From Baron Funds' first quarter letter: Interface, Inc. (IFSIA
) is the worldwide leader in the design, production and sales of modular carpet tiles. This product is gaining market share from traditional broadloom carpet because it is cheaper, easy to install new or to replace stained or damaged tiles, and offers many design options. The company has a number of opportunities for growth. Management believes that sales of carpet tiles, presently representing 33% of the U.S. office floor covering market, may grow to 65% by 2020. We expect Interface to also benefit from: (i) a rebound in commercial and residential construction; (ii) the rollout of its retail stores; and (iii) new uses by schools, government, retail, healthcare, and hotels. Europe and Asia also present attractive growth opportunities. After peaking at $20 per share in 2011, Interface's share price declined as global economic activity remained weak. We recently began acquiring shares at $12 per share, and are optimistic about the company's prospects over the next few years.