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Hotchkis & Wiley on APA Corp $APA US
Thesis: APA’s strategic focus on high-return assets and post-acquisition efficiencies positions it for a cash flow rebound
Extract from their Q3 letter, link here
Analysis:
"APA Corp. (APA) is an independent E&P company operating offshore in the North Sea, onshore in Egypt, and in the Midland and Delaware basins in the Permian. Recent exploration success in Suriname and Egypt has allowed APA to de-emphasize spending on lower-returning assets in the North Sea. APA’s performance continued to be pressured over the quarter due to the downturn in energy prices. In addition, free cash flow was impacted by spending related to the recent acquisition of Callon Petroleum. We expect free cash flow to improve as capital expenditures normalize following the integration of Callon Petroleum."
Check here for the latest results, quarterly call and analysts' estimates.
Hayden Capital on Applovin $APP US
Thesis: Applovin’s future hinges on executing its eCommerce ad strategy and capturing significant market share
Extract from their Q3 letter, link here
Analysis:
"Well, the driver of future returns have shifted from the gaming ad network, to now getting the eCommerce extension right. Essentially, it feels like the gaming ad business’s growth potential is fully priced-in. Future returns require a successful eCommerce ad product, and gaining material market share in the next few years."
Check here for the latest results, quarterly call and analysts' estimates.
Loomis Sayles on Boeing $BA US
Thesis: Boeing’s global dominance in aircraft manufacturing comes at a significant discount to intrinsic value
Extract from their Q3 letter, link here
Analysis:
"We believe Boeing is one of only two companies globally which possess the requisite expertise and scale to profitably serve the global demand for commercial aircraft. As we do with any regulatory or corporate development, we will continue to monitor and assess any potential structural impact on our investment thesis for Boeing and on the company’s market share or growth. However, we believe the current market price embeds expectations for aircraft deliveries, margins, and free cash flow growth that are well below our long-term assumptions. As a result, we believe the company is selling at a significant discount to our estimate of intrinsic value and offers a compelling reward-to-risk opportunity."
Check here for the latest results, quarterly call and analysts' estimates.
Merion Road on Curbline Properties $CURB US
Thesis: Curbline Properties combines a strong leasing portfolio and undervaluation, positioning it for significant growth in suburban real estate
Extract from their Q3 letter, link here
Analysis:
"CURB is the recent “good co” spin-off from the shopping center SITE Centers. It consists of a portfolio of convenience real estate in suburban markets with a geographic concentration in high-growth areas like the Southeast and Southwest. Over 50% of leases serve restaurants, with the balance taken by businesses like medical offices, beer & wine retailers, and fitness centers. Unlike office or malls, these properties are not being obviated by scary trends like work from home or online shopping. 96% of properties are currently leased and leasing rates have been strong with average new spreads of +28% and renewal spreads of +8%. The portfolio requires relatively low capital investments given their standardized site plans.
Since 2022, CURB has purchased almost 1.0mm of gross leasable area (GLA) for nearly $700mm imputing an average price of $710/GLA. This 1.0m in GLA represents 37% of the entire portfolio today. CURB was spun with over $600mm of cash and no debt, giving it plenty of firepower to continue rolling up the industry. Management believes that this is an active submarket with most buyers being private entities, positioning CURB to be the preeminent public acquiror.
I think it is fair to assume that valuation levels today should be higher than properties acquired over the past couple years given the improved economic outlook and where we are at in the interest rate cycle. Yet, when CURB became available for trading in the when-issued market, it was valued at ~$20/sh which implied just $554/GLA. Given the differential between where the public market was valuing the company and the prices they paid for the same assets, along with an attractive free cash flow yield, I decided to build our position."
Check here for the latest results, quarterly call and analysts' estimates.
Hotchkis & Wiley on General Motors $GM US
Thesis: GM’s strong market position, attractive valuation, and commitment to shareholder returns make it a compelling buy
Extract from their Q3 letter, link here
Analysis:
"General Motors Company (GM) is one of the world’s largest manufacturers of passenger vehicles. GM reported a strong Q2; however, management provided a cautious outlook for the second half of 2024. Comments from GM mirrored those of other OEMs and auto suppliers, leading investors to believe the automotive cycle has peaked. We believe this is an overreaction, and we continue to view GM as an attractive investment. We like GM for many reasons. First, we believe GM has leading market positions in its main business segments. Second, the valuation is extremely attractive. Finally, it is a strong free cash flow generator, and the management team is committed to repurchasing their undervalued shares."
Check here for the latest results, quarterly call and analysts' estimates.
Loomis Sayles on Alphabet $GOOGL US
Thesis: Alphabet’s unrivaled dominance in digital advertising positions it to thrive in the shift from traditional media
Extract from their Q3 letter, link here
Analysis:
"We believe Google’s dominance in the online search and advertising market is a function of its superior product offerings and strong and sustainable competitive advantages—not the product of anti-competitive business practices. In Europe, where Google was required to provide users with a choice of browsers on its Android devices, the company maintains over 90% market share—suggesting the company’s dominance is a function of consumer preference and not its default positioning. Even on desktop devices pre-installed with Microsoft’s Edge browser, the company captures over 80% of search activity. Further, if Google is enjoined from paying companies to secure default positioning, it may realize savings from the more than $20 billion it currently spends annually on customer acquisition costs.
We believe Alphabet remains well positioned to benefit from the secular shift of the approximately $1.85 trillion in global annual advertising and marketing expenditures outside of China to online and mobile advertising from traditional advertising media. We believe market expectations underestimate Alphabet’s long-term sustainable growth rate. Therefore, we believe the company is selling at a significant discount to our estimate of intrinsic value and offers a compelling reward-to-risk opportunity."
Check here for the latest results, quarterly call and analysts' estimates.
Lindsell Train on Intuit $INTU US
Thesis: Intuit’s AI-driven innovations enhance productivity, customer satisfaction, and pave the way for strong revenue growth
Extract from their Q3 letter, link here
Analysis:
"Intuit Assist, the company’s self-described ‘Generative AI-powered financial assistant,’ was only first introduced last year, but already its influence is clearly being felt across the board. 80% of customers who have used it resolve their issues in under five minutes, without the need for human assistance. It has increased the speed at which QuickBooks Online (QBO) customers get paid by 45%, and more than halved the amount of time taken to auto-generate bills directly from PDFs. More than 3.1 billion emails with AI-generated content have now been sent through Mailchimp to date. And clearly potential customers want access to these capabilities: the company has seen a 9% uplift in onboarding flow completion rates for QuickBooks Online trialers, and a 2% improvement in conversion for TurboTax’s Tax Hub.
The key takeaway here is that Intuit has been able to deliver these productivity improvements not because they necessarily have the best in-house software developers, but because they have access to a phenomenal treasure trove of underlying consumer data via their accounting software and tax filing pillars: 95 petabytes of data, containing 580,000 financial attributes per SMB and 60,000 tax and financial attributes per consumer, collectively enabling 60 billion machine learning predictions per day. Although it’s difficult to parse out the exact AI-related revenue contribution at this stage, there’s no doubt that they’re improving customer satisfaction and engagement, and hence the implications for future revenue growth are undoubtedly positive."
Check here for the latest results, quarterly call and analysts' estimates.
Loomis Sayles on MercadoLibre $MELI US
Thesis: MercadoLibre’s focus on ecosystem growth and profitability offers a discounted opportunity for long-term investors
Extract from their Q3 letter, link here
Analysis:
"We believe MercadoLibre continues to have an attractive financial model which has been impacted over the past few years by an elevated investment cycle intended to strengthen the company’s ecosystem and long-term competitive positioning, which is now beginning to ease. While reported operating margins of 14.3% declined year-over-year, they have improved materially over the past few years from the low-to-mid single digits to the mid-teens.
Management has demonstrated its long-term focus and commitment to investing everywhere needed to add value for users, including greater selection, frictionless payment options, and reduced cost and increased speed of delivery. The company also expects to increase its investments in several areas, including first-party sales, an improved loyalty program, and advertising technology. While its elevated investments over the past few years have pressured near-term profits, management remains focused on balancing these investments to further improve user experience and extend the company’s leadership in e-commerce and payments while maintaining a sustainable and profitable financial model. We believe the current market price embeds expectations for revenue and cash flow growth that are well below our long-term assumptions. As a result, we believe the shares trade at a significant discount to our estimate of intrinsic value and represent a compelling reward-to-risk opportunity."
Check here for the latest results, quarterly call and analysts' estimates.
Loomis Sayles on Meta $META US
Thesis: Meta’s unmatched scale and advertising potential create a long-term growth story at a discounted valuation
Extract from their Q3 letter, link here
Analysis:
"We believe Meta is a high-quality company, benefiting from the secular shift from traditional advertising to online advertising and positioned for strong and sustainable growth over our investment time horizon. We believe Meta benefits from the competitive advantages of its network, scale, strong brands, platform strategy, and a targeting advantage. With 3.27 billion daily users and over 200 million businesses worldwide using its family of apps, the scale and reach of Meta’s network is unrivaled. When excluding China, where Meta is not currently operating, we estimate that the unique users of the company’s Family of Apps exceed 80% of the world’s internet population.
We expect that businesses will continue to allocate an increasing proportion of their advertising spending online, and Meta remains one of very few platforms where advertisers can reach consumers at such scale in such a targeted and effective fashion. We believe Meta’s brands, network, and targeting advantage position the company to take increasing share of the industry’s profit pool and grow the company’s market share from approximately 7% currently to over 10% of the estimated over $1.85 trillion total global advertising market over our investment time horizon. We also believe that the expectations embedded in Meta’s current share price show a lack of appreciation for the company’s growth opportunities and the sustainability of its business model. We believe the consensus expectations and current market price reflect assumptions for free cash flow growth that are well below our long-term expectations of strong double-digit cash flow growth. As a result, we believe the shares trade at a significant discount to our estimate of intrinsic value, creating a compelling reward-to-risk opportunity."
Check here for the latest results, quarterly call and analysts' estimates.
Crossroads Capital on Magnite $MGNI US
Thesis: Magnite’s Netflix partnership and CTV dominance position it to lead programmatic advertising and deliver outsized returns
Extract from their Q3 letter, link here
Analysis:
"Magnite is the largest independent programmatic Sell-Side Platform (SSP), an entity that provides technology solutions to automate the purchase and sale of digital advertising inventory on behalf of publishers. The company arose from the merger of The Rubicon Project and Telaria in 2020. It then acquired a CTV competitor SpotX in early 2021 to become the third-biggest CTV SSP, after Comcast’s Freewheel and the Darth Vader of the AdTech world, Google. Critically, Magnite stands today as the key enabler of Connected TV advertising for streaming platforms, an increasingly crucial revenue source for media parent companies around the world.
The company’s contract win with Netflix is proof of its differentiation in the space, and was something we expected after hearing back in early 2023 that Microsoft’s Xandr ad tech stack wasn’t capable of true CTV ad delivery. The company has impressive incremental EBITDA margins (75%+), and after spending the last few years consolidating its acquisitions, is in a place to capitalize on growth opportunities, generating cash flow far in excess of current market expectations.
Nonetheless, the company trades on a single-digit multiple of next year’s estimated EBITDA, with minimal credit applied to Netflix onboarding programmatic advertising. That’s strange, if only because the Netflix ad tier is likely to deliver $6 billion in ad spend next year, and half of that may go through Magnite with low-single-digit take rates (3.5 to 5.0%). Should this occur with incremental margins they have shown in the past, the company could see EBITDA rise by over $70 million next year, implying 30%+ growth from Netflix alone. Better yet, with the success of Netflix’s programmatic endeavors, other media customers may accelerate adoption of the same type of programmatic infrastructure/services with MGNI that were previously just tertiary monetization activities."
Check here for the latest results, quarterly call and analysts' estimates.
Broyhill AM on Nice Ltd $NICE US
Thesis: Nice Ltd.’s AI-driven solutions strengthen its market position in cloud-based customer engagement software
Extract from their Q3 letter, link here
Analysis:
"Nice Ltd. develops software to run customer contact centers. The company’s cloud-based software enables the implementation of greater functionality versus its on-premise competitors. Many of these on-premise competitors, which do not offer cloud-based products, have stopped rolling out new features. This has prompted their customers to switch to companies like Nice where they have wider access to new developments. Artificial intelligence is a large part of this shift and of our differentiated view. The market views AI as a threat to Nice’s core operations; we view it as an enabler of additional revenue streams with improved economics."
Check here for the latest results, quarterly call and analysts' estimates.
Artisan Partners on Nike $NKE US
Thesis: Nike’s innovation pipeline and restructuring efforts could unlock significant upside potential for investors
Extract from their Q3 letter, link here
Analysis:
"Nike, the global leader in athletic footwear and apparel, generates revenue from a balanced mix of wholesale and direct-to-consumer channels. The company’s historical success can be attributed to its proprietary R&D, athlete endorsements, marketing strategies, and strong bargaining power against suppliers. After a period of challenging results, we believe the company is entering an interesting inflection period. During the COVID-19 environment, the company thrived given its strategic focus on the direct-to-consumer channel.
However, the company has struggled since the pandemic due to neglected relationships with distribution partners and a lack of focus on product innovation. Despite recent disappointing results, we believe Nike's competitive advantages remain intact. The company’s innovation pipeline is gaining momentum, coinciding with improving product lifecycle management and organizational restructuring. We see significant upside potential at current valuation levels if Nike can reignite brand heat and stimulate consumer demand for its new products, but it will remain a Garden℠ position until our thesis begins to show tangible evidence."
Check here for the latest results, quarterly call and analysts' estimates.
Horos AM on Noah Holdings $NOAH US
Thesis: Noah’s pivot to shareholder-friendly policies and global expansion marks a turning point for its undervalued stock
Extract from their Q3 letter, link here
Analysis:
"Noah is a firm that provides wealth management and asset management services for high-net-worth Chinese clients. The Chinese economic crisis, along with the losses associated with a host of structured financial products offered by the shadow banking sector (such as Wealth Management Products, or WMPs), has led to a much more complex regulatory environment in the industry, as well as greater caution among Noah’s clients.
To counteract this challenging situation, the company has reduced its commercial activity in China and made significant efforts to expand in Hong Kong (as well as in the United States and Singapore), where it also serves high-net-worth Chinese-speaking clients.
Historically, the company’s founding and management team, despite holding more than 35% of the shares, had not been known for a shareholder-friendly capital allocation policy. However, the significant weakness in its stock price in recent times has led to a major shift in their capital allocation approach. Specifically, in 2023 they announced a change in their dividend policy, committing to distribute at least 35% of the annual profit generated. Additionally, they expressed a strong willingness to issue special dividends when there was excess cash. As evidence of this, in 2024 Noah distributed 20% of its market capitalization as a dividend. This major shift, combined with a significant undervaluation of its businesses, led us to initiate a position in the company."
Check here for the latest results, quarterly call and analysts' estimates.
Artisan Partners on Oracle $ORCL US
Thesis: Oracle’s cloud-driven growth strategy and ambitious revenue targets make it a compelling tech investment
Extract from their Q3 letter, link here
Analysis:
"Notable adds in the quarter included Oracle and Nike. Oracle has become a leading global enterprise software provider with more than 400,000 customers and products utilized by 100% of the Fortune 100. We believe the company is entering an interesting profit cycle as its faster-growing business units become a larger percentage of the revenue mix. Most notably, Oracle Cloud Infrastructure (OCI) has gone through a significant product upgrade cycle that will enable it to be the primary incremental top-line growth driver. The company is winning new accounts due to its attractive pricing, flexibility, and expanding geographic availability.
Also, within its SaaS segment, we believe the company will benefit from the secular trend to cloud computing. Oracle experiences a significant profit uplift as it moves its on-premise database business to the cloud (through any cloud provider). As this revenue is migrated, it will become highly accretive to profit margins. The company recently surprised investors by announcing a 2029 revenue target of $104 billion, which implies an acceleration in annual revenue growth to ~16% from the current ~9%-10% levels. Given an attractive valuation and what we feel is a long-term visible path of revenue acceleration, we added to the position."
Check here for the latest results, quarterly call and analysts' estimates.
Pernas Research on Paysafe $PSFE US
Thesis: Paysafe leverages its expertise in online gaming payments to capitalize on the rapidly growing U.S. gambling market.
Extract from their Q3 letter, link here
Analysis:
"Paysafe’s revenue is ~evenly divided between B2B payment processing and B2C digital wallets. Within the B2B segment, around 30-35% is attributed to online gambling and overall revenue is >50% U.S. attribution—a rapidly expanding sector. The U.S. online gambling market is projected to double by 2029, fueled by increasing legalization, states seeking additional revenue, and technological advancements like in-game betting. (25 states have legalized some form of online gambling in the past five years, bringing the total to 30).
Paysafe’s multi-decade experience in processing payments for online gaming has established a significant advantage in managing high-risk areas (KYC, AML, and compliance). We think the company is undervalued after ~30% recent post-earnings sell-off attributed to a slight EPS miss due to investments made in expanding sales personnel."
Check here for the latest results, quarterly call and analysts' estimates.
Macquarie on Sunrun $RUN US
Thesis: Sunrun’s shift from rapid growth to cash flow generation positions it for long-term value creation in the solar market.
Extract from their Q3 letter, link here
Analysis:
"Sunrun Inc., a residential solar installer, was among the Fund’s largest contributors to performance for the quarter. Sunrun’s performance, particularly during a quarter marked by rate cuts, underscores the intricate relationship between interest rates and the residential solar sector. Lower interest rates generally reduce the cost of financing for both companies and consumers, making solar installations more affordable and attractive.
This affordability can lead to increased demand for residential solar solutions, boosting the sales and revenue for companies like Sunrun. Moreover, Sunrun’s ability to generate free cash flow during this period is significant, as it provides the company with several strategic options to enhance shareholder returns. This surplus cash can be used to reinvest in the business, pay dividends, buy back shares, or reduce debt, which in turn can strengthen the company’s balance sheet and contribute to a healthier financial standing. By focusing on generating free cash flow and potentially paying down debt, Sunrun is signaling a strategic shift from prioritizing rapid growth to emphasizing value creation, a move that could attract a different set of investors and reposition the company within the market."
Check here for the latest results, quarterly call and analysts' estimates.
Artisan Partners on Sea $SE US
Thesis: Sea combines growth in e-commerce, gaming, and payments while holding its ground against TikTok’s market challenges.
Extract from their Q3 letter, link here
Analysis:
"Sea is a Singapore-based Internet company with primary operations across Southeast Asia and Taiwan. Its integrated platforms include online games, e-commerce, and digital payment services. We initiated a position as the company appeared out of favor over the past couple of years despite reporting strong fundamental results, including strong growth in gross merchandise volume, e-commerce revenue, active gaming users, and financial services revenue.
Importantly, we have been closely monitoring TikTok (which partnered with Tokopedia to relaunch TikTok Shop in Indonesia) as a potential threat but see no signs of rising competitive intensity."
Check here for the latest results, quarterly call and analysts' estimates.
Loomis Sayles on Tesla $TSLA US
Thesis: Tesla’s leadership in EV technology and global market share solidifies its position as a dominant force in the auto industry.
Extract from their Q3 letter, link here
Analysis:
"We believe the secular growth driver for Tesla is increasing penetration of electric vehicles as a share of global automotive sales. Around the world, EVs accounted for a low-double-digit percentage of new light vehicle sales in 2023, with penetration rates ranging from high-single digits in North America to low double-digits in Western Europe and almost 30% in China.
We believe the pace of EV adoption will accelerate, driven by advances in battery technology that will drive cost parity, lower ongoing cost of ownership for consumers, government incentives, and numerous global initiatives to phase out internal combustion engine sales over the next two decades. Tesla is the global leader in battery EV sales, with over 20% unit share, around 25% revenue share, and a much higher share of industry profitability. While we expect competition to increase substantially, we believe Tesla’s superior brand, focus, technology leadership, and strong ongoing consumer demand will enable the company to maintain a leading global market position."
Check here for the latest results, quarterly call and analysts' estimates.
Artisan Partners on UPS $UPS US
Thesis: UPS offers strong cash flows and an attractive dividend despite short-term headwinds and undervalued potential.
Extract from their Q3 letter, link here
Analysis:
"When we initiated our position in UPS in late 2023, shares were under pressure due to concerns about its new labor contract diverting volumes and driving up costs, as well as the continued normalization of volumes following COVID-related gains. We welcomed the market’s short-term focus as it provided us an opportunity to purchase UPS at an undemanding valuation of less than 11x our view of normalized earnings.
UPS is a good transport operation that easily earns its cost of capital, generates significant free cash, has a wide economic moat, has a strong financial profile, and pays an attractive dividend—now yielding 4.8%. More recently, the stock has been weak because profits came in weaker than expected. UPS’ customers traded down to the lower-yielding ground segment, which negatively impacted overall pricing and margins. These shifts are common and occur in both directions, but what is important, in our view, is the long-term trend of volume growth remains intact. Nevertheless, investors have lost patience with UPS after a string of earnings disappointments."
Check here for the latest results, quarterly call and analysts' estimates.
Artisan Partners on BIM $BIMAS TI
Thesis: BIM’s private-label dominance positions it as a key beneficiary of Turkey’s economic reform trajectory.
Extract from their Q3 letter, link here
Analysis:
"BIM is the largest supermarket chain in Turkey. Having long tracked Turkey’s economic development, we view BIM as a compelling opportunity to invest in the country’s growing economy. The company leads Turkey’s discount supermarket segment, with most of its products sold under private-label brands. This business model yields strong economics and an attractive return on equity. We believe in the company’s ability to outperform as Turkey continues to adopt more orthodox economic policies."
Check here for the latest results, quarterly call and analysts' estimates.
Broyhill AM on Evolution AB $EVO SS
Thesis: Evolution AB’s high margins and undervaluation position it as a strong bet on online gaming expansion.
Extract from their Q3 letter, link here
Analysis:
"Evolution AB is a live casino supplier based in Sweden. Shares have come under pressure as online gaming legalization of additional US states has been slower than hoped, but we believe that the most important factor is the direction of progress more than the pace. The company is a high margin, high growth business trading at what we view to be an inexpensive valuation. With this set-up, we are willing to accept a wide range of potential outcomes, most of which we view to be positive."
Check here for the latest results, quarterly call and analysts' estimates.
Mobius CP on CTOS $CTOS MK
Thesis: CTOS Digital’s market leadership and ASEAN expansion solidify its position as a premier credit reporting firm.
Extract from their Q3 letter, link here
Analysis:
"In Q3, MEMF added CTOS to the portfolio, Malaysia’s leading credit reporting agency. Since 1990, CTOS has provided credit information, analytics, digital solutions, and credit scoring services to businesses, financial institutions, and consumers. We believe the company is well-positioned for future growth, offering a comprehensive digital portfolio and leveraging strategic partnerships, such as its exclusive rights to use the American FICO scoring system in the ASEAN region. Additionally, investments in Indonesia, Thailand, and other ASEAN markets enhance its regional growth prospects."
Check here for the latest results, quarterly call and analysts' estimates.
Lindsell Train on LSEG $LSEG LN
Thesis: LSEG’s innovation in data analytics and Microsoft partnership solidify its growth trajectory post-Refinitiv integration.
Extract from their Q3 letter, link here
Analysis:
"Meanwhile at LSEG, another significant holding, optimism continues to build around the core Data & Analytics segment. The company has put in a huge amount of work behind the scenes over the last few years in the wake of the Refinitiv acquisition, and this is becoming increasingly visible, as product innovations, competitive displacements, and strong retention rates are all now contributing to an accelerating top line. 2025 will be a highly symbolic year, as the company finally sunsets the legacy Eikon system, and completes the transition to the vastly superior Workspace platform.
However, of far greater interest are the first fruits of LSEG’s important Microsoft partnership, with notable upcoming product launches including Meeting Prep, Interoperability, Entra, the first Data-as-a-Service (DaaS) dataset, and Open Directory. The latter product is particularly noteworthy as it represents a direct challenge to Bloomberg Chat, often cited as one of the key supporting pillars of the competing Bloomberg ecosystem. We’re enthused about the additional utility that these products will bring to LSEG’s Data & Analytics customers, and by extension, the increased pricing and hence revenue growth that the company should be able to realise in the coming years."
Check here for the latest results, quarterly call and analysts' estimates.
Lindsell Train on RELX $RELX LN
Thesis: RELX’s AI-driven transformation and leadership in data analytics make it a standout in legal and risk services.
Extract from their Q3 letter, link here
Analysis:
"RELX hosted an impressive teach-in event on its Legal division, showcasing the capabilities of its various AI-enabled offerings, from its legal analytics platform Lexis+ to its next-generation personalized legal AI assistant, Protégé. The segment’s growth rate has been accelerating on the back of a steady mix shift away from print and electronic reference services, towards these higher-utility analytics and decision-making tools. To quote one analyst, 8% growth is now a question of ‘when, not if,’ which will represent a quadrupling of the 2% revenue growth we had previously witnessed for a number of years.
It now seems far more generally accepted that RELX’s vast and proprietary datasets, leading brands, and well-established installed user base stand it in good stead to be an AI beneficiary, rather than a victim. Indeed, the new debates are now instead about just how high the growth rate can become, and for how long it can be sustained—far better problems to have! Just as the invention of Microsoft Excel clearly didn’t lead to the extinction of the bookkeeping profession, which has grown robustly over the ensuing decades, we expect that RELX’s AI-enabled tools will prove a similar boon to the legal profession going forward.
Our conviction on RELX’s improved business prospects—not just within the Legal segment, but also notably for its Risk division as well—led us to consciously upweight our position in the Fund over the last few years, and it now ranks as one of our largest holdings. The company is up 21% year-to-date, yet still trades at a discount to US information services peers with similar growth algorithms."
Check here for the latest results, quarterly call and analysts' estimates.
Broyhill AM on Rentokil Initial $RTO LN
Thesis: Rentokil’s US expansion and discounted valuation offer significant growth potential in a fragmented market.
Extract from their Q3 letter, link here
Analysis:
"Rentokil Initial is a UK-based pest control company that grew its US presence by acquiring Terminix in 2022. The industry is largely fragmented and has the tailwind of a warming environment, expanding the seasons and geographies where pests thrive. Trading at a steep discount to its nearest peer, Rollins, we see plenty of room for upside as activist investor Nelson Peltz holds management accountable during the Terminix integration."
Check here for the latest results, quarterly call and analysts' estimates.
Artisan Partners on Unilever $ULVR LN
Thesis: Unilever’s transformation under new leadership positions it for a profit cycle driven by growth and strategic focus.
Extract from their Q3 letter, link here
Analysis:
"Unilever is one of the largest global consumer packaged goods companies across five business segments: beauty and wellbeing, personal care, home care, nutrition, and ice cream. We believe the company is in the early innings of significant internal changes that will drive a profit cycle fueled by higher volumes and margins. The company has hired new management, changed the incentive compensation structure to drive performance, developed a strategy that places a greater emphasis on investing in the company’s fastest-growing brands, and has stated its intention to divest underperforming assets."
Check here for the latest results, quarterly call and analysts' estimates.
Hotchkis & Wiley on Unilever $ULVR LN
Thesis: Unilever’s strategic focus on efficiency and spin-offs positions it for steady growth and shareholder returns.
Extract from their Q3 letter, link here
Analysis:
"Unilever (UL) is one of the world’s leading suppliers of consumer goods in the food, home care, and personal care categories, maintaining #1 or #2 market share over 75% of its business. With a new CEO and the involvement of an activist investor (Trian), Unilever is focused on execution and consistency, expecting low to mid-single digit volume-driven top-line growth over the medium term, profit growth ahead of sales growth due to operating leverage and mix, and the consistent return of cash to shareholders.
Additionally, the company has announced plans to separate the Ice Cream business (13% of 2023 sales), which is expected to be completed by the end of 2025 and increase organic sales growth to 4-6% annually."
Check here for the latest results, quarterly call and analysts' estimates.
Crossroads Capital on Vistry $VTY LN
Thesis: Vistry’s capital-light model and partnerships-driven approach position it as the leader in UK affordable housing with a strong valuation upside.
Extract from their Q3 letter, link here
Analysis:
"UK homebuilder Vistry Group is transitioning to a pure-play “partnerships” business model that combines the financial and land resources of local authorities and housing associations, the central government, and even financial institutions with those of the homebuilder to create a capital-light home construction enterprise at the center of a virtuous circle for all stakeholders.
Unlike traditional homebuilders, Vistry’s “partnerships” model pre-sells over 50% of its homes at affordable prices (mostly to cycle-agnostic local councils or housing associations), shortening cash collection times and considerably reducing the business’s cyclicality and interest rate sensitivity. Vistry’s shift from a hybrid traditional/partnerships housebuilder to a partnerships pure play will not only make it the UK’s largest affordable housing manufacturer, but will also drastically improve its revenue stability and visibility, return on capital, and earnings potential."
Check here for the latest results, quarterly call and analysts' estimates.
Artisan Partners on Kia $000270 KS
Thesis: Kia's leap into EVs, AI-driven innovation, and corporate governance improvements make it a standout in the auto industry.
Extract from their Q3 letter, link here
Analysis:
"Kia, a Korean automaker, is a company previously held in our portfolio. We found the company to be a compelling investment once again due to its successful repositioning as a more sophisticated car manufacturer. Through its significant investments in research and development, the company has made great strides in producing electric vehicles and hybrids as well as incorporating AI technology into its new models.
We believe Kia is on track to build even stronger brand equity. In addition, we see positive changes in its corporate governance, which gives us greater confidence as minority shareholders."
Check here for the latest results, quarterly call and analysts' estimates.
Crossroads Capital on Nintendo $7974 JP
Thesis: Nintendo’s expansion into movies, theme parks, and its upcoming Switch 2 launch sets the stage for unparalleled growth and valuation upside.
Extract from their Q3 letter, link here
Analysis:
"Our thesis on Nintendo, the Godzilla of video gaming, is quite simple. Armed with its Apple-like iterative hardware model and software-based ecosystem, as well as a growing active player base and ever-increasing digital sales, the company should generate substantial earnings growth that is de-coupled from the past 'boom-bust' console cycles it previously underwent. Additionally, its historically under-monetized IP continues to shine, getting new life in a rapidly expanding number of movies, theme parks, retail stores, general merchandise, and (we strongly suspect) a whole new crop of perpetual live service games in the years ahead.
Better yet, with the debut of the Switch 2 early next year, the company is embarking on a new era which should see massive and consistent growth that the market continues to miss. The release of the Switch 2 will open the Nintendo ecosystem to third-party AAA games like Call of Duty and an entirely new cohort of higher-spending gamers. And that’s just one driver of returns. The global blockbuster Super Mario movie has the company embarking on the next leg of its journey in visual content, i.e., a multi-film, very Marvel-like 'Nintendo Cinematic Universe,' with the company aiming to build up to a one-movie-per-year pace over the next five years. New movies for Mario, Zelda, and others are in development.
Finally, we anticipate strong Switch 2 sales starting in early 2025, alongside an impressive lineup of first- and third-party software and higher prices for NSO and all AAA games sold on Nintendo’s App Store-like eShop platform. As a result, we should see a step-change increase in its earnings power in the coming years, unlike anything we’ve seen to date."
Check here for the latest results, quarterly call and analysts' estimates.
Mobius CP on 360 One $360ONE IN
Thesis: 360 One leverages India’s wealth boom with a customer-focused model and robust growth opportunities.
Extract from their Q3 letter, link here
Analysis:
"The team’s trip to India last year marked the final step of an extensive research process that confirmed our conviction and led to the addition of 360 One, one of India’s largest independent wealth managers, to the portfolio. With $62bn in AUM and serving over 7,000 HNWIs, the company has been a key contributor to performance since MCP’s initial investment in Q2 2023.
As a pioneer in the advisory model, 360 One is well-positioned to benefit from India’s growing wealth, rising financialisation, and increasing demand for wealth management, with an addressable market growing at over 13% CAGR. The company’s strong competitive advantages include a customer-centric approach, a recurring fee model, innovative revenue streams, and industry-leading talent. Additionally, 360 One’s stable, pedigreed leadership team has demonstrated a strong alignment with minority shareholders and a favorable track record in capital allocation."
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Liontrust on Interpump $IP IM
Thesis: Interpump’s efficiency-focused solutions and discounted valuation position it well for long-term industrial growth.
Extract from their Q3 letter, link here
Analysis:
"We initiated a position in Italian industrials company Interpump under our Improving the resource efficiency of industrial and agricultural processes theme. Interpump focuses on resource-efficient high-pressure water jetting equipment, as well as durable and efficient hydraulic systems. Its products help to reduce water and energy consumption in industrial processes and reduce toxic chemical use in water jetting.
After a period of particularly strong post-COVID-19 growth, the hydraulics market is now slowing. This has provided an opportunity to buy shares in this high-quality business at a discount to the long-term valuation."
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Horos AM on Pluxee $PLX FP
Thesis: Pluxee’s strong market position and float-based revenue model offer significant upside despite short-term macro challenges.
Extract from their Q3 letter, link here
Analysis:
"Pluxee began trading at the beginning of this year after its spinoff from Sodexo. Its business-to-business-to-consumer (B2B2C) model issues prepaid vouchers or credits—either physical or digital—for food, transportation, leisure, and other services, benefiting companies and their employees, who can use them at affiliated merchants.
Pluxee operates in over 30 countries and, with a market share exceeding 25%, is the second-largest player in the sector, behind only Edenred. The company serves more than 500,000 clients and over 36 million consumers globally. One of the advantages of this business is the use of 'float,' or funds prepaid by Pluxee’s corporate clients, which their employees will eventually spend. In the meantime, Pluxee can invest this money in risk-free financial assets, earning interest on these investments.
On the downside, poor macroeconomic forecasts and political and regulatory uncertainty in France have negatively impacted the sector’s stock performance. This, along with its limited track record as an independent company, has led Pluxee to trade at valuations that we believe are far below what a business of this quality should warrant."
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Loomis Sayles on Novo Nordisk $NOVO B DC
Thesis: Novo’s leadership in GLP-1 innovation positions it for sustained growth in the obesity treatment market.
Extract from their Q3 letter, link here
Analysis:
"While we expect Novo will maintain its strong market position, we believe both Eli Lilly and Novo will continue to innovate and compete in GLP-1s, driving increased penetration of the overall addressable market and sustaining double-digit market growth over our long-term investment horizon.
We believe that Novo’s product differentiation and first-mover advantage will drive continued penetration across a growing range of obesity and comorbidity patients, contributing to double-digit growth in revenues and free cash flows. Despite competitive pressures, we believe continued innovation in products still in development, as well as ongoing operational execution, will enable the company’s continued long-term success. We believe the company’s shares are currently selling at a discount to our estimate of intrinsic value and offer an attractive reward-to-risk opportunity."
Check here for the latest results, quarterly call and analysts' estimates.
Langdon on Aritzia $ATZ CN
Thesis: Aritzia’s thoughtful growth strategy and investments in talent position it for continued success in U.S. and international markets.
Extract from their Q3 letter, link here
Analysis:
"Aritzia, founded in 1984, is an everyday luxury fashion house focused on the female consumer. Aritzia and its halo of brands—Wilfred, Babaton, TNA, Super Puff, Sunday Best—have been well known to Canadians for years. Revenues at Aritzia increased from $875MM pre-COVID to $2.2B for the fiscal year ending February 2023, driven by growth in eCommerce and the United States.
Over the past two years, the business navigated a major catch-up capital expenditure program that was needed after the business saw eCommerce revenues nearly quadruple through the pandemic. While the capital program was sensible, the front-loaded nature and its impact on cash generation surprised us.
With these distribution network investments now behind them, we have seen the business deliver on expected margin improvements while continuing to grow. We are excited for what lies ahead as they continue to invest in U.S. growth, which now represents over 55% of revenues, while patiently laying the foundation for international expansion in the years to come."
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Mobius CP on FPT $FPT VN
Thesis: FPT’s cost advantages and international expansion make it a leader in Vietnam’s technology sector with strong growth prospects
Extract from their Q3 letter, link here
Analysis:
"MEMF also added FPT, Vietnam’s largest technology company, which has a strong market position in technology, telecoms and education sectors. FPT’s group synergies help secure lower labour costs than its competitors, which together with its growing international contracts, are expected to boost margins. With a strong management track record and future catalysts like strategic acquisitions in Europe and Australia and new technologies penetrating the local market, FPT is well-positioned for continued growth."
Check here for the latest results, quarterly call and analysts' estimates.
Here are some additional Q3 letters :
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