Baron Fifth Avenue Growth Fund (BFTHX)

Portfolio Management

AlexUmansky
Alex Umansky

Fund Manager since 2011

View All Commentary by Alex

Fund Description

Baron Fifth Avenue Growth Fund invests in large growth companies.

    

Portfolio Commentary

Retail Performance

Review and Outlook (for quarter ended 6/30/2015)

The Review and Outlook for period ending June 30, 2015 is not yet available

Top Contributors/Detractors to Performance

Contributors (for quarter ended 6/30/2015)
  • Shares of Amazon.com, Inc., the world’s largest retailer, were up due to better-than-anticipated operating margins for Q1 and guidance for Q2. It also broke out Amazon Web Services margins for the first time, and at 17%, these margins were meaningfully higher than what investors had feared. We believe retail margins through the rest of the year will improve as Amazon focuses on productivity gains. With e-commerce less than 10% of global retail sales, we believe the shift to online retailing represents a multi-year growth opportunity for Amazon.

  • Illumina, Inc. is the leading provider of next generation DNA sequencing instruments and consumables. Shares rose on reports of better-than-expected revenue and earnings driven by strong sales of sequencing instruments. We maintain conviction because we believe Illumina holds a monopoly on DNA sequencing at a time when DNA sequencing is increasingly being used in cancer research and diagnosis and reproductive health.

  • FireEye, Inc. is a next generation network security company that pioneered Advanced Persistent Threat Protection. The company has grown by more than 10 times over the last four years. FireEye continued its strong performance in Q2 as organizations around the world scrambled for solutions to growing cyberthreats. FireEye is the leading provider of breach response services and it has been using this advantage to cross-sell services and products. We think this will allow FireEye to keep growing at a fast pace for a while.

Detractors (for quarter ended 6/30/2015)
  • Twitter, Inc. is an online social networking and micro-blogging service. Shares fell as a result of weaker Q1 results and a slower user growth outlook for Q2. A recent change in senior leadership also created short-term uncertainty. We continue to believe that Twitter is in the early stages of monetization and evolution as a platform. The company has launched several new efforts and product initiatives to increase user growth and engagement on the platform, which we think will gain traction over time.

  • LinkedIn Corp. is the #1 professional networking platform with over 350 million registered members. Shares were pressured by noisy Q1 results, where the company lowered guidance due to foreign exchange rates, an internal sales force transition, display advertising weakness, and the unexpected accounting treatment of a recent acquisition. We believe LinkedIn is a unique platform asset in the early days of capturing a $27 billion talent acquisition market and a $25 billion B2B advertising market, with interesting upside optionality.

  • Shares of Wynn Resorts Ltd., a gaming company with casinos in Macau and Las Vegas, decreased in Q2 due to the slowdown in Macau and concerns over a smoking ban on VIP gaming expected to be enacted next year. The slowdown, combined with the unpredictability of how many tables Wynn will receive at its new casino opening in April 2016, led to our sale of the stock. While we think the company will still be able to finance and open the casino, the return may not be what investors expect and the increased supply could cannibalize existing assets.

Quarterly Attribution Analysis (for quarter ended 6/30/2015)

The Quarterly Attribution Analysis for period ending June 30, 2015 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.