Baron Generational Growth Fund on MSCI Inc.
Thesis
MSCI is among the portfolio holdings whose valuation has been pressured by concerns that AI could disrupt information-service businesses. The Fund believes the magnitude of the stock-price decline is inconsistent with the underlying growth and profitability of this group of companies. It continues to view MSCI as possessing a large addressable market, sustainable competitive advantages, and durable growth prospects. The Fund expects a recovery in valuation as investors increasingly distinguish fundamental performance from generalized fears surrounding AI disruption.
“We expect their valuations to expand as these characteristics are again recognized by the market.”
Key risks
- AI could create greater competitive pressure in financial data and analytics.
- Investor concerns about AI disruption could continue to suppress valuation multiples.