Consumer Discretionary companies no longer dominate the Fund given the current hyper-competitive retail landscape. However, we still hold a number of stocks in the sector, including Bright HorizonsFamily Solutions, Inc. (NYSE:BFAM), the leader in corporate-sponsored childcare in the U.S. and U.K. The company is benefiting from growing numbers of working women and dual income households. Its business model is characterized by high revenue and earnings visibility, low capital intensity, superior return on investment, and high cash flows. We expect continued strong compound growth, driven by additional childcare centers and back up services, accretive acquisitions in a highly fragmented market, geographic expansion, and cross selling of new, higher margin services.
From the Baron Funds Small Cap Fund winter newsletter 2016.
