Ron Baron argues that software and data companies like FactSet, MSCI, and Gartner have proprietary data and relationships embedded in client workflows that cannot be replaced by LLMs. He sees the selloff in these stocks as a buying opportunity, noting that FactSet's new CEO from JPMorgan is transforming the business. ✦ AI generated
Ron Baron · The Compound · 2026-07-24 · original ↗
starts at this moment · 60:20
“You guys are optimistic that some of the AI fears are overblown?”
The narrative is they're not going to exist any longer. ... We find companies that have something special that get well there's no way they're going to exist. That's all going to get replaced by by AI. ... He's describing to us how all of the services that he's providing are getting embedded in the workflow of the clients that can't be replaced. ... So basically he's talking about the data that he has, the relationships he has. ... When we have something that's a commodity type of service, then we give it to them for really low prices, but that gets us the entree to give them something that they really need for their business they can't get somewhere else.
verbatim transcript · starts at 60:20
60:12valuations are incredibly cheap. You know, 50% off of their highs. >> You own some software stocks, right? >> Yeah. >> You so you guys are optimistic that some of the AI fears are overblown. >> Way overblown if you have something that is proprietary >> such as AI should be an enabler to these businesses, not a not a >> proprietary data. Msei >> they have proprietary data they're
60:36spending a great deal on on on people to gather information to provide to hedge funds for example they have and there's also going after private no one's done that before so >> you guys on faxet too >> yeah um faxet is a really interesting story >> market hates it >> yeah we have been so in the past year we bought $9 billion [clears throat] worth of stock and about $5 billion uh has been
61:05in software companies. So five billion out of nine uh for software the past year and uh in fact then uh we have been investor for uh a very long time and did well for a long period of time and then in the past year the stock has fallen from 500 to 200. It's now 250 and we've been buying it. Has the companies been buying it? So the four or five companies
61:34that we've been investing in or software, the companies have been buying in like crazy and we've been buying right along with the companies and uh and the narrative is they're not going to exist any longer. And the person who is really interesting to me uh who runs uh Paxet now replaced the prior CEO who we hadn't had good success with for probably three or four or five years and
62:00uh so was vulnerable. Uh this guy uh so he grows up on a farm in India, dirt poor uh figures out how to go to the best technical school in India and goes to the best uh uh you know business school in India and then gets recruited by uh um McKenzie and company and then uh the financial crisis hits in uh 2008 and McKenzie says we'd like you to come
62:29to America and to be an adviser. He's 31 years old at the time. We'd like you to come to America to be an adviser to Tim Gener right off the farm in India. [clears throat] And so he comes to the United States. He works uh for Gitener for a year or two. Then Morgan then then price solved. Then JP Morgan recruits him and uh he works at JP Morgan and he
62:53becomes one of the top candidates uh to uh to succeed Jaime Diamond. He's now 52. it becomes one of the the the prime candidates probably in the top 10. They say, "Well, look, you're in the top 10, but you didn't make the top five." He says, "Come out of here." And where does he go? Fact set. So, I tell Michael say, "This is a really cool company. It
63:15hasn't been especially well managed for a few years now. And now it's like a junior Bloomberg, but we got uh the big company in the industry is Bloomberg. And they got some vulnerabilities and we get some special things. And now we drop in this new guy who is unbelievable. We weren't allowed to speak to him until we took his position. And so after that we spent a bunch of time with him and he