Valley Forge Capital Management, a hedge fund founded by Dev Kantesaria in 2007, has grown significantly from its initial $300,000 to managing over $4.54 billion in assets. The firm, originally based in Pennsylvania and now headquartered in Miami, follows a focused investment strategy with a portfolio of just eight stocks. Kantesaria, a former medical student who transitioned to finance, prioritizes long-term investments in companies with strong pricing power and consistent cash flow growth. His fund’s top three holdings—Fair Isaac, S&P Global, and Mastercard (NYSE:MA)—comprise 71% of its total assets. These investments reflect his confidence in businesses with strong market positions.
In previous years, Valley Forge Capital Management has consistently outperformed the S&P 500, posting annualized returns near 15%, exceeding the index by over five percentage points. This performance is largely attributed to its selective stock-picking approach. While other hedge funds diversify across a wide range of equities, Kantesaria concentrates investments in a few firms he believes have sustainable business advantages. This method carries potential risks due to reduced diversification, but it has so far contributed to the fund’s above-market returns.
Why is Fair Isaac the Fund’s Largest Holding?
Fair Isaac, known for its FICO credit scores, is Valley Forge’s most significant investment, representing 34.39% of its assets. The hedge fund owns 784,122 shares in the company, equating to a 3.22% stake. Kantesaria began acquiring Fair Isaac stock in 2018, with an estimated average purchase price of $359.55 per share. Despite a decline of nearly 10% in 2025, the position remains valued at $1.41 billion.
“FICO operates as a natural monopoly. The entire ecosystem of consumer debt is centered around these scores. The company has a lot of pricing power,” Kantesaria stated. “Much of the world doesn’t have developed credit markets. There is international growth potential.”
Fair Isaac’s ability to maintain high margins and consistent free cash flow growth contributes to its attractiveness. Over the past decade, its free cash flow margin increased from 11.5% to 31.0%, with a compounded annual growth rate of nearly 21%. The company is also engaged in regular share buybacks, estimated at 2-3% of its stock annually.
What Makes S&P Global a Key Investment?
S&P Global, best known for its indices business, represents 19.25% of Valley Forge’s portfolio. While its Indices segment is widely recognized, it only accounted for 11.5% of the company’s $14.21 billion revenue in 2024. Other divisions, including Market Intelligence and Ratings, generate a larger share of total earnings.
“We like to invest in companies where the cost of the service is small, so there is a lot of room for pricing power. … If inflation goes up to 10%, you want to know that your company can raise its prices 13%. They could double their prices tomorrow if they want to,” Kantesaria commented.
In 2025, S&P Global projects revenue growth of 6% and an adjusted operating margin of 49.5%. The company’s pricing power and ability to increase fees during inflationary periods contribute to its inclusion in Valley Forge’s concentrated portfolio.
Mastercard is another major holding, representing 17.22% of Valley Forge’s investments. While the firm also owns shares of Visa, Mastercard receives greater allocation. Since initially acquiring Mastercard stock in late 2016, the hedge fund has increased its stake to 1.48 million shares, currently valued at $783.4 million. Mastercard’s ability to continuously expand its free cash flow and conduct substantial share buybacks aligns with Valley Forge’s investment philosophy.
While this concentrated investment strategy has produced strong results, it also presents risks if one of the key holdings underperforms. The reliance on just a few stocks means the hedge fund is more exposed to fluctuations in these companies’ financial performance. However, Kantesaria’s preference for firms with stable cash flows and competitive advantages suggests a long-term approach focused on sustained growth.
