Billionaire investor Ron Baron is urging investors to look beyond the dominant artificial intelligence and mega-cap technology trade, identifying significant value in overlooked sectors and market caps. In a recent interview, Baron spotlighted two financial sector holdings—index and analytics provider MSCI and financial data firm FactSet—as prime examples of companies with strong long-term prospects currently ignored by the market.

Baron, whose firm recently launched its first exchange-traded funds after decades of generating an estimated $57 billion in investor profits, forecasts another $250 billion in profits over the next decade. This confidence is partly rooted in finding companies where exceptional leadership and embedded market positions are temporarily overshadowed by short-term headwinds or broader market neglect.

MSCI: A Bet on a Founder's Legacy and Embedded Infrastructure
Baron has been a continuous buyer of MSCI since its 2007 IPO at $18 per share, even during the financial crisis. He attributes his conviction partly to the compelling story of founder and Chairman Henry Fernandez, who fled Nicaragua with nothing and built the company inside Morgan Stanley. "He's been buying shares as well personally... I'm trying to keep up to him," Baron said.

Despite MSCI's critical role—with trillions in global assets benchmarked to its indexes—its shares are down approximately 8% over the past year. Baron views this underperformance not as a reflection of a broken business model but as a disconnect from the company's entrenched, utility-like position in the institutional investment ecosystem.

FactSet: Banking on a "Killer" New CEO from JPMorgan
Baron expresses even greater enthusiasm for FactSet, whose shares have plummeted nearly 40% this year due to disappointing earnings. He believes the sell-off is excessive and points to a recent CEO change as a transformative event. The company appointed Sanoke Viswanathan, a former senior JPMorgan executive once considered a potential successor to Jamie Dimon.

Baron likened the hire to "putting Jamie Dimon at 51 or 52 in charge of this company." He highlighted Viswanathan's remarkable journey from growing up poor on a farm in India to advising U.S. officials during the financial crisis and rising within JPMorgan. "You find people like this to run these businesses, and you say 'I have to invest with this person'," Baron stated, framing the management shift as a major catalyst for the underperforming data provider.

The Core Philosophy: Investing in People and Long-Term Vision
Both cases underscore Baron's core investment philosophy: identifying companies with durable competitive advantages and exceptional leadership, then capitalizing when short-term market sentiment creates an attractive entry point. As investors begin rotating out of crowded tech trades in search of value, Baron's focus on these "left behind" financial names highlights a disciplined approach to finding growth where the broader market currently isn't looking.