Shares of Tata Steel fell 2% to Rs 202 on the BSE on Monday amid reports that it may have to push back the commissioning timeline of its 1.25-billion-pound low-carbon steel project in the UK by six to eight months due to delays in obtaining access to the required electricity infrastructure.

The company is building a 3.2 million-tonne electric arc furnace (EAF) at Port Talbot as part of its decarbonisation strategy. The project, which involves an investment of 1.25 billion pounds, is intended to replace the site’s blast furnace operations of similar capacity that have now been shut down.

Before the latest setback, Tata Steel had been targeting the start of operations by late 2027 or early 2028. However, delays linked to the power connection process have created uncertainty around that timeline, a news report by PTI stated.

Koushik Chatterjee, Executive Director and Chief Financial Officer of Tata Steel, said the company has been working with the Electricity System Operator (ESO) and National Grid on the new electrical infrastructure. However, National Grid has formally informed Tata Steel that its connectivity project is running behind schedule.

According to Chatterjee, National Grid has flagged potential delays compared with the originally planned date for the high-voltage power connection. He said Tata Steel is engaging with all stakeholders, including the UK government, to minimise the impact and establish revised timelines, the report added.

The company said major demolition work at the Port Talbot site has already been completed, while fabrication and delivery of equipment continue to progress. Access to higher-capacity electricity remains a critical requirement for the transition to electric arc furnace-based steelmaking.
The project has secured 500 million pounds of support from the UK government and is expected to cut site-level carbon dioxide emissions by 90%, equivalent to around 5 million tonnes annually. Separately, the Port Talbot project site witnessed a fire incident on June 3. Tata Steel UK said on Thursday that all personnel were safely evacuated and accounted for, with no injuries reported. Chatterjee said Tata Steel is continuing discussions with National Grid and the UK government to address the issue and explore ways to reduce the delay.

“We are working with the UK government, the National Grid and ESO, which is the electricity supplier, to see if we can mitigate it, but somewhere between six months to eight months will certainly be there, maybe higher, after we have built the plant,” he said while responding to a question on potential delays in commissioning the facility.

He added that the company is evaluating options to shorten the delay but acknowledged that some slippage in timelines now appears unavoidable. “We are actively working to see if we can reduce it further, but there will be some imminent delays,” Chatterjee said, without providing additional details.

In May 2024, Tata Steel signed a connection offer agreement with the Electricity System Operator. Under the arrangement, National Grid is responsible for building the electrical infrastructure required to power the 3.2 million-tonne electric arc furnace by the end of 2027.

According to information shared by Tata Steel, the National Energy System Operator (NESO) is a public body that oversees the connection process, including the connection contract with Tata Steel UK, and manages electricity grid operations across the UK.

National Grid Electricity Transmission (NGET), meanwhile, is the private company responsible for constructing, owning and maintaining the connection infrastructure.

Tata Steel Group is among the world’s leading steelmakers, with an annual crude steel production capacity of 35 million tonnes. The company also ranks among the most geographically diversified steel producers globally.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

CUPERTINO, Calif. — Apple Inc. kicks off its annual Worldwide Developers Conference on Monday with expectations centered on a significant upgrade to Siri and broader advancements in its Apple Intelligence platform, as the company aims to close the gap with competitors in generative artificial intelligence.

The weeklong event, running through June 12, will feature keynote addresses, developer sessions and previews of upcoming software updates for iOS, macOS, iPadOS and other platforms. This year’s gathering holds particular significance as the company seeks to demonstrate progress on AI features that have so far failed to fully satisfy investor and user expectations.

A revamped Siri is widely anticipated as the centerpiece. The digital assistant, introduced in 2011, has struggled to keep pace with more advanced chatbots and AI agents from rivals. Apple initially previewed an enhanced version in 2024 but encountered delays in delivery. The new iteration is expected to leverage Google’s Gemini AI models rather than relying solely on Apple’s own technology.

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According to reports, the updated Siri will gain its own dedicated app and support more natural, conversational interactions similar to leading chatbots. Users will be able to issue multi-step commands in a single request, such as drafting emails or handling complex tasks. Additional features include placement at the top of the iPhone screen in the Dynamic Island and a new text-based search interface accessible by swiping down from the center of the screen.

Siri is also expected to integrate more deeply with the Camera app, allowing users to quickly extract nutrition information from food labels for meal tracking. These enhancements aim to make the assistant more proactive, capable and useful in everyday scenarios.

Apple Intelligence, the company’s broader AI framework introduced last year, already includes writing tools, image editing capabilities and Visual Intelligence features. While these have been well-received in specific use cases, analysts and users have noted that the platform has yet to deliver the transformative impact many anticipated in the generative AI era.

The company’s approach emphasizes on-device processing for privacy and efficiency, distinguishing it from cloud-heavy competitors. However, this strategy has also limited access to the most powerful frontier models, prompting partnerships such as the one with Google for Siri.

Analysts believe a successful AI showing at WWDC could have meaningful financial implications. Bernstein analyst Mark Newman highlighted the potential in a recent note, stating that Apple Intelligence “presents a huge opportunity to reinvent the company, accelerate product replacement cycles, and drive increased services revenue.”

Newman estimated “13% upside to [earnings per share] from [an] accelerating replacement cycle and a further 16% upside to EPS from upselling a premium version of Apple Intelligence.”

Evercore ISI analyst Amit Daryanani echoed the optimism, noting Apple’s advantage lies in its massive installed base. “We don’t think Apple needs to win the frontier-model race to monetize AI, but rather its edge is in distribution to a ~1.25B iPhone install base,” he wrote.

The conference also marks a transitional period for Apple leadership. CEO Tim Cook, who has guided the company since 2011, is expected to use the event to outline the next phase of innovation. Speculation continues about long-term succession planning, though the company has not made any official announcements.

Beyond Siri, developers and users anticipate updates across Apple’s ecosystem. iOS improvements are likely to focus on deeper Apple Intelligence integration, enhanced privacy controls and productivity features. macOS updates may emphasize better cross-device continuity and AI-assisted workflows for creative professionals.

The event will include hands-on sessions for developers to explore new APIs and tools, enabling third-party apps to leverage Apple Intelligence capabilities. This approach allows Apple to extend its AI reach while maintaining control over the core user experience.

Investor attention remains high. Apple shares have experienced mixed performance in 2026, reflecting broader concerns about AI leadership and slowing growth in core hardware segments. A compelling demonstration of AI progress could help reassure markets and re-accelerate device upgrade cycles.

The company has invested heavily in silicon development, data centers and machine learning talent to support its AI ambitions. On-device models reduce reliance on cloud services and enhance privacy — a key differentiator Apple continues to highlight in marketing.

Challenges remain. Competitors have moved aggressively with multimodal AI, agentic systems and creative tools. Apple’s more measured rollout prioritizes reliability and integration over rapid feature expansion, but the strategy has drawn criticism for being too conservative.

WWDC serves as an important platform for Apple to regain narrative control in the AI conversation. By showcasing practical, user-focused applications rather than flashy demonstrations, the company aims to differentiate itself through seamless ecosystem experiences.

Analysts will closely watch for details on monetization strategies, such as potential premium tiers for advanced AI features or new services built around Apple Intelligence. The installed base of over 1.25 billion active iPhones provides a massive distribution advantage if the company can deliver compelling experiences.

For developers, the conference offers technical deep dives and opportunities to build the next generation of AI-powered applications. Apple’s focus on responsible AI development, including transparency and user control, aligns with its longstanding privacy-first philosophy.

As the week progresses, announcements around watchOS, tvOS and visionOS are also expected, though the spotlight will remain firmly on iOS and Siri improvements. The event typically concludes with a strong message about Apple’s vision for the future of personal computing.

WWDC 2026 arrives at a critical juncture for Apple. The company’s ability to translate its vast resources and engineering talent into compelling AI experiences will influence its trajectory for years to come. Investors, developers and consumers alike will be watching to see whether this second major push delivers the AI momentum Apple needs.

The conference is expected to generate significant media coverage and social conversation, with live streaming available on Apple’s website and YouTube. Previews and hands-on impressions from attendees will provide early indications of how the new features perform in real-world use.

Apple has a strong track record of using WWDC to introduce transformative technologies that define the next era of its products. This year’s focus on making Siri smarter and more capable represents another step in that tradition, even as the competitive landscape grows more intense.

Success at the event could help quiet concerns about Apple’s AI positioning and set the stage for stronger hardware sales in the second half of 2026 and beyond. As the company enters a new chapter under continued leadership from Tim Cook, WWDC offers a platform to demonstrate innovation and vision at scale.

What the mayoral development corporation could mean for ‘nationally significant’ scheme

The vision to build 7,000 new homes, create 20,000 ‘high-quality’ jobs and carve out 17m sq ft of employment land is about to be unlocked. The Atom Valley project has been described as a nationally-significant scheme that will change the face of north Manchester forever.

Now it has a new driving force behind it – a mayoral development corporation (MDC).

These special powers, granted by the Greater Manchester Combined Authority (GMCA), are designed to speed up development and attract investment within a specific area. This will be done by cutting down red tape that slows down redevelopment and ramps up costs.

The MDC has powers to acquire, hold, regenerate and dispose of land including compulsory purchase (CPO) powers to speed up the transformation. Council documents say the MDC will work with landowners and developers to understand their priorities and future plans.

Atom Valley is anticipated to give a £7bn boost to the regional economy through employment and investment. Now the MDC, led by business leaders and council bosses from Bury and Rochdale, would help push forward the project by using these powers to unlock land primed for transformation.

Much of the work on this project has been in the boardrooms of council offices and in planning meetings. But physical evidence that this major scheme has started is the Sustainable Materials and Manufacturing Centre (SMMC) – which is currently under construction.

Greater Manchester mayor Andy Burnham was there on a rainy November day in Rochdale to officially put the spades in the ground on the project. Located at Kingsway Business Park near the M62, the research hub is expected to become a catalyst for growth in advanced manufacturing, machinery, materials, and scientific research.

Building up industry around Kingsway is one of three key components of Atom Valley. The other key sites include Stakehill and the Northern Gateway.

Stakehill is land allocated for around 1650 new homes and 231 acres of new employment space for industrial, distribution and advanced manufacturing uses. The site is just off the A627(M) and provides direct access to M62 and M60.

There has already been movement on this section of the project, with plans for 314 new homes on land to the north and east of the Stakehill Industrial Estate being tabled last year. This would be the first of many developments coming to the Stakehill area under the overarching Atom Valley development plan. The other piece of the puzzle will be the Northern Gateway project – which is set to become one of the largest employment hubs in the region.

It is anticipated to drive substantial investment and up to 10,000 jobs into Greater Manchester. It also promises new homes straddling areas of Bury and Rochdale along the M60, M62 and M66 corridors. It features proposals for 6.5 million sqft of industrial space for the advanced manufacturing, industrial, and logistical sectors.

Outline plans for the Northern Gateway’s giant industrial park were tabled last year by Northern Gateway Development Vehicle (NGDV) – a 50/50 partnership between land and property giants Russell LDP and Harworth Group plc.

When he officially launched the project last November, Greater Manchester mayor Andy Burnham described this as the start of a ‘decade of growth’ for the northern section of the city-region.

Speaking to a crowd at the ground breaking of the facility at Kingsway Business Park in Rochdale, Mr Burnham said: “This is a major milestone on our journey to be a world-leading city-region in every respect. I think in the future, we will remember being gathered here in the rain on a bleak looking day, hopeful of what today symbolises.

“This is a huge statement about how Rochdale has changed. I arrived on this building site and I saw a bowl of rocket and guacamole, if that doesn’t tell you Rochdale is changing, nothing else will.

“We’ve had 10 years of devolution in Greater Manchester. In that time we’ve achieved something others thought we wouldn’t, we’ve become the fastest growing city-region in the country.

“We’ve not seen enough change in Rochdale, Oldham, Bury, Wigan and Leigh – that’s why this is significant. Because the next decade of growth in GM is going to be a decade of good growth, where we lift every person and every place.”

Work has already started on the Simister Island upgrade project, which will be essential to help deal with the increased transport activity created by Atom Valley. Five lanes of traffic and a new link road will be created at Junction 18 in a bid to ease congestion, following official confirmation by the Department for Transport (DfT) last year.

Simister Island interchange, which connects the M60, M62 and M66 motorways, has long been earmarked for a massive change under National Highways proposals.

But Mr Burnham said a better public transport network would still be needed. That’s why the Atom Valley project already includes a plan to extend the Metrolink tram service in the area.

Back in November, Mr Burnham added: “You can’t be here and ignore the congestion on the M60 and M62. The congestion is a drag on productivity and it’s too hard to get across the country in that part and around the city-region.

“The Simister Island (junction 18) investment is good, but going into the budget my message to the government is that you can’t take GM’s growth for granted. We’ve got growth but to keep ahead of that you have to put in the infrastructure to support further growth.

“We’re still waiting to hear about the big infrastructure to support our railways. I don’t think we can carry on with the M60 as it is, because it’s overly congested all the way around.

“We need a plan for road and rail to support the level of ambition that is Atom Valley.”

The committee meeting on the Atom Valley Northern Gateway Mayoral Development Corporation was postponed last week. But it is expected to reconvene soon.

To find all the planning applications, traffic diversions, road layout changes, alcohol licence applications and more in your community, visit the Public Notices Portal.

SYDNEY — The S&P/ASX 200 index closed lower on Friday, falling 61 points or 0.7% to finish at 8,625.1 as weakness in mining and financial stocks offset gains elsewhere amid cautious global sentiment.

The benchmark index recorded its second straight decline, extending losses for the week to 1.2% — its first weekly drop in three and the largest in nearly a month. Trading volume remained solid as investors navigated mixed signals from overseas markets and domestic economic data.

Mining stocks led the retreat, pressured by softer commodity prices. Energy and financial sectors also contributed to the downside. Gold miners declined despite firmer bullion prices, with several major names posting losses of 2-3%. The big four banks slipped between 1.1% and 1.6%, reflecting broader caution in the financial space.

In contrast, technology and certain consumer stocks provided some support. Megaport surged more than 11% after announcing new AI infrastructure contracts and plans for an inference cloud, highlighting investor interest in technology-related growth themes.

The decline came as U.S. stock futures weakened ahead of key May jobs data that could influence Federal Reserve policy expectations. Fading hopes around certain geopolitical developments also weighed on risk appetite across Asia-Pacific markets.

Economists noted that the Reserve Bank of Australia’s upcoming policy decision later in the month remains a key focus. Recent wage pressures and inflation data have tempered expectations for near-term rate cuts, contributing to a more guarded tone among local investors.

Sector rotation was evident, with defensive areas showing relative resilience while cyclical sectors faced selling pressure. Materials and energy, which have driven much of the year’s performance, gave back some recent gains as iron ore and oil prices eased.

Individual stock moves reflected broader themes. Lynas Rare Earths fell after announcing an interim CEO transition. Several mid-cap resources names also traded lower on commodity price softness. On the positive side, selected technology and healthcare stocks bucked the trend, supported by company-specific news and defensive characteristics.

Market analysts described the session as a healthy consolidation after recent gains rather than the start of a major reversal. The ASX 200 remains up modestly for the year but has lagged some global peers amid mixed domestic growth signals and external uncertainties.

Trading Economics noted that over the past month the index has declined around 1.9%, though it stays positive year-over-year. Historically, the benchmark reached an all-time high earlier in 2026 near 9,200 points.

Looking ahead, investors will monitor upcoming economic releases, corporate earnings and international developments for direction. The upcoming RBA meeting and U.S. data will likely influence sentiment in the short term.

Broader context includes ongoing global transitions in monetary policy and geopolitical tensions. Australian markets, heavily weighted toward resources and financials, remain sensitive to movements in commodity prices and major trading partners like China.

Despite Friday’s decline, many strategists maintain a constructive longer-term outlook for Australian equities, citing attractive valuations in certain sectors and potential benefits from any global economic soft landing. However, near-term volatility is expected to persist as markets digest fresh data.

The All Ordinaries index, which includes more smaller companies, also closed lower, reflecting similar pressures across the broader market.

Volume leaders and most active stocks highlighted interest in both declining resources names and outperforming technology plays. Options activity and futures positioning suggested continued caution heading into the new week.

For individual investors, the session underscored the importance of diversification across sectors. While resources have powered recent gains, defensive and growth areas provided balance during periods of weakness.

As the Australian sharemarket enters the new week, focus shifts to corporate earnings season continuation, commodity trends and international cues. The S&P/ASX 200’s performance will depend on how these factors interplay amid a complex global backdrop.

Analysts recommend monitoring key support levels around recent lows while watching for positive catalysts in upcoming data releases. The market’s resilience in the face of mixed signals highlights underlying strength in select areas despite headline declines.

Overall, Friday’s trading reflected typical late-week positioning and profit-taking amid uncertainty. While the 0.7% drop was noticeable, it fits within normal daily fluctuations for the benchmark index and does not necessarily signal a change in the broader trend.

Market participants will now assess next week’s calendar, including any further U.S. economic indicators and domestic developments that could influence the RBA’s thinking. The balance between growth expectations, inflation control and global risk appetite will remain central to Australian equity performance in the near term.

Baron is an asset management firm focused on delivering growth equity investment solutions. Founded in 1982, Baron has become known for its long-term, fundamental, active approach to growth investing. Baron was founded as an equity research firm, and research has remained at the core of its business. Note: This account is not managed or monitored by Baron Capital, and any messages sent via Seeking Alpha will not receive a response. For inquiries or communication, please use Baron Capital’s official channels.

Dear Baron Discovery FundShareholder,

Performance

This was a challenging quarter for Baron Discovery Fund ^® (the Fund), both on an absolute and relative basis. In the first quarter of 2026, the Fund declined 10.65% (Institutional Shares), trailing the Russell 2000 Growth Index (the Index) by 7.84%. We don’t take this lightly, and we have doubled our efforts to understand what is going on in the market both in the short term, and (far more importantly) as it affects the overall long-term embedded valuations of our holdings in the Fund.

Of the underperformance, five buckets accounted for 7.88% (essentially all of it):

• 2.63% came from Information Technology (IT) (software exposure was entirely responsible for the relative shortfall in the sector, but was partly offset by solid relative performance in areas benefiting from the AI secular growth narrative, such as semiconductor, semiconductor materials & equipment, and electronic equipment & instruments related companies)

• 1.76% came from Consumer Discretionary (higher energy prices, inflation and AI induced unemployment fears, plus noise around “prediction markets” competitors to DraftKings Inc. (DKNG) )

• 1.22% came from Health Care (there were no real standout mistakes here, but the market was negative on life sciences tools and health care technology)

• 1.17% came from our lack of exposure to Energy (higher oil prices related to the Iran action moved the sector up 26%) and Materials (aluminum and chemicals prices are up, also related to Iran);

• 1.09% came from Industrials (some of which related to concerns about commercial aerospace suppliers like Loar Holdings Inc. (LOAR) due to the military action in Iran)

Annualized performance (%) for periods ended March 31, 2026 ^†

Of the underperformance, in IT, 3.71% of the relative deficit was attributable to software. If we include two health care companies that are software-related ( Waystar Holding Corp. (WAY) and Heartflow, Inc. (HTFL) ), the total adverse impact from software in the quarter was (4.36%) or nearly 60% of our negative relative performance. These software companies almost uniformly beat earnings, yet shares dropped considerably.

Software has been decimated by the so-called “SaaS-pocalypse” which is shorthand for how the revolution of AI is changing the industry. SaaS stands for software as a service. The market has decided that all software companies are AI losers and, as a result, every one of our software holdings saw significant declines in the quarter. Despite generally strong fourth quarter earnings, the sharp declines have pushed software valuations to levels not seen in more than 15 years. Although the short-term results have been difficult, we see this environment as a chance to invest in truly attractive opportunities across software companies that in our view have strong and sustainable competitive advantages. There are multiple potential catalysts that could quickly change the market’s thinking on these software companies, and we want to be there to reap the benefits when that happens.

Companies like Anthropic (ANTHRO) and OpenAI (OPENAI) have created models known as “frontier, ” “foundation, ” or “large language” AI models (LLMs) that have revolutionized the way we search for and categorize information that is generally publicly available. They have extended their LLMs into software coding, in a way that has become much more accessible to the general population, thereby democratizing software development. It is true that this revolution has made it much less expensive to develop basic software (for professionals and consumers alike). Companies that have value propositions based mostly on their actual code are truly at risk of disintermediation in the world of AI. However, we have largely avoided these types of companies. Our companies should have built-in competitive advantages, which extend far beyond the actual code. Our portfolio companies have their own internally developed AI which is custom tailored to their own domains. Here are a few examples of the differentiation which exists in our investments.

1. Deterministic Data/Infrastructure Protection – LLMs take the data that is available to them and search based upon it. If there is an actual answer to the question being asked, it will be returned. Where no actual answer can be found, a probabilistic “guess” is made in order to fill in the blanks. The answer may be correct, or it may not be (in which case you have what is called a “hallucination”). Software companies that deal with private customer data, not available to LLMs, have a prized possession because software using deterministic data will have an actual answer to a question being asked that in many cases cannot be addressed by an outside LLM. In fact, it may be unsafe, illegal, or out of policy for a company to use an external model, or to allow that external model to have access to its proprietary information.

Good examples of this are regulated companies in industries such as health care and finance. The more complex the environment, the more embedded the legacy software will be in the enterprise. Now these legacy software companies can use AI from an outside LLM through a link called an MCP Server (Model Context Protocol) to help fine-tune their own deterministic data. But there is a cost for using outside AI based on the amount of information “tokens” consumed. And breaches of MCP Server software have also been reported (see below). Cybersecurity companies in particular have the advantage of seeing all of a company’s data and parsing it for particular threats to the internal network or application structure of that company.

The brands of these companies are valuable as they have built up years’ worth of trust with their customers. This is why we have invested in SentinelOne, Inc. (S), which provides endpoint protection using its own AI algorithms for cyber-breach discovery and remediation, . The same is true for observability software (which “instruments” everything that moves through a network or attaches to it, as well as the applications and data related to that movement). We own Dynatrace, Inc. (DT) which is architected on its own internal AI to predict failures in network software and hardware (whether in the cloud or on-premise) and works to automatically remediate the issues. It’s used by the largest companies in the world that operate in the most complex environments (airlines, financial giants, and defense companies for example).

Deterministic/infrastructure oriented companies gain nearly all of their value by integrating with and servicing their clients’ needs, rather than just by selling an off-the-shelf software package. Such software provides high return on investment (ROI), auditable security compliance, and peace of mind at a reasonable cost. Even if cheaper software solutions that were coded using LLM platforms came out, they would still have to be integrated and maintained into the enterprise’s architecture, and they would have to link to outside LLM’s for AI capability (which could cost a LOT more to run in the future versus what existing vendors charge for their “tuned” and more specific AI models). We believe that these companies will become even more valuable in an “agentic AI” world, where software autonomously executes tasks based on user goals, operates with its own enterprise privileges, and must be monitored and controlled.

2. Network Effects Vertical Vendors – Some companies serve a very specific customer base and provide increased value by giving each customer the benefit of understanding (using hard to compile domain specific data) what is going on in their industry. Examples of this include ServiceTitan, Inc. (TTAN), which provides software for service trades such as plumbing and HVAC. It is an all-in-one platform for lead generation, job bookings, dispatching, estimating jobs, customer communications, and payments/financing. Each trade has its own specific characteristics and regional data on pricing, competition, service times, and contract terms that ServiceTitan understands deeply. It is not easy to switch the software out, particularly because it helps businesses automate their processes and minimize the overall personnel needed. Procore Technologies, Inc. (PCOR) provides integrated construction software, which is required by many of the major general contractors in order for subcontractors to be able to participate in a construction project. The software combines computer-aided design software blueprints with job scheduling, cost estimations, materials costs, and change order management. In this manner, the job site can be coordinated among all the different parties involved in the construction project. It is truly a community-oriented platform that is not easily replaced.

3. Atoms Plus Electrons – These are hybrids of software and hardware. They are in some ways the most protected because AI in and of itself can’t create hardware. Companies like Netskope, Inc. (NTSK) fit into this category. Netskope is a misunderstood company which provides secure access service edge (SASE) functionality for zero trust network access (ZTNA), data loss protection, and threat protection to its enterprise customers. It uses a proprietary network of worldwide data access centers as gateways for access to enterprise network resources, web resources, and applications. These physical data centers allow much faster data movement as well as for in-line scanning of network data for security purposes. The company is not earning full margins yet because it has invested in building its physical network (which is part of the reason it is down in the quarter). However, NetSkope is now starting to reap scaled revenue benefits, and its physical network gives the company an advantage over purely software-based ZTNA solutions in that it is safer and provides much faster overall network access (lower latency or delay). It cannot be replicated by software alone.

4. Regulated Industries – Some industries like health care in particular are heavily regulated, with extreme penalties for misuse or loss of patient information. And in some cases, such as with Heartflow (which uses AI software to map coronary arteries to assess blood flow and plaque buildup without an invasive procedure), clinical trials and Food and Drug Administration (FDA) approval are required before the software can be used.

While this discussion is important, the more practical question is when the market will begin to recognize the wide dispersion in intrinsic value across the software universe. We believe several catalysts are emerging that should separate the winners from the losers.

First, it is likely that we will see increased merger activity. Private equity funds specializing in software have recently raised tens of billions of dollars and would be very sophisticated buyers of high-quality companies at historically depressed evaluations (we have had eight companies acquired in this space in the last six years). Additionally, we are seeing strategic buyers from within the technology space purchase software companies. Last year we had two software companies purchased by such buyers, including CyberArk Software Ltd. (CYBR), a high-end cybersecurity company which was bought by Palo Alto Networks (PANW) (announced in July 2025 and closed in February 2026).

Second, it is almost inevitable that there will be cyber-attacks based upon usage of LLM based AI within enterprises if the technology is not properly secured and controlled. We have already seen such an attack. In March 2026 LiteLLM, an LLM gateway tool (which allows developers to link their applications to over 100 different LLMs) was used as an attack vector. Poorly secured coding in this widely used tool led to widespread malware infiltration. The attack was so sophisticated that it allowed the attackers to rapidly spread the malware across on-premise and cloud resources and exfiltrate sensitive data to an external server. SentinelOne recently released a technical paper which showed how its own AI-driven software automatically and rapidly protected its users by finding and shutting down this attack and provided an audited trail of the attack vector itself.

Third, we are likely to see partnerships between legacy software companies and LLM providers, which will highlight the “last mile” deterministic data value of legacy software companies. Recent examples include partnerships with OpenAI and transaction processors such as Instacart (CART), as well as a partnership with SentinelOne and Google (GOOGL) (to provide autonomous, AI-based cloud security for Google Cloud customers).

Finally, we expect continued solid financial performance from companies with the protected characteristics described above. During the past quarter, our holdings generally delivered results ahead of expectations and raised guidance. We believe this trend will persist, and that growing free cash flow will ultimately capture investors’ attention. Yet valuations are lower than they have been in over a decade. As we have noted in past letters, software companies have incredible financial characteristics, including outsized margins, strong balance sheets, and the ability to actually generate more free cash flow as they grow (due to the upfront payment of subscription fees). For all these reasons, we have maintained our overweight in the software space, and we believe that we will see significant outperformance for years ahead of us.

Top contributors to performance for the quarter

Advanced Energy Industries, Inc. is a designer and manufacturer of products used to transform, refine, and modify electrical power for use in semiconductor, industrial, medical, data center, and telecommunications end markets. Advanced Energy’s stock rose during the quarter as earnings and guidance were better than expected and as the market began to appreciate the strength that the company would see in both its data center and semiconductor end markets. The company is enjoying the fruits of having repositioned its data center segment to focus on sole-source, differentiated, higher margin business. AI’s increasing power requirements play to Advanced Energy’s strengths in power density and efficiency. The company also recently launched new products into the semiconductor market which are expected to drive strong growth through this year. Combined with the early stages of a recovery in its industrial and medical end markets, Advanced Energy is poised for several years of continued strong growth and margin expansion. The company also remains focused on acquisitions to bolster its product offerings, particularly in the large fragmented industrial and medical spaces.

Masimo Corporation is a medical device company that manufactures and sells a variety of non-invasive patient monitoring technologies, including its well-known pulse oximeters used to measure blood oxygen levels. Shares outperformed for the quarter after Danaher Corporation (DHR) announced that it would acquire Masimo at a 38% premium. This was a special situation driven by an activist investor that worked out very well for the Fund.

Arcellx, Inc. is a biotechnology company which uses CAR-T technology (modifies a patient’s own immune cells to recognize and destroy cancer cells) to treat multiple myeloma. It is due to be acquired by Gilead Sciences Inc. (GILD) in June (around which time we expect that Arcellx will receive FDA approval for its drug called Antio-cel).

Top detractors from performance for the quarter

Intapp, Inc., a vertical software platform serving private equity, legal, and consulting firms, detracted from performance this quarter. The drawdown was driven by a sector-wide AI disruption narrative that hit legal-adjacent software stocks particularly hard, with Intapp declining sharply through mid-February after Anthropic announced new legal tools. We sold our investment in the quarter as we believe that our other software holdings have better overall competitive advantages.

DraftKings Inc. is the leading U.S. digital sports betting and iCasino operator. The stock declined as investors grappled with a guidance range that implied handle (amount bet) deceleration, elevated prediction markets investments to compete with firms like Kalshi (KALSHI) and Polymarkets, and lingering debate around structural hold (the percentage of overage profit per bet) sustainability. The headline concerns obscure what we believe are strong fundamentals in the core sports betting business customer cohorts. Management built 2026 guidance on flat actual hold, a figure that has expanded every year in the industry’s history. Parlay mix, the primary mechanical driver of hold, increased 500 basis points during NFL season and 200 basis points year to date. The $800 million EBITDA midpoint also embeds a $200 million headwind from prediction markets investment, which currently carries no associated revenue. Excluding that impact, implied core business EBITDA exceeds $1 billion. We believe the stock is trading at attractive multiples relative to the company’s long-term earnings potential and think the total addressable market for prediction markets, while nascent, has the potential to accelerate growth.

Shares of Netskope, Inc., a cloud security and networking platform for enterprises, were down due to a combination of sector-wide and technical factors rather than fundamental weakness. The entire application software sub-sector experienced a sharp drawdown as investors weighed AI disruption risks, and recent IPOs like Netskope bore the heaviest losses. Adding to the pressure, Netskope’s lock-up expiration in mid-March made roughly 390 million shares eligible for sale, creating a supply overhang that coincided with the worst of the sub-sector selloff. The business itself performed very well— fiscal fourth quarter (ended January 31, 2026) revenue grew 32%, annualized recurring revenue (ARR) reached $811 million, and grew 31%, the company posted record quarterly net new ARR, and achieved positive free cash flow for the first time. Management guided fiscal 2027 revenue above consensus expectations. We maintain conviction in Netskope’s long-term positioning in the SASE market, where demand for securing cloud and AI workloads continues to grow, and view the current valuation as disconnected from the company’s growth trajectory and competitive standing.

Portfolio Structure

Top 10 holdings

Recent Activity

Top net purchases for the quarter

Forgent Power Solutions, Inc. is a leading manufacturer of electrical distribution equipment used in data centers, the power grid, and energy-intensive industrial applications. Forgent is a low- and medium-voltage equipment specialist and focuses on custom, “engineered-to-order” products (90% or more of revenue) whereas larger competitors in the industry generally focus more on higher voltage and standard products. Forgent differentiates itself from competitors by engaging deeply with customers in the design phase and then offering custom products in shorter lead times than the standard products sold by competitors.

The company has nearly completed a manufacturing footprint investment which will support $5 billion in revenue, giving it one of the largest state-of-the-art manufacturing footprints in the industry. Plus, it has very good visibility with about $3 billion in annualized orders, with a $1.5 billion current backlog. Electrical equipment, especially power transformers, remains a key bottleneck in the broader data center infrastructure build, and Forgent’s capacity planning and manufacturing efficiency are uniquely positioned to take advantage of this supply/demand mismatch. Despite inefficiencies from excess capacity, Forgent already has near best-in-class adjusted cash flow margins, which we expect to continue to expand as the company drives more volume over its large manufacturing footprint. To date, most of its data center business has focused on colocators and neoclouds, with very large opportunities to engage with and support larger hyperscale customers going forward. We believe Forgent can grow its revenues to over $5 billion in the next five years (from $296 million in 2025 and an expected $1.3 billion in 2026) supported by continued robust grid and data center capital expenditure as well as share gains from competitors in the market.

Enpro Inc. is a diversified industrial technology company whose proprietary, value add products and solutions provide critical functionality and protection across a wide range of demanding environments. Today, more than half of revenue is generated from recurring, high margin aftermarket applications, and a similar proportion is exposed to structurally higher growth end markets. Enpro’s Sealing Technologies segment designs, engineers, and manufactures metallic seals, soft gaskets, wheel end products, and gas analyzers and sensors serving general industrial, commercial vehicle, power generation, food and pharmaceutical, aerospace, and petrochemical markets, supported by strong brands such as Garlock, which is widely regarded as the “Kleenex” of its category. The Advanced Surface Technologies (AST) segment is focused on the semiconductor market and provides precision manufacturing, cleaning, refurbishment, and coating services to leading wafer fabrication equipment original equipment manufacturers and foundries, with a particular emphasis on leading edge production.

We believe Enpro can deliver mid to high single-digit organic revenue growth over time, with EBITDA margins expanding into the high 20% range from the low to mid 20% range today, supported by contributions from both segments. Sealing Technologies should continue to achieve above GDP organic growth driven by strong pricing power and ongoing investment in innovation and attractive growth markets. AST is positioned to benefit from a multi year secular growth opportunity driven by increasing leading-edge semiconductor spending and a rising U.S. share of global manufacturing, particularly supported by AI driven demand in the near term. We also expect the company to continue deploying its strong free cash flow toward highly complementary acquisitions, leveraging its operational excellence capabilities to drive value creation. As Enpro continues to scale and margins improve, we believe the business will warrant a more premium valuation, supporting further upside over time.

We added to our position in Dynatrace, Inc., a provider of “observability” software. For the reasons we laid out above we believe that this is a great deterministic data-oriented company, benefiting from significant competitive advantages. However, it is trading at a rock-bottom multiple (13 times free cash flow, with that metric is likely to grow in the mid-teens for the next few years).

We also added to Heartflow, Inc., whose software analyzes CT scans of a patient’s coronary arteries done with contrast, and shows calcification, plaque buildup, and blood flow quality in a three-dimensional model. It is hard to understand how Heartflow would be easily disintermediated, given the customer trust it has built up, and its FDA approved software based on significant clinical trials and millions of real-world CT scan analyses.

Finally, we added to Waystar Holding Corp., which like Heartflow has been lumped into the “AI software losers” bucket. Waystar is a provider of revenue cycle management software to health care providers. The company has an AI driven, end-to-end suite of solutions that saves clients massive amounts of working capital costs by getting claims submitted quickly and correctly, and by automating insurance appeals when necessary. At under 11 times adjusted cash flow, but growing cash flow in the low teens, we believe the company is competitively advantaged and very cheap.

Top net sales for the quarter

We sold several positions in the first quarter, mostly relating to companies set to be acquired. These included Exact Sciences Corporation (a cancer diagnostics company acquired by Abbott Laboratories (ABT) in March), Masimo Corporation, Clearwater Analytics Holdings, Inc. (an investment accounting SaaS company due to be acquired by multiple private equity firms in June), and Arcellx, Inc. We also sold our remaining position in GitLab Inc. (a software company that enables enterprises to coordinate the development and production of software), as we came to the view that the company had the potential to be disintermediated by LLM developed solutions.

Conclusion

We hate to underperform. We “eat our own cooking, ” as we have personally invested meaningful amounts of our net worth in the Fund. Rest assured that we are devoted to our process of investing in competitively advantaged companies with great management teams for the long term. We spend hours every day performing due diligence on our companies, including speaking with management teams, competitors, industry experts, and customers. So, we have true conviction in our investments for the reasons laid out above. Sometimes we are too early. But we believe we are not far away from seeing outperformance related to our hard work. We are grateful that you have chosen to take this journey with us.

Randy Gwirtzman, Portfolio Manager

Laird Bieger, Portfolio Manager

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References

1. † Historical performance was impacted by gains from IPOs. There is no guarantee that these results can be repeated or the level of IPO participation will be the same in the future.
2. 1 The Russell 2000® Growth Index measures the performance of small-sized U.S. companies that are classified as growth. The Russell 3000® Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market, as of the most recent reconstitution. All rights in the FTSE Russell Index (the “Index”) vest in the relevant LSE Group company which owns the Index. Russell® is a trademark of the relevant LSE Group company and is used by any other LSE Group company under license. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. The Fund includes reinvestment of dividends, net of withholding taxes, while the Russell 2000® Growth and Russell 3000® Indexes include reinvestment of dividends before taxes. Reinvestment of dividends positively impacts the performance results. The indexes are unmanaged. Index performance is not Fund performance. Investors cannot invest directly in an index.
3. 2 The performance data in the table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
4. 3 Not annualized.

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Original Post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.