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Baron Funds Comments on Booz Allen Hamilton Holding Corp.

May 24, 2012 | About:
Holly LaFon

Holly LaFon

From Baron Funds' first quarter commentary: Shares of Booz Allen Hamilton Holding Corp. (BAH), a provider of information services and technology to the federal government, declined slightly. Amid difficult times for defense contractors, the company released good fourth-quarter numbers, but its guidance for the coming fiscal year was disappointing. We are confident that there is significant upside to the company's shares given multiple factors, including its current low valuation, significant free cash flow, new share-repurchase program, headcount reduction initiatives and new commercial and foreign sales opportunities for its sophisticated cyber-security and health care information technology products. (Randy Gwirtzman)

Booz Allen Hamilton Holding Corp., as mentioned above, is a provider of information technology and operational consulting services to the federal government. The company has a decades-long history of superior client service, and is unique in both the extreme high-end quality of its consultants, and in its client-focused organizational structure.While just over half of Booz Allen's revenues come from the Department of Defense, many of these projects help the government to save money (up to a ten-fold return to the customer), meaning that these services will be in increasing demand. Its specialization in healthcare, financial services and cyber-security (the other half of Booz Allen's business) ensure that Booz Allen is focused on the highest demand areas of government consulting. In addition, Booz Allen is building out a high end commercial version of its business which will be targeted toward healthcare and financial services clients in the U.S. and overseas.We believe Booz Allen has significant room to grow with its current low valuation, free cash flow, share repurchases, and new commercial and foreign sales opportunities. (Randy Gwirtzman)

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