Baron Generational Growth Fund on FactSet Research Systems Inc.
Thesis
FactSet is part of a group of portfolio companies whose valuations have compressed sharply because investors fear AI could disrupt established information and software businesses. The Fund believes those concerns have created a disconnect between stock prices and fundamentals, with the broader group continuing to produce low double-digit revenue growth and strong profit growth. It believes FactSet retains a vast addressable market, sustainable competitive advantages, and attractive durable growth prospects. The Fund expects valuation multiples to recover as the market again recognizes those characteristics.
“We remain optimistic that all boast vast addressable markets, sustainable competitive advantages, and attractive and durable growth prospects.”
Key risks
- AI could disrupt financial information and analytics businesses more materially than the Fund expects.
- Valuation multiples could remain depressed even if operating fundamentals remain healthy.