Baron Capital US Small Cap Fund

Clearwater Analytics Holdings, Inc. (CWAN) is a cloud-based software solution providing portfolio accounting and reporting, compliance monitoring, performance tracking, and risk analytics for insurers, investment managers, corporations, and other institutional investors.
We believe Clearwater has a large market opportunity with the possibility of compounding revenue at a high-teens to 20%-plus rate for several years. The company's cloud-based multi-tenant platform should continue to take share from legacy on-premise, service-heavy solutions or homegrown systems as companies increasingly shift operations to the cloud. Clearwater also benefits from powerful network effects driven by its unique data model and high client satisfaction. Its efficient business model should help the company reach a 40%-plus adjusted EBITDA margin over time.

Novanta Inc. (NOVT) sells highly engineered photonics, vision, and precision motion-control solutions to original equipment manufacturers (OEMs) serving the medical and advanced industrial markets.
Novanta’s portfolio of proprietary, mission-critical components supports long-term OEM customer relationships. The company is positioned to deliver mid- to high-single-digit organic growth, driven by secular trends including surgical robotics, minimally invasive surgery, and broader automation. Continued focus on operational excellence should drive expansion in gross and operating margins. Acquisitions remain a core element of the strategy and the primary use of capital, with Novanta targeting high-quality, complementary assets that offer both revenue and cost synergies.

SiteOne Landscape Supply, Inc. (SITE) is the largest wholesale distributor of landscape supplies in North America. Through its large branch network, the company offers a broad selection of products across irrigation, agronomics, hardscapes, and nursery to landscaping professionals.
While SiteOne is over three times the size of its closest competitor, it has only high-teens share of a highly fragmented market. It has significant opportunity to further consolidate the industry through accretive acquisitions, driven by an experienced management team with a strong M&A track record. With the company’s renewed focus on execution and improving underperforming branches, we expect margin expansion to accelerate in the coming years. It is also investing in technology and productivity initiatives to enhance the customer experience and improve sales efficiency.

Vertiv Holdings Co (VRT) is a pure-play full-service provider of digital-critical infrastructure solutions for the data center and communications end markets.
As the leader in critical infrastructure solutions for data centers, Vertiv is positioned to exceed end-market growth due to its strong competitive advantage, particularly in liquid cooling, which is essential for AI data centers given the increased energy density of the servers. We expect Vertiv to leverage its healthy contribution margins and strong execution to boost profits, driving robust free cash flow generation that the company could deploy into share buybacks or M&A to create additional value.

Agilysys, Inc.

Cognex Corporation (CGNX) is a leading provider of machine vision systems used in factory automation across the automotive, consumer electronics, logistics, and health care industries. Its machine vision products help manufacturers improve quality, reduce production errors, and lower manufacturing costs.
Machine vision is a foundational technology that underpins advancements in AI, robotics, next-generation automotive production, e-commerce fulfillment, product traceability, counterfeit prevention, consumer electronics manufacturing, and life sciences. Cognex is the global leader in machine vision and invests heavily in R&D to sustain its leadership and expand into new markets. The company’s competitive advantages include deep engineering expertise, an extensive patent portfolio, a strong distribution network, and the ability to service customers worldwide.

Advanced Drainage Systems, Inc. (WMS) manufactures plastic pipes and related stormwater management products. It has 69 manufacturing plants and 46 distribution centers, primarily in the U.S. Revenue by end market is 41% non-residential, 40% residential, 7% infrastructure, 5% agriculture, and 7% international.
Advanced Drainage Systems is a high-quality business with multiple competitive advantages that is benefiting from secular tailwinds related to increasing storm activity, investments in U.S. manufacturing and infrastructure, and the ongoing conversion from concrete to plastic storm pipes. The company has the potential to grow sales at a high-single-digit rate and earnings at a double-digit rate over the long term, while generating significant free cash flow that can be reinvest into the business, deployed for acquisitions, and returned to shareholders through share buybacks.

Kinsale Capital Group, Inc. (KNSL) is a property and casualty (P&C) insurer focused exclusively on the excess and surplus (E&S) lines market, which includes risks that are unique or difficult to place in the standard insurance market.
We believe Kinsale is a well-run insurer that should grow earnings and book value per share much faster than its peers. The company's focus on the attractive E&S market, underwriting discipline, and efficient technology platform enable it to rapidly grow premiums while delivering industry-leading underwriting margins. Management is highly regarded and has decades of experience in the E&S market. We believe Kinsale has a long runway for growth in an attractive segment of the P&C insurance market.

JBT Marel Corporation (JBTM) is a leading global technology solutions provider to high-value segments of the food and beverage industry.
JBT has been implementing an aggressive strategy to consolidate the food processing industry and expand margins amid favorable secular trends. We are positive on the company’s recent acquisition of Marel and believe the combination of two industry leaders should enhance growth and profitability as management realizes synergies. We expect a return to normalized industry growth of 4% to 6% organically, supplemented by acquisition-driven revenue growth and margin expansion that should increase free cash flow and create substantial shareholder value over time. 

Enpro Inc. (NPO) is an industrial technology company that offers gaskets and seals for industrial applications, as well as advanced manufacturing, cleaning, coating, refurbishment, and related services for the semiconductor industry.
Enpro has transformed its business over the past five years, divesting more than $1 billion in assets and acquiring over $1.4 billion to improve its end-market mix, growth and margin profile, and competitive moat. Enpro’s industrial businesses focus on high-margin, niche applications with recurring demand, served through industry-leading brands. The semiconductor segment is well positioned to benefit from leading-edge investments and the reshoring of semiconductor production to the U.S. Continued accretive acquisitions remain central to the company’s strategy.

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