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Artemis on Amer Sports $AS US
Thesis: Amer Sports’ iconic brands and strong performance in China position it for growth, with undervalued prospects despite macroeconomic concerns.
Extract from their Q3 letter, link here
Analysis:
We initiated a new position in Amer Sports, whose two billion-dollar brands—Arc'teryx and Salomon—are expected to drive growth in the medium term. The company floated earlier this year, but we avoided it at the time due to its high valuation and a risk to near-term earnings that materialized through its first two reports as a public company. But since then, Q2 earnings have materially beaten expectations, with 18% growth (adjusted for currency fluctuations) in a feeble macro backdrop.
More importantly, the company raised 2024 guidance at a time when most consumer companies sound nervous on weaker-than-expected consumption trends, notably in China. Amer’s Greater China division accounts for one-fifth of group revenues, and this was up an enormous 55% in the quarter, driven by improving brand awareness. The company's growth prospects aren’t reflected in its P/E multiple.
Saltlight Capital on Applovin $APP US
Thesis: AppLovin leverages its AI-driven advertising platform to redefine ad efficiency and targeting, with the potential to disrupt e-commerce and challenge the digital ad duopoly.
Extract from their Q3 letter, link here
Analysis:
AppLovin’s position as a matchmaker is precious because it obtains unique data from both sides. This data is continually ingested to train and optimize its AI model called Axon 2. This reinforces a competitive moat: more game studios, more advertisers equals data and better targeting and —as a result — more revenue.
And by improving the targeting, AppLovin doesn't just benefit individual studios. Because of the peculiar dynamics of the industry, they have the potential to grow the industry as a whole.
Like our optimal jobs analogy, optimizing targeting creates wealth for everyone. Here is why: the game industry has zero marginal costs, and advertisers can be both producers and consumers of advertising.
Digital goods inherently boast a zero marginal cost, starkly contrasting with physical goods, which invariably incur some marginal expense. In the physical world, advertisers are usually confined to a fixed media budget that needs to be allocated across TV, print and internet advertising.
As long as the revenue from an acquired user exceeds the cost of acquiring the user, the advertiser is incentivized to continue spending on user acquisition. Remember that acquiring a non-payer user can also be valuable because these eyeballs can be sold as ad inventory.
The attractive selling point for advertisers who use AppLovin’s platform is that they only pay when they achieve their targeted results. This performance-based model creates a win-win situation, incentivizing AppLovin to improve its AI algorithms to ensure better incremental targeting. We elaborated on the source of effectiveness in our 4Q23 letter, praising its ability to leverage contextual data for ad matching.
Optimist Fund on First Advantage $FA US
Thesis: First Advantage’s strategic acquisition and strong growth trajectory make it a standout investment in the background check industry.
Extract from their Q3 letter, link here
Analysis:
Lastly, in terms of notable portfolio changes in the quarter, we made a new investment in First Advantage, a leading provider of background checks. What makes First Advantage particularly interesting right now is the pending acquisition of their largest competitor that roughly doubles the size of the business. Based on our math, we think First Advantage is trading at an attractive valuation of 14x 2025 earnings per share for a business that should grow earnings over 20% annually for the foreseeable future.
Acatis on Halozyme Therapeutics $HALO US
Thesis: Halozyme revolutionizes drug delivery with its subcutaneous injection technology, reducing patient burden and healthcare costs while maintaining a highly profitable business model.
Extract from their Q3 letter, link here
Analysis:
Halozyme Therapeutics: Using Halozyme's carrier enzymes, medication can now be injected directly under the skin, instead of being gradually added to the vein as an intravenous infusion over a period of several hours. It reduces the pressure on patients and lowers healthcare costs. Pharmaceutical companies such as Roche or Pfizer are responsible for the costs and risks associated with developing the medication, while Halozyme makes its money with treatments. A good and highly-profitable business model.
Artisan on Hubbell $HUBB US
Thesis: Hubbell powers grid modernization with essential components, benefiting from green energy growth and infrastructure investments.
Extract from their Q3 letter, link here
Analysis:
Hubbell manufactures and sells electrical products for a wide range of utility, commercial, residential, and industrial applications. The US electrical grid needs substantial investment to avoid outages and support the future proliferation of green energy installations. As a leading supplier of transmission and distribution components to utilities, Hubbell, we believe, is well-positioned. We have continued to build our position based on our view that its valuation is reasonable, its profit cycle momentum is supported by the grid modernization trend, and its recent acquisition will be accretive to earnings.
Check here for the latest results, quarterly call and analysts' estimates.
Optimist Fund on Latham Group $SWIM US
Thesis: Latham’s leadership in fiberglass pools, combined with strong recovery potential and market expansion, offers a compelling asymmetric upside.
Extract from their Q3 letter, link here
Analysis:
Latham Group is the leading manufacturer of fiberglass pools in the United States, set to increase earnings materially over the next five years. Fiberglass pools currently make up ~22% of new U.S. pool starts, steadily growing from ~16% in 2019 and ~4% in 2000. Fiberglass pools are gaining market share from concrete and vinyl pools due to lower maintenance costs, faster installation, and better design and finish.
Over the next decade, U.S. fiberglass pool penetration is expected to surpass 30%, following trends observed in other markets. Latham’s growth drivers include new pool starts, increased fiberglass penetration, and the adoption of ancillary products. These levers translate into a long-term revenue growth rate in the low double digits and 15–20% EPS growth due to operating leverage.
The pool industry recently faced a downturn, with new pool starts dropping 50% as interest rates rose. Latham’s EBITDA declined by over 50%, and its share price fell from $30 to $2. However, the company is expected to recover as the market normalizes, with potential 2029 EPS of ~$2 and a price target of $50, representing a ~600% return from the current price.
Hardman Johnson on Meta $META US
Thesis: Meta's pivot to AI and improved governance sets the stage for sustained growth and enhanced profitability.
Extract from their Q3 letter, link here
Analysis:
During the quarter, we initiated a position in Meta Platforms, Inc. Management has improved investment efficiency by shifting resources from Reality Labs to broader AI initiatives, with a clearer path to profitability. This strategy drives user engagement and advertiser productivity, fueling revenue momentum and potential earnings surprises.
Additionally, Meta has taken steps to address data privacy and safety concerns, resolving governance issues that previously led to portfolio divestment in 2021. This shift toward proactive measures strengthens the company’s foundation for strong earnings growth.
TCW on Omnicom Group $OMC US
Thesis: Omnicom leverages its iconic brands and diverse services to drive innovation and global expansion, underpinned by attractive valuations.
Extract from their Q3 letter, link here
Analysis:
Omnicom Group Inc., headquartered in New York, NY, is a leading provider of data-inspired, creative marketing and sales solutions. Omnicom’s iconic agency brands are home to the industry's most innovative communications specialists, focused on driving intelligent business outcomes for their clients. The company offers a wide range of services, including advertising, strategic media planning, buying, precision marketing, retail and digital commerce, branding, experiential, public relations, healthcare marketing, and other specialty marketing services to over 5,000 clients in more than 70 countries.
At initiation, OMC had a market capitalization of $20.6 billion and met four of the five valuation factors: price-to-sales, price-to-cash-flow, price-to-earnings, and dividend yield of 2.8%. Fundamental catalysts include new products and markets, as the company continues to offer new creative solutions while expanding its geographical footprint.
Sound Shore Fund on Public Service Enterprise Group $PEG US
Thesis: PSE&G delivers steady utility returns while unlocking unappreciated value from its nuclear assets, driving substantial upside potential.
Extract from their Q3 letter, link here
Analysis:
Public Service Enterprise Group, better known as PSE&G, is a “hybrid” regulated utility and unregulated nuclear power generator. The company’s regulated utilities provide consistent returns that grow steadily with their rate bases. Additionally, the nuclear plants in its unregulated subsidiary have significant upside potential due to rising power prices.
Carbon-free and reliable electricity commands a premium, as evidenced by 20-year data center sales contracts announced by peer companies. PSE&G is in discussions to secure similar agreements. We estimate a potential 20% or more upside to earnings over the next few years.
Ace River Capital on RCI Hospitality $RICK US
Thesis: RCI Hospitality combines its nightclub monopoly model with potential digital expansion through AdmireMe, paving the way for long-term growth and shareholder value.
Extract from their Q3 letter, link here
Analysis:
The fund’s top position is RCI Hospitality (RICK). RICK is the only publicly traded owner of adult nightclubs in the US. Currently, they own 56 clubs across 13 states and an additional 13 sports-bar restaurants with the “Bombshells” concept. With few municipalities issuing new adult entertainment licenses, these businesses function as local monopolies with excellent unit economics. There are roughly 2,200 clubs across the country, and RICK estimates that 500 would meet their criteria for acquisition. These clubs have limited potential buyers, with RICK establishing themselves as the buyer of choice for any club owners looking to sell. This provides a long runway for growth.
The share price has taken a hit, with the stock currently trading at a double-digit free cash flow yield. The company has responded with aggressive share buybacks. Management has retired 401,093 shares for the year as of 8/5/24, amounting to roughly 4.5% of shares outstanding. In addition, the company announced a 16.7% dividend increase to $0.07/share on 9/3/24.
Additionally, the launch of AdmireMe, a competitor to OnlyFans, is expected to create new revenue streams. RCI is strategically positioned for growth in both physical and digital markets.
Check here for the latest results, quarterly call and analysts' estimates.
Heartland Advisors on Robert Half $RHI US
Thesis: Robert Half’s cyclical downturn creates an opportunity to invest in a cash-rich, resilient staffing leader with proven recovery potential.
Extract from their Q3 letter, link here
Analysis:
Robert Half is a leading temporary staffing and consulting firm catering to small and medium-sized businesses. With a history of resilience through economic cycles, RHI exemplifies quality value investing. The company is currently underearning due to a cyclical downturn, with temporary staffing revenues declining for seven consecutive quarters. However, RHI enjoys industry-leading profitability, no debt, and $500M in cash on its balance sheet.
Despite market headwinds, RHI’s strong cash flow generation, combined with dividend growth and share buybacks, positions it to outperform as the labor market stabilizes.
Saltlight Capital on Roblox $RBLX US
Thesis: Roblox redefines gaming by empowering developers and creators with a vast audience and cross-platform accessibility, poised to unlock new revenue streams through advertising while reshaping the industry.
Extract from their Q3 letter, link here
Analysis:
Roblox has firmly established itself as the dominant player in user-generated gaming within Western markets. Meanwhile, Tencent has developed a similar ecosystem in China with its WeChat Mini-games platform. Owning both gives us a unique vantage point to assess the evolving landscape of user-generated gaming platforms globally.
At its recent investor day, Roblox set an ambitious target of reaching 10% of gaming content revenue, of which it estimates the total pool is around $180bn (for context, in the last twelve months, it made $4bn in bookings).
Roblox has spent the last three years heavily investing in re-engineering its game platform to be high fidelity, performant, and widely available across platforms. This has improved the quality of games, attracting additional engagement—particularly from older users. Its cross-platform accessibility offers developers instant access to 79 million daily active users, dramatically shifting studio economics.
The next opportunity for Roblox is to monetize its vast user base with advertising. For Roblox, the future growth in this segment isn't just about more games—it's about a fundamental shift in how games are created, distributed, and experienced.
Ave Maria Funds on Simply Good Foods $SMPL US
Thesis: Simply Good Foods leverages its asset-light model and acquisitions to dominate the growing nutritional snacking market.
Extract from their Q3 letter, link here
Analysis:
The Simply Good Foods Company is a fast-growing, asset-light consumer packaged goods company focusing on nutritional snacks. It began with the acquisition of the Atkins brand in 2016 and expanded into protein bars, cookies, and shakes with its acquisitions of Quest (2019) for $1B and OWYN (2024) for $280M. OWYN specializes in plant-based, clean-label protein shakes.
Simply Good Foods continues to expand its market share through strategic acquisitions and a growing product portfolio, positioning itself as a leader in the healthy snacking industry.
Artemis on Smurfit Westrock $SW US
Thesis: Smurfit Westrock's merger unlocks efficiencies, with leadership poised to drive improved returns in the dominant global packaging industry.
Extract from their Q3 letter, link here
Analysis:
This global packaging company was formed through the merger of Irish-based Smurfit Kappa and US-based WestRock. Following the merger, its primary listing moved to New York, resulting in its exit from the UK index and forced selling by index trackers. However, it retains a secondary listing in London.
The merger is expected to be value accretive. A change in management at the two largest players in the packaging market (holding roughly 60% market share) is anticipated to reverse the previous strategy of sacrificing price for market share, resulting in sharply improved returns across the industry.
Artisan on Snap-on $SNA US
Thesis: Snap-on thrives with its unique van distribution model and robust financials, set to capitalize on growing automotive repair demand and complex tool markets.
Extract from their Q3 letter, link here
Analysis:
We added Snap-on (SNA) to the portfolio this quarter. SNA is a unique and powerful business. It designs, manufactures, and sells tools that are used in critical applications. Its largest business is selling tools through its franchised van network to auto mechanics. The distribution on one end and the customer on the other bookend the unique economic model.
SNA stays close to mechanics through the van network, which helps it continually develop new tools for an increasingly complex and variable car park comprised of internal combustion cars, electric vehicles, and hybrids. This dynamic creates long-term auto repair demand and supports its robust earnings power.
Despite a recent earnings slowdown, Snap-on operates with strong financials, including consistent operating margins of around 20% and a ROE in the high teens to twenties. We believe Snap-on is well-positioned for continued growth in the automotive repair sector.
Check here for the latest results, quarterly call and analysts' estimates.
Artisan on Tetra Tech $TTEK US
Thesis: Tetra Tech leads sustainable infrastructure growth, capitalizing on water regulation reforms and global investment tailwinds.
Extract from their Q3 letter, link here
Analysis:
Tetra Tech is a leader in the water, renewable energy, and sustainable infrastructure end markets. The company provides exposure to an ongoing sustainability trend and funding renaissance around water. For example, the Environmental Protection Agency (EPA) recently finalized the National Primary Drinking Water Regulation, which states that public water systems must monitor and limit per- and polyfluoroalkyl substances (PFAS) in drinking water. Coupled with an experienced management team, established client relationships, and key capabilities, we believe Tetra Tech should be a long-term beneficiary of the transformational federal funding and secular tailwinds of global investment into water infrastructure.
TCW on Teva Pharmaceutical $TEVA US
Thesis: Teva’s strategic refocus on biosimilars under new leadership positions it for innovation-led growth and market leadership.
Extract from their Q3 letter, link here
Analysis:
Teva Pharmaceutical Industries Ltd., headquartered in Tel Aviv, Israel, with its U.S. headquarters in Parsippany, NJ, focuses on the development, production, and sale of pharmaceuticals. The company specializes in generics, innovative proprietary products, and over-the-counter (OTC) medicine. At initiation, Teva had a capitalization of $17.1 billion and met four of the five valuation factors: price-to-sales, price-to-cash-flow, price-to-earnings, and price-to-book. Fundamental catalysts include new management and new products/markets. Richard Francis joined Teva as President and CEO in January 2023. With over 25 years of experience, including leadership roles at Novartis, Sandoz AG, and Purespring Therapeutics, he is committed to refocusing the company on biosimilar products and expanding Teva’s innovative pipeline.
Cooper Investors on TKO $TKO US
Thesis: TKO Group leverages its premium events and strategic partnerships to unlock growth, bridging untapped sponsorships, media rights, and content monetization.
Extract from their Q3 letter, link here
Analysis:
TKO is trading at about a 5% FCF yield and is a business in which we have high conviction that it can grow sustainably at a mid-high single-digit rate. Media rights and sponsorships, including renewals of UFC and WWE premium events, represent significant opportunities. Moreover, TKO’s live events and site fees generate additional revenue, with only a fraction of events currently receiving site fees.
TKO is already producing content with an EBITDA margin of 40%. Beyond its current growth, TKO’s strategic partnerships, including a Netflix collaboration, are expected to further enhance content monetization and drive engagement. We estimate a potential upside of 50% to Free Cash Flow through these initiatives.
Artisan on Trip.com $TCOM US
Thesis: Trip.com leverages its strengthened domestic position to drive growth as China's outbound travel resumes, with potential for global market expansion.
Extract from their Q3 letter, link here
Analysis:
Trip.com is a market leader in the online travel business in China with a portfolio of online travel brands, including Ctrip, Qunar, Trip.com, and Skyscanner. The travel segment in China has historically been an e-commerce laggard versus the rest of the world, but the pandemic acted as a market share accelerant as many offline travel companies were shut down. We believe the company’s strengthened domestic positioning will support strong growth as China outbound travel returns to normal levels. This domestic strength will enable it to further invest and accelerate global share gains, beginning in greater Asia, as it invests in marketing.
Artemis on Ventas $VTR US
Thesis: Ventas capitalizes on demographic trends and limited supply in senior housing, positioning itself for growth in a highly favorable market environment.
Extract from their Q3 letter, link here
Analysis:
Ventas, a US diversified healthcare REIT, operates in a favorable environment. The REIT benefits from limited supply in senior housing, coinciding with favorable demographics as the 85+ age cohort outpaces any other demographic in the US. Additionally, costs appear to be easing just as utilization and pricing improve.
Ventas is well-positioned to capitalize on these demographic shifts, driving long-term growth in a market with strong demand and limited competition.
Check here for the latest results, quarterly call and analysts' estimates.
Artemis on Vertiv $VRT US
Thesis: Vertiv addresses critical AI-driven data center cooling needs, benefiting from robust demand and capitalizing on its industrial expertise at an attractive valuation.
Extract from their Q3 letter, link here
Analysis:
Vertiv is a US-based manufacturer of power and heat systems. Vertiv’s sales are heavily skewed to data centers and benefit strongly from the rise of AI. This is because it offers a solution to a very complex problem—how to cool down data centers when AI-driven components are taking off. The short- and medium-term sales are very well underpinned by their customers’ very public capex plans, and we took advantage of a reversal in sentiment to buy into what we think is a high-quality industrial, at a very reasonable price.
TCW on Western Alliance Bancorp $WAL US
Thesis: Western Alliance's proactive management and strong deposit growth position it for resilience and outperformance in the evolving banking landscape.
Extract from their Q3 letter, link here
Analysis:
Western Alliance Bancorp, headquartered in Phoenix, AZ, is a commercial and retail bank with 37 branches across six states, including Arizona, California, and Nevada. At initiation, the stock had a $7.4 billion market capitalization and met four valuation factors: price-to-sales, price-to-earnings, price-to-book, and higher-than-market yield. A key catalyst is restructuring, with management preparing for Category IV bank status years in advance of surpassing the $100 billion asset threshold.
Unlike peers such as SVB Financial, Signature Bank, and First Republic Bank, which faltered in 2023, WAL has demonstrated proactive risk management. This includes maintaining a capital floor of 11% CET1 and fostering steady deposit growth of 30.8% in the past year, even amid volatility. The company is poised for significant stock price improvement over the next 1–2 years.
Artisan on Galderma $GALD SW
Thesis: Galderma leverages its leadership in dermatology and aesthetics, poised for growth with innovative treatments and high-margin opportunities.
Extract from their Q3 letter, link here
Analysis:
Galderma is a science-based dermatology business. The company is a leader in injectable aesthetics (neuromodulators, fillers, and biostimulators), owns the Cetaphil skincare franchise (a brand that will do more than $1 billion in revenue this year), and has a leading portfolio of drugs for acne/rosacea. We expect the global dermatology market to continue to grow at attractive levels, and the company to outgrow the overall market by leveraging its scale, breadth, and innovation in aesthetics while meaningfully expanding its margin profile.
We added to the position due to increasing conviction, including the approval of Nemluvio, an atopic dermatitis biologic that treats prurigo nodularis, a chronic skin disease. We estimate this could be a $2 billion opportunity. Meanwhile, margins should improve now that clinical trials are finished.
Artemis on Sandoz $SDZ SW
Thesis: Sandoz is primed for growth with its biosimilar portfolio, capitalizing on expiring biologic exclusivity and commanding premium pricing in a low-competition market.
Extract from their Q3 letter, link here
Analysis:
Sandoz, a biosimilar manufacturer spun out of Novartis in 2023, is poised to benefit from a wave of biologics losing exclusivity in the coming years. Sandoz is well-positioned with a growing pipeline of biosimilars. These generic biologic drugs, though more challenging to produce, face limited competition and command better pricing.
Artisan on Sandoz $SDZ SW
Thesis: Sandoz leads the biosimilar revolution, leveraging its industry-first innovations to drive high-margin growth across global markets.
Extract from their Q3 letter, link here
Analysis:
Sandoz is a global leader in generics and biosimilars, serving more than 100 markets and providing off-patent medication to more than 500 million people. The company was the first to introduce oral penicillin (in 1951), the first to introduce a biosimilar (human growth hormone), and is a key player in the antibiotics market worldwide. We believe that Sandoz will be a key beneficiary of overall industry growth in biosimilars. Not only will it improve the company’s growth profile, but it will also drive improving profitability given its higher margin profile.
Check here for the latest results, quarterly call and analysts' estimates.
Desert Lion on Calgro $CGR SJ
Thesis: Calgro's deep discount valuation, efficient capital management, and strong housing demand position it for multi-year growth.
Extract from their Q3 letter, link here
Analysis:
At a price of R6.50, Calgro is trading at a 3x PE multiple and less than 0.5x realizable book value. Thanks to shrewd capital allocation, cost management, and margin expansion, EPS is growing at high double digits. With solid demand due to an affordable housing backlog, improved economic outlook, and a decreasing interest rate cycle, the outlook is decidedly positive. We believe Calgro can maintain this momentum for several years to come.
Artemis on Beazley $BEZ LN
Thesis: Beazley offers a rare opportunity at a multi-year low valuation, backed by strong solvency and expertise in high-growth specialist insurance markets.
Extract from their Q3 letter, link here
Analysis:
Beazley is a UK-listed specialist insurer. The company is well-capitalized with strong solvency. It is trading—on 1.3x book value—at a multi-year low. For a company with a robust track record in a range of specialist underwriting markets, including cybersecurity and natural catastrophe, we believe this to be an attractive entry point.
Heartland Advisors on Smith and Nephew $SN/ LN
Thesis: Smith & Nephew’s strategic turnaround offers compelling upside potential as operational efficiencies drive profitability and market competitiveness.
Extract from their Q3 letter, link here
Analysis:
Smith and Nephew plc (SNN) is a leading medical device company specializing in advanced wound care, sports medicine, and orthopedics. Over the past two years, SNN has been implementing a self-help playbook to address inefficiencies, particularly in its orthopedics group, which trails industry peers. Efforts include improving asset utilization, capital allocation, and operational productivity.
Progress is evident as orthopedic knee and hip product shipments reached target levels, though challenges remain in improving manufacturing efficiency. At 11x EV/EBITDA, SNN trades at a discount to peers, with depressed profit margins due to orthopedic inefficiencies. Continued improvement could yield a virtuous cycle of margin expansion and multiple re-rating.
Longleaf on Katitas $8919 JP
Thesis: Katitas combines rapid inventory turnover and a dominant market position to capture growth in Japan’s undervalued housing market.
Extract from their Q3 letter, link here
Analysis:
Katitas is the largest detached house renovator and reseller in regional Japan, with over 16x the scale of its nearest competitor. Renovated houses are approximately 50% cheaper than new ones in similar areas, and monthly mortgage payments are typically lower than rent for comparable properties, providing an attractive value proposition. The company’s inventory turns over rapidly (twice annually), achieving 20%+ ROA and ROE with minimal leverage.
Despite its dominant market position, Katitas captures only 4.5% of the total addressable market (TAM), offering substantial growth potential. Katitas has grown at a 10% compound annual growth rate (CAGR) in a stagnant Japanese housing market, historically commanding premium valuations. Recent derating due to supply and tax issues provides an opportunity to buy at a low-teens P/E multiple.
Cooper Investors on Eurofins $ERF FP
Thesis: Eurofins leverages its industry-leading lab network and long-term investments to drive organic growth and high margins, transforming into a mature market leader post-COVID.
Extract from their Q3 letter, link here
Analysis:
Eurofins is a global leader in lab testing. Its key end markets are food, pharmaceuticals, and environmental testing. Customers rely on Eurofins for fast turnaround times, quality analysis, and high service levels. The average cost to a client for product or sample testing is very small, while the benefit they get is significant—it significantly lowers customer reputational and financial risks (e.g., through reducing the risk of a food product recall).
CEO Gilles Martin has methodically built out an optimized lab network across North America and Europe through organic and acquisition-related investment. These investments have created long-dated competitive advantages and open the opportunity for further significant organic growth at highly attractive margins.
Eurofins’ progress on harvesting the value in their network has been obscured by COVID, which turned from a significant tailwind to a headwind for Eurofins in 2022 and 2023. However, recent half-year results showed strong progress on its transition to a mature market leader with solid 6% organic sales growth flowing through to 28% earnings per share growth.
Check here for the latest results, quarterly call and analysts' estimates.
Ave Maria Funds on Hermes International $RMS FP
Thesis: Hermès’ scarcity-driven strategy ensures resilient demand and long-term brand equity, making it a standout in the luxury sector.
Extract from their Q3 letter, link here
Analysis:
Founded in 1837, Hermès is a leading producer of luxury goods, with iconic Birkin and Kelly handbags. Hermès prices its bags below market-clearing levels, creating a supply-demand mismatch that elevates brand desirability and status. This scarcity-driven strategy aligns Hermès with companies like Rolex and Ferrari, whose recession-resistant sales benefit from brand exclusivity.
Hermès’ stock recently declined in sympathy with revenue declines in other luxury brands, presenting an attractive entry point at a premium valuation supported by its enduring demand dynamics.
Check here for the latest results, quarterly call and analysts' estimates.
Hardman Johnson on Nexans $NEX FP
Thesis: Nexans capitalizes on electrification and grid modernization trends, leveraging its high-voltage cable expertise for multi-year growth.
Extract from their Q3 letter, link here
Analysis:
Nexans SA is a French cable maker poised to benefit from electrification trends, particularly renewable energy transitions and grid fortification. Nexans is among the few major high-voltage cable makers globally with integrated installation capabilities. The company has a record backlog and visibility into multi-year margin expansion due to its focus on higher-margin, high-voltage orders. Additionally, Nexans is managing its portfolio by divesting non-core industrial cable segments, with proceeds set to drive future growth.
Check here for the latest results, quarterly call and analysts' estimates.
Artisan on Novonesis $NSISB DC
Thesis: Novonesis transforms industries with sustainable biosolutions, leveraging innovation and cost synergies for long-term growth.
Extract from their Q3 letter, link here
Analysis:
Novonesis was born out of the merger between Novozymes and Chr Hansen, creating a global biosolutions powerhouse that aims to transform consumer products and make industrial and agricultural processes more sustainable and efficient. The company has an unrivaled portfolio breadth and an industry-leading R&D spend that should support continued innovation.
We view the company as a sustainability enabler, given that most of its products either directly support healthy lives and well-being or are substitutes for traditional petrochemical-based ingredients. The company is expected to achieve accelerating growth due to successful innovations and better commercialization execution. Additionally, conservative cost synergy expectations from the merger imply potential margin upside.
Check here for the latest results, quarterly call and analysts' estimates.
Atai Capital Management on Haivision Systems $HAI CN
Thesis: Haivision’s pivot to high-growth industries and undervalued multiples set it up for scalable profitability and robust returns.
Extract from their Q3 letter, link here
Analysis:
Haivision expects to return to growth in 2025, guiding to $140M+ in revenue. Growth drivers include a pivot from integrator to solutions provider, expansion of its 5G transmitter business, and a long-term rental business that grew 76% y/y. Key partnerships, including a consortium with Airbus to develop secure communication technologies (e.g., private 5G networks), also position the company for future growth.
If the company achieves high single-digit growth with 18% EBITDA margins by 2026, it would imply ~$27M EBITDA and ~$18M UFCF. Haivision is trading at less than 5x EBITDA and 7.5x EV/UFCF, making it an undervalued opportunity in high-growth markets.
Check here for the latest results, quarterly call and analysts' estimates.
AVI on D'Ieteren $DIE BB
Thesis: D’Ieteren combines an extraordinary dividend yield with an attractive valuation, supported by robust cash flows and stable long-term family governance.
Extract from their Q3 letter, link here
Analysis:
D’Ieteren announced its intention to pay a special dividend of €74 per share, equating to a yield of 39%. The dividend will be funded via a €3.8bn dividend recapitalization at Belron and cash on hand. This is a highly positive development, allowing shareholders to receive a significant return while maintaining a robust balance sheet.
Concerns over governance failures and increased debt at Belron have emerged, but we view these criticisms as overblown. The company’s stable family ownership ensures long-term sustainability, and its cash-generating capacity justifies the increased leverage. On an ex-dividend basis, D’Ieteren trades at an implied 54% discount to NAV, representing a highly attractive valuation.
Check here for the latest results, quarterly call and analysts' estimates.
Here are some additional Q3 letters :
Everything you read here is for information purposes only and is not an investment recommendation.