Company Reports

As the largest retailer in Canada, Loblaw boasts well-recognized grocery and drugstore banners and a sizable loyalty program that drives strong consumer engagement. However, we think the firm has not carved out an economic moat based on either intangible assets or cost advantage, given its sales concentration in commoditized food retail, where low prices reign as the major point of differentiation.

Founded in 1980 via the acquisition of Airstream, Thor Industries has grown to become the world’s largest recreational vehicle manufacturer. The company fabricates and sells a wide array of vehicles through three segments: North American towables, North American motorized, and Europe. Additionally, the company sells aftermarket component parts and digital solutions that are classified within its other segment. During fiscal 2024, the company generated 37% of sales from North American towables, 24% of sales from North American motorized segment, 34% of sales from Europe, and the remaining from parts.

Lithium Argentina is a pure-play lithium producer with two assets in Argentina. The company was created as a result of the former Lithium Americas separation, which separated the firm's Argentina and North America businesses.

Eli Lilly's innovative culture and strong financial commitment to developing the next generation of drugs set the company apart from its peers and fuel its long-term growth. Lilly holds industry-leading growth potential as the company is launching several new blockbusters and patent losses are fading.

Pfizer's foundation remains solid, based on strong cash flows generated from a basket of diverse drugs. The company's large size confers significant competitive advantages in developing new drugs. This unmatched heft, combined with a broad portfolio of patent-protected drugs, has helped Pfizer build a wide economic moat around its business.

Merck's combination of a wide lineup of high-margin drugs and a pipeline of new drugs should ensure strong returns on invested capital over the long term. Further, following the divestment of the Organon business in June 2021, the remaining portfolio at Merck holds a higher percentage of drugs with strong patent protection. On the pipeline front, after several years of only moderate research and development productivity, Merck's drug development strategy is yielding important new drugs.

Adept at partnerships and acquisitions, Bristol-Myers Squibb has built a strong portfolio of drugs and a robust pipeline. This strategy is seen with its large acquisition of Celgene, which netted the firm an excellent pipeline and a strong entrenchment in blood cancer. More recent acquisitions in 2024—oncology firms Mirati and RayzeBio and neurology firm Karuna—also help support Bristol's strong overall pipeline and wide moat.

AbbVie holds a strong portfolio of marketed and pipeline drugs. While the increasing competition to the company's key drug Humira should slow the growth for the company in the near term, we believe the firm's remaining portfolio will mitigate these losses.

Johnson & Johnson stands alone as a leader across the major healthcare industries. It maintains a diverse revenue base, a developing research pipeline, and exceptional cash flow generation that together create a wide economic moat.

Ubisoft owns some of the best-known video game franchises, including Assassin’s Creed and the Tom Clancy series. We expect these core titles will provide opportunities to create new content that generates consistent revenue. However, increased investment in new game development over the past few years has delivered poor results, and execution around core titles has faltered. We still see room for financial results to improve, but we suspect the next year will be bumpy.

Kone is a global top-four elevator and escalator original equipment manufacturer. Its operations are integrated across manufacturing and installation activities, while also spanning E&E servicing for existing installations. Kone also performs elevator modernization services for elevator systems that have come to the end of their useful lives, which is typically 15-20 years. Active in all major geographies, Kone has an approximate 15% share of the estimated $80 billion global E&E market.

Japan Exchange Group’s strategy has long focused on various attempts to help revitalize the Japanese economy and financial markets. Over the past decade, this strategy took shape through various mergers and acquisitions, such as the merger between predecessor companies Tokyo Stock Exchange and Osaka Securities Exchange in 2013 and the acquisition of Tokyo Commodity Exchange in 2019. Through these mergers and acquisitions, the Japan Exchange Group has become a vertically integrated securities exchange business, with offerings across the full breadth and depth of exchanges and a dominant market share in listing, trading and clearing in Japan. JPX’s current strategy continues in a similar vein, with its medium-term management plan aiming to reinvigorate the Japanese economy and financial markets, primarily by focusing on supporting fundraising and asset formation.

New World Development is a leading property developer in Hong Kong and mainland China under the Cheng family, with property development and investment as core businesses. As NWD aims to raise the revenue mix of investment properties, we think execution efficiency remains crucial for the group to maintain robust top-line growth. We believe NWD is poised to leverage the success of its well-received K11 commercial project in Victoria Dockside to deliver the new 11 Skies project in Hong Kong. We also expect the group to complete a rich portfolio of K11 malls over the next five years in mainland China. With continuing floor area expansion and upward rental reversion, we estimate that recurring earnings from investment properties should represent over 30% of NWD’s operating profit in fiscal 2029.

We think BlackBerry has positioned itself in rapidly growing markets that benefit from secular trends toward security and connectivity, but we think it has a long way to go to earn a durable competitive advantage. We like the firm’s automotive software portfolio, but see the larger enterprise security business as an underperformer that weighs on results. BlackBerry sells software into enterprise cybersecurity applications and embedded applications like cars. Its products in enterprise security focus on endpoint security. In the automotive market, BlackBerry’s QNX software underpins automotive chips, safety systems, and cabin features.

BASF is the world’s largest chemical company, producing commodity and specialty chemicals in nearly every major category. The firm maintains a top-three market position in over two thirds of its businesses. Its products are sold to a wide variety of end markets ranging from industrials to transportation to pharmaceuticals to agriculture. The catalysts business generated around 17% of companywide revenue in 2023, while agriculture generated roughly 15%. The remaining 11 business lines accounted for roughly 10% or less. BASF is fairly vertically integrated, manufacturing many chemicals that serve as inputs to its other segments.

Accenture is one of the largest IT-services companies in the world, providing both consulting and outsourcing capabilities. We think that Accenture’s growth will remain at a healthy and gradual pace, thanks to the persistence of digital transformation trends. With the company's prominent reputation, which we believe to be crucial to the consulting business, and its proven ability to bring expertise to a gamut of enterprise issues, we are confident Accenture will maintain its wide economic moat.

Brickworks is a conglomerate consisting of building product manufacturing operations, property management, and a cross-shareholding in ASX-listed investment firm, Washington H. Soul Pattinson & Company, or Soul Patts.

Washington H. Soul Pattinson, or Soul Patts, is a value style-oriented investment house with approximately AUD 12 billion in net equity value. Its approach to growing shareholder value is somewhat distinct from many fund managers and capital allocators, benefitting from advantages in its corporate structure, investment-style, and from a relatively unconstrained investment mandate.

Southwest is the largest domestic carrier in the US by passenger volume. Southwest has stuck to its strategy of streamlining airline operations to maintain lower unit costs than its full service rivals, which it passes on to customers in the form of cheaper tickets and a low-frills experience.

We expect Star Entertainment to deliver strong earnings growth over the next decade, buoyed by the recovery from pandemic-induced lows, the ramp-up of the Queen's Wharf and Gold Coast growth projects, and solid performance from its Sydney property, despite increased competition. The Star casino in Sydney is the company's core asset and historically generated approximately most of group earnings as the city's only casino. However, Star's exclusivity in Sydney has come to an end with a second Sydney casino license issued to Crown Resorts, opening in August 2022. This is a major blow to Star, ending its long-standing monopoly in Sydney.