Hedge Fund Founder Puts His Faith in These 3 Stocks to Deliver Market-Beating Returns 

Valley Forge Capital Management is a very patriotic name for a hedge fund, don’t you think? 

The hedge fund was founded by Dev Kantesaria in 2007 in Wayne, Pennsylvania, about eight miles from Valley Forge National Historical Park. Now located in Miami, Valley Forge manages $4.54 billion in assets, according to its latest 13F holdings report.  

Kantesaria studied to be a surgeon but realized in medical school that his true calling was investing. After graduation, he worked for McKinsey & Co., then spent 18 years in venture capital before starting up his hedge fund with $300,000 of seed money. 

In 2024, Barron’s published an article about Kantesaria’s investment strategy, stating that in the 17 years since inception, Valley Forge delivered annual returns nearing 15%, over five percentage points higher than the S&P 500.

The hedge fund manager runs a concentrated portfolio of stocks. As of Dec. 31, his firm owned eight stocks, with the top three: Fair Isaac (NYSE:FICO), S&P Global (NYSE:SPGI), and Mastercard (NYSE:MA) accounting for 71% of its multi-billion portfolio. 

It’s not as easy as it looks to run a concentrated portfolio. Here’s why Valley Forge owns these three stocks. 

Key Points About This Article:

• Valley Forge Capital Management founder Dev Kantesaria started with $300,000 in his hedge fund. Today, his firm manages over $4.5 billion.
• Kantesaria’s three largest positions account for 71% of his assets. 
• The hedge fund’s largest bet is Fair Isaac (NYSE:FICO), the people behind your FICO score. 
• Over 4 Million Americans set to retire this year. If you’re one, don’t leave your future to chance. Speak with an advisor and learn if you’re ahead, or behind on your goals. Click here to get started. 

Fair Isaac Has a FICO Score Monopoly

The hedge fund’s largest position is Fair Isaac, best known for the FICO score, which helps determine a borrower’s creditworthiness. At the end of 2024, it owned 784,122 shares of the company, representing 34.39% of Valley Forge’s assets. The position represents a 3.22% ownership stake in the company.

Kantesaria first acquired Fair Isaac shares in Q2 2018. WhaleWisdom estimates the hedge fund manager paid an average price of $359.55 a share for FICO stock. While its share price has come down nearly 10% in 2025, the position is still worth $1.41 billion. 

Kantesaria said this about the company in his May 2024 Barron’s interview.   

“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 said. “Much of the world doesn’t have developed credit markets. There is international growth potential.”

Given the monopoly position, Valley Forge expects Fair Isaac to grow its free cash flow per share 20% annually over the next decade, buying back 2-3% of its stock each year along the way. 

Over the past decade, according to S&P Global Market Intelligence, it has grown its levered free cash flow–defined as the amount of cash left over after paying all its financial obligations–from $96.8 million at the end of 2014 (September year-end), to $532.4 million in 2024, a compound annual growth rate (CAGR) of nearly 21%. 

Because it’s shareholder-friendly and repurchases shares at a decent pace, its levered free cash flow per share is significantly higher, with a CAGR of 24.3% over the same period. Equally important, its free cash flow margin went from 11.5% in 2015, to 31.0% in 2024.

This explains why Kantesaria is so high on Fair Isaac.   

S&P Global Is More Than Indexes

When investors hear the name S&P Global, most immediately think about the S&P 500, and the company’s Indices business. However, the segment generated just 11.5% of the firm’s $14.21 billion in 2024 revenue, with three of its other four segments doing more.

I’m not suggesting that SPGI is about to unload this part of its business. All five tend to feed off each other to some degree. It’s like a well-constructed sports team; a very profitable one at that. In 2024, its adjusted operating margin was 49.0%, 310 basis points higher than a year ago. 

In 2025, it expects to grow revenue by 6% at the midpoint of its guidance, leading to a 49.5% operating margin, and adjusted earnings per share of $17.13. It trades at a reasonable 28.3 times earnings.

That’s especially true when you consider its pricing power. 

“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 said about S&P Global. 

While it hasn’t performed nearly as well as Fair Isaac over the past five years, it wouldn’t be Valley Forge’s second-largest holding, accounting for 19.25% of its assets. 

Valley Forge Owns More Mastercard Than Visa

Eight of Valley Forge’s nine holdings are finance-related, including its third-largest position, Mastercard, which accounts for 17.22% of its portfolio. 

While it also owns Visa (NYSE:V), Mastercard’s biggest rival, Visa accounts for just 6.35%, or less than half. The hedge fund acquired both positions in Q4 2016. However, that’s not entirely accurate. WhaleWisdom reports this date because it was the first quarter the hedge fund went over $100 million in assets. The SEC requires institutional investment managers to file a Form 13F when it goes over this amount. 

Kantesaria likes to see his investments increase free cash flow per share by 15-20% annually and consistently buy back stock. 

How does Mastercard do on this front?

According to S&P Global Market Intelligence, Mastercard’s levered free cash flow increased from $6.46 billion in 2019, to $14.46 billion, a CAGR of 17.5%, right in Valley Forge’s wheelhouse.  In the same five years, it repurchased $39.88 billion of its stock, an average of nearly $8 billion annually. 

In Q4 2016, it owned 34,750 shares of Mastercard, worth $3.6 million. Today, Valley Forge owns 1.48 million shares worth $783.4 million. Mastercard has added considerably to the growth in its asset base. 

It’s likely to remain a large contributor to Valley Forge’s gains in the years ahead.

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