higher than at listing. With cyclical recovery prospects, potential sponsor activity as Valedo exits, and insider buying, we see a quality compounder that remains undervalued.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Synopsys is a leading chip design company with a strong foundation for long-term growth, despite near-term challenges in its Intellectual Property business.
Source: https://drive.google.com/file/d/1ckFqwAPlJcJH2P-fuZ7n0uMzzcsNfADK/view?usp=drivesdk
Analysis:
Our second new investment during the quarter was Synopsys, a company we know well through our extensive industry research, particularly our long-standing work on Cadence. Both firms are leaders in chip design and play a critical role in the semiconductor manufacturing process. After a sharp share price drop during the quarter, management acknowledged near-term challenges in its Intellectual Property business, driven by lower demand and export restrictions in China. However, the core business remains strong, the integration of its most recent acquisition, Ansys, is on track, and management expects Intellectual Property growth to return to mid-teens by 2027. We believe Synopsys’ leadership in design automation, strong innovation pipeline, and strategic positioning in AI-driven chip design provide a solid foundation for long-term growth.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
TowneBank is a strong investment opportunity due to its dominant market share, diverse earnings from non-interest income sources like its insurance brokerage, disciplined acquisition strategy, and attractive valuation compared to expected robust earnings growth.
Source: https://drive.google.com/file/d/1IxRAU6oDXpvkvPc9GQ0qxx8s_TVVCiAA/view?usp=drivesdk
Analysis:
TowneBank (Nasdaq: TOWN) is headquartered in Portsmouth, VA, where it has a dominant share of 36% in the Hampton Roads area. Towne also has a small but growing presence in the fast-growing N.C. market. As a traditional bank, Towne is outstanding in its own right, with a long history of pristine credit, impressive returns on assets and on tangible common equity, solid growth, and a very attractive deposit franchise. What makes Towne unique, though, is its diverse array of earnings that are not related to generating income from taking deposits and making loans (known as net interest income), which is the primary driver of revenues for most small banks. A typical bank might generate 80-85% of its revenue from net interest income, with the balance coming from ancillary fee income. Towne, on the other hand, derives about 36% of its revenue from fee income, much of which is not related to the bank. The biggest driver of that fee income is Towne’s insurance brokerage business. There are many publicly traded insurance brokers, and most trade at healthy multiples owing to the recurring nature of their revenues, their asset light business models, and sturdy growth profiles. We believe that Towne’s insurance brokerage business alone could be worth 30-40% of the value of the company. We also think this unique collection of businesses is valuable and quite rare in the bank space. In addition, Towne is a disciplined and proven acquirer. In fact, of the $19.7 billion in assets on their balance sheet at the end of 3Q25, $6.7 billion came from acquisitions. With a favorable M&A backdrop, we believe the bank is well positioned to continue doing deals that will create further value for shareholders. The shares have been trading at a little over 9x forward earnings, levels we have only seen a couple of times in the last 15 years. That looks very compelling for a bank that is expected to grow earnings north of 20% in 2026 and 11% in 2027.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
Toyoda Gosei is a well-positioned Tier 1 automotive supplier benefiting from Japan’s industrial renewal and the global shift in automotive supply chains, with a stable revenue, improving profitability, and attractive valuation amid growing demand for hybrid and electric vehicles.
Source: https://drive.google.com/file/d/1sI4j4QA5DRid6G5r2JD1KOcNHNOcmxKV/view?usp=drivesdk
Analysis:
Toyoda Gosei remains a key beneficiary of Japan’s industrial renewal and the global rebalancing of automotive supply chains. The company, 43.6%-owned by Toyota Motor Corporation, manufactures critical components such as weatherstripping, fuel and battery modules, and chassis systems. FY25 revenue was ¥1.06 trillion, essentially stable year-on-year, while EBITDA margins held firm at 11.3% despite cost pressures from input inflation. The company’s profitability is improving thanks to higher-margin products and operational efficiency initiatives, with ROE trending upward. Dividend yield stands at 3%, underpinned by a solid balance sheet and a conservative payout ratio. Looking ahead, Toyoda Gosei is well positioned to benefit from the rise of hybrid and electric vehicles through its battery and functional components division, while its global customer base provides resilience across market cycles. The stock trades on a modest 0.86x book value and 4.1x EV/EBITDA, representing attractive value for a globally diversified Tier 1 automotive supplier.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
UFP Industries combines unmatched softwood purchasing scale, an asset-light and decentralized operating model, and deep home-center relationships to compound returns through mix-shift into higher-margin engineered products, packaging, and its patented Deckorators platform, positioning the company for durable multi-year margin and cash-flow expansion even in a weak lumber cycle.
Source: https://drive.google.com/file/d/1hPP-O2_hlGt-ZNnWXvL3srSOj5urCs1q/view?usp=drivesdk
Analysis:
UFP Industries is the largest pressure-treated lumber processor in North America and a scaled converter of softwood, serving three more-or-less equal end markets—Retail, Construction and Packaging—via a national network of more than 200 facilities. The company’s model blends massive buy-side leverage—north of 7% of North American softwood output sourced across approximately 90 mills, often under managed vendor/consigned programs—with an asset-light footprint (like Exponent, CapEx around 2.5% of sales) and a dense, near-customer plant network that lowers freight, raises turns, and enables “last mile utilization.” On the “sell side,” UFP translates raw-material scale into leadership positions across retail building products (pressure-treated lumber), residential engineered components (roof trusses, floor systems, and factory-built housing solutions), and industrial packaging (machine-built pallets and protective packaging). Culture and incentives reinforce returns—each plant is a profit center, and managers are measured on ROIC. The company has recorded over 65 consecutive years of profitability and a recent reorganization from geographic to market orientation has sharpened pricing, sourcing, and customer focus.
As UFP shares its scaled economics with customers, we see a durable mix-shift toward higher value-add as the core retail position compounds. Into attractive adjacencies. For example, in its Retail end market, UFP’s embedded scale with the home-center channel (the largest supplier of pressure-treated lumber along with meaningful single-vendor category shares at both Home Depot and Lowe’s) creates a logistics and service moat that competitors struggle to match. This customer footprint in commodity-oriented products affords the company the advantage to attack the composite decking and railing categories with its patented mineral-based composite platform, Deckorators. We view Deckorators as a meaningful multi-year profit opportunity: It offers unique product attributes and protected IP to go with UFP’s ability to route product through its existing big-box distribution versus the harder-to-replicate two-step distributor model used by incumbents Trek and Azek. This should lower delivered cost, improve availability, and accelerate placement at the point of sale. We would anticipate that competitors will forfeit share over time in this very attractive category as UFP leverages proximity, service levels, and breadth of offerings to win the aisle and the professional contractor. The same network economics support Construction and Packaging: shared plants manufacture engineered wood components and custom packaging near customers, extending lumber buying power into higher-margin, mission-critical parts of customers’ bills of materials.
Beyond the structural under-supply of U.S. housing, UFP is emerging from a cyclically low lumber environment that structurally reset gross margins versus past cycles, helped by a mix upgrade and operating discipline. The company’s balance sheet is conservative, with more than $1 billion in cash and more than $2 billion of liquidity; ROIC has structurally increased cycle to cycle and stands at 15%+ at a depressed moment in industry dynamics. We believe UFP Industries has a differentiated, durable business model attributes. Management’s laser focus on cost take out while facing a depressed industry backdrop at a time when they continue to gain share at home centers and exhibit steady expansion in engineered components and industrial packaging. In addition, the scaling of Deckorators can support multi-year margin and cash-flow compounding from here.
Check here for the latest results, quarterly call and analysts’ estimates.
Thesis:
UnitedHealth Group is a leading and diversified health insurer in the U.S. with a unique integrated model and strong long-term growth potential, despite temporary challenges from elevated medical costs.
Source: https://drive.google.com/file/d/1y5-YJAo_-hCuTKo8sgbJeMDMzYjSfUod/view?usp=drivesdk
Analysis:
Initiated: UnitedHealth Group (UNH) - UNH is the largest and most diversified health insurer in the U.S., anchored by two complementary platforms: UnitedHealthcare, which provides benefits to individuals and employers, and Optum, which offers healthcare services, data, and technology solutions. This integrated model gives UNH unmatched scale and insight into healthcare costs, enabling both efficiency and improved outcomes. Its vast provider networks, local dominance, and data-driven capabilities form durable competitive advantages and high barriers to entry. Long-term growth is supported by powerful demographics, as the aging U.S. population drives steady Medicare Advantage enrollment—a core UNH strength. While near-term elevated medical costs have pressured margins and weighed on the stock, we view these headwinds as temporary. UNH is already repricing future plans to reflect higher costs, supporting a gradual return to historical margin levels. With a recurring revenue base, diversified earnings, and financial strength, UNH offers attractive downside protection. At today’s valuation, we see a compelling opportunity to own a structural growth leader with resilient cash flows.
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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