FactSet Research Systems, Inc. (FDS, Financial), a provider of financial intelligence to theinvestment community, represented 3.7% of the average portfolio weight. Its stock price increased 9.0% in the quarter as speculation surfaced the company was in discussions to be acquired. The company continues to make investments in new products and services, which is reducing its current earnings growth. However, we believe FactSet’s two-year investment cycle in private equity information is warranted and should ultimately accelerate revenue growth. We believe these investments will eventually generate 50% returns on capital. FactSet is a prime example of a business penalizing its current earnings by investing in new products to become a significantly larger company.
From Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund second-quarter 2021 letter.
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