Baron Fifth Avenue Growth Fund (BFTHX)
Review and Outlook
Baron Fifth Avenue Growth Fund increased 10.2% in the third quarter. In a complete reversal from the first half of the year, where the Fund plainly lacked sizable winners, the Fund saw broad-based strength across the entire portfolio, with 21 of our 36 investments rising double digits, and 12 of them appreciating over 15%.
Investments in Information Technology (IT), Consumer Discretionary, and Health Care were the top contributors. IT advanced on the strength of double-digit increases in 10 out of 13 sector investments. Performance was led by Alibaba Group Holding Ltd., the Fund’s second largest contributor in the quarter. Alphabet, Inc., the world’s largest search and online advertising company, was another significant IT contributor after its share price increased on the strength of quarterly results that surpassed Street expectations. With five investments posting double-digit share price increases, Consumer Discretionary appreciated in the third quarter, led by top contributor Amazon.com, Inc. Also within the sector, shares of leading online travel agency The Priceline Group, Inc. rose after reporting strong Q2 results and a robust outlook for Q3. While Health Care investments posted somewhat mixed performance, contributors outweighed detractors. Life sciences tools & services company Illumina, Inc. was the Fund’s third largest contributor. Holdings in the Real Estate sector lost some ground in the quarter due to a decline in the share price of Equinix, Inc., which was the second largest detractor from performance. The Materials sector was a minor detractor after the share price of the Fund’s sole holding within the sector, Monsanto Company, fell modestly in the period.
Our goal is to maximize long-term returns without taking significant risks of permanent loss of capital. We continue to focus on identifying and investing in what we believe are unique companies with sustainable competitive advantages and the ability to redeploy capital at high rates of return. We are optimistic about the long-term prospects of the companies in which we are invested and continue to search for new ideas and investment opportunities.
Top Contributors/Detractors to Performance
Quarterly Attribution Analysis
The Quarterly Attribution Analysis for period ending September 30, 2016 is not yet available
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The prospective performance of the companies discussed herein is based on our internal analysis and reflect our opinions only. We cannot promise future returns and our opinions are a reflection of our best judgement at the time of publication. Our views are not intended as recommendations or investment advice to any person and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. I Investing in the stock market is always risky. Current and future portfolio holdings in the Fund are subject to risk.
Source: FactSet PA.