Despite the ongoing macroeconomic challenges, we have remained steadfast in our investment approach, which is based on the twin pillars of our careful fundamental research and our willingness to be patient in times of volatility. We believe that our holdings' fundamentals have remained largely consistent throughout this volatile period, helping to reinforce our conviction and continued focus on longer-term prospects.

Software

Within software, we invest in companies that benefit from strong secular growth drivers, sustaining demand in the face of macro uncertainty, and have limited supply chain exposure. Many of the software companies that we favor develop innovative solutions that are valued by their customers precisely for their ability to create greater efficiencies. We believe these efficiencies should lead to higher productivity and lower costs.

• We initiated a position in Salesforce, a leading provider of customer relationship management software. Shares dropped mid-quarter on concerns that protracted economic weakness could undermine enterprise technology spending, and we believe this created an attractive valuation for a company that is in a privileged market position and has a long growth runway driven by businesses prioritizing how they attract and serve customers. We also believe in management's efforts to make the business more profitable.
• We downsized our position in Okta, a company providing software services for identity management solutions. Okta was negatively impacted by a security incident earlier in the year. However, we believe an increasingly mobile workforce, along with growing demand from enterprises for more robust network security, represents strong secular tailwinds for the firm.
• We reduced our position in Hubspot, a provider of marketing and customer relationship management software for small businesses. Although e-commerce has decelerated and consumer spending has weakened, we believe HubSpot should continue to benefit from its strong management team, the secular shift from offline-to-online interactions, and the prospects for increased durable growth as it moves upmarket.

Semiconductors

We trimmed our position in semiconductors and maintained an underweight position given our concerns over the inventory cycle. However, we are becoming more constructive on certain holdings within the space given the recent increase in data center spending.

• We sold shares in Taiwan Semiconductors, the world's largest dedicated foundry of semiconductor manufacturer capacity. We believe the company's sustained tech leadership in the semiconductor space and broadening demand from smartphones to personal computing, data centers, and automotive components can help it overcome cyclical demands within the industry. While we remain constructive on the position, we trimmed our holdings to capture some long-term profits.

Internet

Seeking to balance risk and reward, we trimmed certain names in internet, especially companies that are facing regulatory risks or increased competition.

• MercadoLibre is the premier e-commerce marketplace in Latin America. We trimmed our position given signs of slowing online growth. While we continue to appreciate the company's vibrant marketplace ecosystem and proven experience in building two-sided networks, we have increased cautiousness on the company's ability to overdeliver on commerce volume growth expectations as we cycle through two years of elevated pandemic-related comparables in the quarters ahead.
• We sold shares in Etsy to reduce our position size and on concerns about macroeconomic headwinds and slowing e-commerce demand. Etsy is an online marketplace for unique, creative, and often homemade goods that employs a flywheel strategy to drive organic revenue growth. We value the company for its strong market position, global growth opportunity, and very large total addressable market.

Media and Entertainment

We added to select holdings in the media and entertainment space.

• We added to Roblox on recent weakness. We are attracted to the powerful social network effects Roblox utilizes in drawing in new active users and creators. This sets up a positive feedback loop and helps the platform widen its moat, expand its addressable market, and potentially deliver durable earnings.

Industrials

Supply chain problems continued to hamper electric vehicle makers' ability to meet robust demand. We reduced our exposure to the subsector during the quarter.

• We sold shares of Tesla. Performance lagged as the company dealt with mixed messaging on staffing levels and production issues. We appreciate Tesla's ability to leverage its advantages in manufacturing, software, and brand, and we expect it to eventually be able to move down the cost curve and unlock new parts of the market while increasing unit margins. However, we sold shares during the period to manage risk/reward.
• We eliminated our position in the electric vehicle manufacturer and developer Rivian Automotive. While the company reduced cash burn and has a projected liquidity runway to 2025 to provide runway for its production ramp-up, we sold shares on the belief that it remains a long road to scale. We feel the company will have to walk an execution tightrope to profitably produce its models, especially its SUV and pickup truck, and continue to add production volume while coming down the cost curve.