From Baron Funds' first quarter letter: ACI Worldwide, Inc. (ACIW
) is the leading provider of banking software that powers the global retail payments network. This critical software allows financial institutions to communicate with each other and make sure funds move to the right places. ACI acquired its main rival (S1 Corporation) in February 2012 and now is the dominant player to both the large and small institution segments and has a commanding international presence. We believe the deal is highly accretive, will enhance the company's growth rate, and improve the recurring nature of the business, all of which we believe will lead to a higher valuation.We think that the company should trade at a double digit multiple of cash flow, which we project will increase significantly, leading to considerable upside in the stock.