Baron Small Cap Fund

Vertiv Holdings Co (VRT) is a pure-play full-service provider of digital-critical infrastructure solutions for the data center and communications end markets.
As the leader in critical infrastructure solutions for data centers, Vertiv is positioned to exceed end-market growth due to its strong competitive advantage, particularly in liquid cooling, which is essential for AI data centers given the increased energy density of the servers. We expect Vertiv to leverage its healthy contribution margins and strong execution to boost profits, driving robust free cash flow generation that will allow the company to deploy funds into share buybacks or M&A to create additional value.

Gartner, Inc. (IT) is the leading independent provider of research and advisory services for IT, HR, sales, finance, and marketing leaders.
Gartner has a vast addressable market, which management estimates exceeds $70 billion annually, implying a penetration rate of less than 3%. IT is rapidly changing and growing in strategic importance, leading users to turn to third-party providers for insight into trends. Gartner enjoys retention rates of more than 100%, driven by the low price of its research relative to value. We think consistent execution in Global Technology Sales and improvements in Global Business Sales will help accelerate Research growth into the low double digits.

Kinsale Capital Group, Inc. (KNSL) is a property and casualty insurer focused exclusively on the excess and surplus (E&S) lines market, which includes risks that are unique or difficult to place in the standard insurance market.
We believe Kinsale is a well-run insurer that should grow earnings and book value per share much faster than its peers. Its focus on the attractive E&S market, underwriting discipline, and efficient technology platform enable Kinsale to rapidly grow premiums while delivering industry-leading underwriting margins. Management is highly regarded and has decades of experience in the E&S market. We believe Kinsale has a long runway for growth in an attractive segment of the P&C insurance market.

ICON Plc (ICLR) is the second largest global contract research organization (CRO), providing outsourced drug development services to pharmaceutical and biotechnology clients. ICON has expertise in multiple therapeutic areas.
ICON became the second largest CRO through its 2021 merger with PRA Health. As drug trials become increasingly complex and biopharma companies consolidate vendor lists among top-tier providers and seek stickier strategic relationships, we believe large global CROs will be the primary beneficiaries. ICON's scale benefits enhance relevance to existing and potential customers. The outsourcing trend is accelerating, driven by biopharma's need for a lower, more variable cost structure and the inherent lack of biotechnology infrastructure.

Red Rock Resorts, Inc. (RRR) owns and operates 20 local casinos in Las Vegas and is in the planning stages of developing and managing another tribal casino in California. It also controls seven gaming-entitled sites consisting of almost 600 acres in Las Vegas and 30 acres in Reno.
The company operates in the improving Las Vegas locals gaming market, which is now back to previous peak levels. We think the market is attractive, given favorable fundamentals including population growth 2.7 times the national average and $20 billion of development projects that are either in the planning stages or under development. The market also offers the lowest tax rate in the U.S., with limitations on the development of new casinos in the region. Red Rock also has the option to develop or sell its owned acreage for gaming in Las Vegas and Reno.

Guidewire Software, Inc. (GWRE) is a leading provider of core systems software to the global P&C insurance industry.
Guidewire is a small player in a vast addressable market and has been benefiting from the inevitable need for P&C insurers to upgrade 30-year-old systems. The company offers best-in-class functionality, as evidenced by its growing installed base and near-100% retention rates. The company has passed the midpoint of its cloud transition, and we expect to see accelerating revenue, expanding margins, and improving FCF over the next several years. We believe that recent M&A in the vertical software space supports a meaningful value creation opportunity for shareholders.

ASGN Incorporated (ASGN) is the second largest staffing firm in the U.S., providing IT and professional services in the technology, digital, and creative fields across commercial and government sectors.
ASGN participates in segments of the professional staffing industry (scientific, IT/engineering, advertising, digital, creative, marketing, and government) experiencing robust secular growth. Focus on the non-commoditized high end of the market should allow the company to maintain industry-high organic growth rates and gross margins. We think it should benefit from increased U.S. outsourcing penetration and the shortage of skilled workers in its verticals. Its business model is characterized by robust operating margins and substantial free cash flow generation.

The Baldwin Insurance Group, Inc. (BWIN) is an insurance brokerage firm that distributes commercial and personal lines insurance to over 2 million clients.
The Baldwin Insurance Group is gaining market share due to its entrepreneurial culture, unique client service offerings, and fast-growing distribution channels. The company is an active consolidator in the highly fragmented insurance brokerage industry. We expect margin expansion from lapping recent growth investments, leveraging corporate overhead, and high contribution margins on acquisitions. Management aspires to grow the firm into a top 10 broker over time.

Through its subsidiaries, TransDigm Group Incorporated (TDG) designs, produces, and supplies engineered aerospace components for commercial and military aircraft customers across the world.
TransDigm's parts are custom designed at the pre-production stage and specifically approved by the Federal Aviation Administration and aircraft manufacturers. TransDigm is typically the sole supplier of 90% of the parts that it manufactures. While the company earns a modest return on original equipment parts, it earns large margins on after-market replacement parts for airframes that stay in service for decades. This generates a substantial stream of recurring cash flow, which is used for acquisitions and shareholder dividends.

SiteOne Landscape Supply, Inc. (SITE) is the largest wholesale distributor of landscape supplies in North America. Through its large branch network, the company offers a broad selection of products across irrigation, agronomics, hardscapes, and nursery to landscaping professionals.
While SiteOne is more than five times the size of its closest competitor, it has only mid-teens share of a highly fragmented market. It has significant opportunity to further consolidate the industry through accretive acquisitions, driven by an experienced management team with a strong M&A track record. The core landscaping market generally grows faster than GDP over time and is relatively recession resilient. SiteOne is also investing in initiatives to increase the productivity of its sales force and in-store associates to expand margins over time.

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