Amid Steep Decline, $24 Million Bet Highlights Faith in FactSet's Enduring Data Model
In a notable show of confidence during a prolonged market downturn, McDonald Capital Investors has substantially increased its stake in FactSet Research Systems Inc. (NYSE: FDS). A recent SEC filing reveals the firm purchased 86,891 shares in the fourth quarter, a transaction valued at approximately $24.39 million.
This move comes as FactSet shares have tumbled roughly 45% over the past 12 months, significantly underperforming the broader S&P 500. Despite the stark price decline, the investment appears to be a calculated bet on the underlying strength of FactSet's core business—providing integrated financial data and analytics to institutional investors and wealth managers worldwide.
"This isn't a trade on short-term momentum," said market analyst David Chen of Finley Strategic Advisors. "McDonald's purchase signals a belief that the market is mispricing a high-quality, annuity-like business. FactSet is deeply embedded in its clients' workflows. That creates incredible stickiness and visibility, which is gold in a volatile market."
FactSet's model, driven by subscription revenues rather than transaction volumes, has historically delivered robust operating margins and strong free cash flow. The company's latest quarterly results showed continued organic growth, even as some financial sector clients tightened budgets.
However, not all observers are convinced. Rebecca Vance, a portfolio manager known for her skeptical takes, offered a sharper critique: "Let's be real. This looks like classic 'catching a falling knife.' The financial data space is brutally competitive, with giants like Bloomberg and upstarts leveraging AI. A 45% drop doesn't happen in a vacuum. This could be a value trap, not a value buy. Throwing $24 million at it feels more like hope than a strategy."
For McDonald Capital, the FDS position now represents 3.31% of its reported U.S. equity assets. It sits alongside other long-term holdings like Berkshire Hathaway and Regeneron Pharmaceuticals, suggesting the firm views FactSet as a similar "compounder"—a business that can grow intrinsic value steadily over time through its durable competitive advantages.
Michael Torres, a veteran financial advisor, struck a more balanced tone: "The size of the buy is meaningful but not reckless. It's an incremental increase in a high-conviction idea. For long-term investors, the question isn't about next quarter's stock price, but whether FactSet's moat—its data integration and client retention—remains intact. The recent financials suggest it does."
The transaction highlights a growing divide in market sentiment: between those focused on near-term price pain and those looking through the cycle at business fundamentals. As spending scrutiny in the financial sector continues, FactSet's ability to maintain its high renewal rates will be the ultimate test of convictions like McDonald's.