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.

IDEXX Laboratories, Inc. (IDXX) is the leading provider of diagnostics to the veterinary industry.
IDEXX has continued to benefit from secular growth spending on pets, due to a growing human-animal bond, favorable demographics, increased use of diagnostics, and enhanced focus on preventative care. We think IDEXX has the best menu of diagnostics, which it continuously improves by spending six times more on R&D annually than all its competitors combined. The company's products are sold via a razor/razorblade model, which creates high retention rates and incremental margins. IDEXX generates strong cash flow, which it has returned to shareholders via repurchases.

CoStar Group, Inc. (CSGP) is the leading provider of information and marketing services to the commercial real estate industry.
CoStar has built a proprietary database through data collection over a 20-year period, creating high barriers to entry. We think CoStar's suite should grow at mid-teens rates, and we believe its Loopnet marketing platform can grow even faster. Its Apartments.com platform is the dominant multi-family internet listing service and should grow revenue by more than 20%. CoStar is starting to expand into residential, creating additional significant growth opportunities. Its balance sheet and cash generation create M&A optionality.

Arch Capital Group Ltd. (ACGL) is a Bermuda-based insurance company providing property & casualty insurance, reinsurance, and mortgage insurance.
Arch is led by an experienced management team with a successful track record across insurance cycles. The company excels at underwriting specialized policies and can nimbly shift its business mix to target the most profitable lines as market conditions change. The company is currently benefiting from favorable pricing trends across many of its product lines. In our view, management has demonstrated strong underwriting discipline and capital stewardship, allowing Arch to maintain industry-leading returns on equity with less volatility.

Verisk Analytics, Inc. (VRSK) provides risk information to insurance companies that enables them to better understand and manage their risks and optimize their decision-making processes.
We believe Verisk has a unique competitive position. The company is investing to expand its product set in Insurance and has divested its Financial Services and Energy segments. We think the pure-play focus on insurance offers an attractive financial profile with mid/high single-digit organic growth, robust margins (with room for expansion), and strong free cash flow generation.

Mettler-Toledo International Inc. (MTD) is a leading provider of precision instruments and services for customers in the life sciences, food, and chemical industries, among others.  
Mettler has a track record of consistent growth. The company has strong brand recognition, customer diversification, pricing power, and margin expansion opportunities. We think the business has attractive financial characteristics, including high returns on capital, minimal capital requirements, and strong free cash flow generation, all of which it uses to repurchase its stock. We believe the management team is an excellent steward of capital and skilled at developing sales and marketing initiatives to enhance growth.

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 inevitable 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 FCF over the next several years. We believe that recent M&A in the vertical software space supports a meaningful value creation opportunity for shareholders.

FactSet Research Systems Inc. (FDS) provides financial information to the global investment community.
FactSet serves only a small part of the addressable market, which we estimate at roughly $20 billion annually. The company has been taking market share and offering broader data sets and more advanced portfolio analytics than its competitors and has a highly regarded customer service model. FactSet has also been expanding into the fixed income and wealth management markets. Its products are sticky, leading to retention rates of over 95% and high visibility. FactSet generates robust free cash flow, which it has returned to shareholders via share repurchases and dividends.

Roper Technologies, Inc. (ROP) is a diversified industrial technology company. The company provides engineered products and solutions for global niche markets, including software information networks, medical, water, energy, and transportation.
Roper owns a portfolio of high-quality niche businesses that have generated substantial cash flow due to high margins and low capital requirements. The company seeks growth in sales and earnings by emphasizing continuous improvement in the operating performance of the core business. Roper has been using the cash generated and a modest amount of leverage to make acquisitions that are consistent with its investment thesis and make the business larger and more capital light.

Fair Isaac Corporation (FICO) is a data and analytics company focused on predicting consumer behavior through re-sellable algorithms (FICO Scores) and software (Applications and Decision Management Software).
We believe Fair Isaac has meaningful growth opportunities across all its business lines. In FICO Scores, special pricing initiatives in B2B seem likely to continue. In Software, years of substantial investment are bearing fruit and should lead to notable margin expansion over the next several years. Management has a shareholder-friendly capital allocation strategy with nearly all free cash flow used for share repurchases.

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Long Equity Exposure

Cash & Equivalents