Baron Small Cap Fund

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.

Red Rock Resorts, Inc. (RRR) owns and operates 20 local casinos in Las Vegas and is in the planning stages of developing and managing a tribal casino in California. It also controls seven gaming-entitled sites consisting of almost 600 acres in Las Vegas and 30 acres in Reno.
Red Rock operates in the improving Las Vegas locals gaming market, which is now back to previous peak levels. We think the market is attractive, given favorable fundamentals including population growth 2.7 times the national average and $20 billion in projects either in the planning stages or under development. The market also offers the lowest tax rate in the U.S., with limitations on the development of new casinos in the region. Red Rock also has the option to develop or sell its owned acreage.

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.

Guidewire Software, Inc. (GWRE) is a leading provider of core systems software to the global property and casualty (P&C) insurance industry.
Guidewire is a small player in a vast addressable market and has been benefiting from the need for P&C insurers to upgrade 30-year-old systems. The company offers best-in-class functionality, as evidenced by its growing installed base and near-100% retention rates. The company has passed the midpoint of its cloud transition, and we expect to see accelerating revenue, expanding margins, and improving free cash flow over the next several years. We believe that recent M&A in the vertical software space supports a meaningful value creation opportunity for shareholders.

Planet Fitness, Inc. (PLNT) is the leading franchiser and operator of low-cost fitness centers, with over 2,500 gyms (the majority of which are franchises) and over 18 million members. The company also sells branded fitness equipment and merchandise to all franchise locations.
As the dominant low-cost gym operator in the U.S. with the largest marketing budget in the industry, Planet Fitness is positioned to benefit from industry growth driven by increasing consumer focus on health and wellness. The company is also expanding its market by attracting first-time users (78% of Americans do not belong to a fitness club), with a long-term target of more than 4,000 gyms in the U.S. Its asset-light franchise business model produces high margins, returns, and free cash flow, as well as recurring revenue streams.

ICON Plc (ICLR) is the second-largest global contract research organization (CRO), providing outsourced drug development services to pharmaceutical and biotechnology clients. ICON has expertise in multiple therapeutic areas.
As drug trials become increasingly complex and biopharmaceutical companies consolidate vendor lists among top-tier providers and seek stickier strategic relationships, we believe large global CROs will be the primary beneficiaries. ICON's scale benefits enhance relevance to existing and potential customers. The outsourcing trend is accelerating, driven by biopharma's need for a lower, more variable cost structure and the inherent lack of biotechnology infrastructure.

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 more than five 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. The core landscaping market generally grows faster than GDP over time and is relatively recession resilient. SiteOne is also investing in initiatives to increase the productivity of its sales force and in-store associates to expand margins over time.

Gartner, Inc. (IT) is the leading independent provider of research and advisory services for IT, HR, sales, finance, and marketing leaders.
Gartner has a vast addressable market, which management estimates exceeds $70 billion annually, implying a penetration rate of less than 3%. IT is rapidly changing and growing in strategic importance, leading users to turn to third-party providers for insight into trends. Gartner enjoys retention rates of more than 100%, driven by the low price of its research relative to value. We think consistent execution in Global Technology Sales and improvements in Global Business Sales will help accelerate Research growth into the low double digits.

Kratos Defense & Security Solutions, Inc. (KTOS) develops and fields transformative, affordable technology, platforms, and systems for U.S. national security-related customers, allies, and commercial enterprises.
Kratos specializes in unmanned systems, satellite communications, cybersecurity/warfare, missile defense, training, and combat systems. Kratos’ unmanned systems/drone business offers technologically disruptive solutions that enable cost-effective upgrades of U.S. military technology. Within government services, the majority of revenue comes from high-growth spaces, including small jet engine, microwave electronics, and missile defense businesses. We expect growth to accelerate as Kratos wins key government contracts across the business due to its unique, low-cost offerings.

Houlihan Lokey, Inc. (HLI) is a global investment bank with expertise in mergers and acquisitions, corporate finance, restructuring, and valuation services.
Houlihan Lokey is a leading corporate advisory firm that is gaining share in a large global market. The company should have less earnings volatility than peers due to greater revenue diversification, a counter-cyclical restructuring business, and a mostly variable cost structure. Houlihan Lokey has significant growth potential in Europe and capital markets advisory. The company supplements solid organic growth with accretive, tuck-in acquisitions. Houlihan Lokey's long track record of success, respected brand, and global presence serve as meaningful competitive advantages.

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