Baron Discovery Fund

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.

Exact Sciences Corporation (EXAS) is a cancer diagnostics company whose flagship product is Cologuard, a stool-based DNA colon cancer screening test.   
Exact Sciences is targeting a $18 billion annual revenue opportunity in its core Cologuard business. With 110 million Americans at risk for colon cancer, the market is vast. Cologuard is also better at detecting pre-cancerous growths than blood-based screenings. Its long-term objective is to capture 40% market share with 40% adjusted EBITDA margins, or $7 billion in revenue and $2.8 billion of adjusted EBITDA. The company is developing tests for minimal residual disease and multi-cancer early detection with the goal of becoming a leader in cancer screening and diagnostics.  

Liberty Media Corporation - Liberty Live (LLYVK) consists of Liberty Media Corporation's 30% interest in Live Nation Entertainment, Inc., the world's largest live entertainment company, producing, selling, and promoting concerts, and connecting brands to music.
Live Nation is the dominant player in an industry with solid long-term demand trends. The company has significant opportunities for capital reinvestment. Its investment in new owned and operated venues drives higher concert segment margins relative to shows held at third-party venues, largely due to Live Nation's control of the profitable food and beverage business. As Live Nation's mix shift to owned venues increases, we believe the resulting margin improvement will produce low double-digit growth in adjusted operating income over the long term.

Guidewire Software, Inc. (GWRE) is a leading provider of core systems software to the global 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.

CyberArk Software Ltd. (CYBR) is an identity-based security software provider focused on privileged access management (PAM). The PAM platform prevents against theft of the credentials of privileged accounts (such as IT administrators) and restricts access to critical resources. 
CyberArk is a recognized market leader with more than 25% share in PAM and deployments in over half of the Fortune 500. The company is leveraging its foothold in PAM across its 8,000 clients to expand into adjacent markets such as single sign-on, multifactor authentication, secrets management, and endpoint privilege management. New product categories, which are doubling on a yearly basis, account for roughly 40% of revenue. Transition to a subscription-based model should lead to revenue reacceleration, strong free cash flow margins, and increased customer lifetime value.

DraftKings Inc. (DKNG) is the leading mobile sportsbook and gaming operator in the U.S. Its products include daily fantasy sports, regulated internet casino gaming, and regulated online sports betting. DraftKings offers sports betting in 26 states and online gaming in five states.
As the market leader in internet gaming, DraftKings is well positioned to capitalize on the rapid growth of regulated sports betting and iGaming in the U.S. The company is demonstrating healthy profit margins in its most mature markets and remains focused on driving strong customer lifetime value. We believe DraftKings’s product and scale advantages will enable the company to maintain its leadership position in the years ahead.

PAR Technology Corporation (PAR) is a leading global provider of software, systems, and service solutions to the restaurant industry. Its cloud-based SaaS offering for point of sale, loyalty, ordering, and back office is purpose-built for enterprise restaurants.
PAR is building a cloud-based unified platform for food service enterprises to improve operations and customer experience. Through acquisitions, PAR now has most of the key pieces of the software technology stack in-house and is driving cross-selling and penetration across customers. The company has a multi-year opportunity to drive further customer adoption of its platform with limited competition from incumbents. We think PAR can deliver strong growth in annual recurring revenue for several years with best-in-class operating leverage driving margins and valuation higher in time.

Mercury Systems, Inc. (MRCY) designs, manufactures, and markets high-performance, embedded, real-time digital signal and image processing systems, mission systems, and software. Its customers are Tier-1 defense contractors worldwide.
We believe Mercury is uniquely positioned to sell high-speed computing and storage subsystems to nearly all large U.S. defense contractors. Its products, which let customers more rapidly and cheaply develop their own solutions, are used for mission management, communications, sensors, electronic warfare, and other systems. Mercury serves an available market of over $40 billion, including $24 billion for C4I (communications, command and control, and mission management), and $18 billion for sensor and mission systems (electronic warfare, radar, and weapons).

Dynatrace Holdings LLC (DT) is a leading provider of application performance monitoring (APM), offering a full-stack solution including infrastructure and log management. It finalized transitioning its customers to a new updated platform in 2021.
With its new platform, the company can better address complex use cases of multi-cloud, containers, and hybrid environments. Public estimations suggest only 20% of enterprise applications are currently monitored, but that percentage could grow to 50% by 2023-2024. We believe that Dynatrace's customer base has 20% to 30% penetration, with a sophisticated G15K customer base. The completion of its transition to the new platform in 2021 is driving more attractive revenue growth, margins, and unlevered free cash flow that underpin an appealing stock setup.

Montrose Environmental Group, Inc. (MEG) is an environmental services company that supports government and commercial organizations with services ranging from air measurement and laboratory services to regulatory compliance, permitting, engineering, and remediation.
Montrose's plan is to consolidate the $1.3 trillion environmental services industry, in which there is no current leader. Management believes that organic growth will remain in the high-single-digit range, and that Montrose can increase margins by 100 bps to 150 bps per year. The secular backdrop is quite strong given the increasing focus on environmental issues, and the company has an ESG overtone. There is optionality around additional contaminant regulations, such as monitoring PFAS chemicals in water and methane emissions.