Baron Fifth Avenue Growth Fund (BFTIX)

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

Institutional Performance

Review and Outlook (for quarter ended 3/31/2014)

The Review and Outlook for period ending March 31, 2014 is not yet available

Top Contributors/Detractors to Performance

Contributors (for quarter ended 3/31/2014)
  • Shares of Illumina, Inc., the leading provider of next generation DNA sequencing instruments and consumables, rose in Q1, driven by better than expected Q4 financial results, strong 2014 financial guidance, and the announcement of multiple new product introductions, including an ultra-high throughput sequencing platform that will be the first to sequence a full human genome for less than $1,000. We believe Illumina has further distanced itself from its competitors and holds an effective monopoly on DNA sequencing at a time when demand is accelerating.

  • Shares of Facebook Inc., the world’s largest social network, were up in Q1, driven by improvements in consumer engagement and mobile monetization. We continue to believe that Facebook is in the early stages of building out its global advertising business. The company has an attractive customer base and stands to benefit from expected improvements in the price of advertising on its platform. Its recent buyout of Instagram provides further growth opportunities and possible synergies with the Facebook network.

  • Shares of Wynn Resorts Ltd., a casino company with properties in Macau and Las Vegas, gained in Q1 as the company’s Macau property continued to generate strong results and investor enthusiasm grew around its new resort on Cotai, expected to open in early 2016. Discussion in Japan over legalizing gaming by this summer added momentum to the stock as well, as the company remains a frontrunner for a license to operate in Japan, which is expected to be decided over the next 18 to 24 months.

Detractors (for quarter ended 3/31/2014)
  • Shares of Amazon.com, Inc., the world’s largest online retailer, fell due to weaker than anticipated revenue growth in Q4. We expect the company to improve growth rates going forward. Amazon continues to expand into large new growth markets, including apparel, consumer product goods, consumer electronics, grocery, and Amazon Web Services. Given that e-commerce still represents less than 10% of retail sales today, we believe that the ongoing shift to online retailing represents a multi-year opportunity from which Amazon should benefit.

  • Twitter, Inc. is an online social networking and micro-blogging service that enables users to send and read messages. Shares of Twitter declined in Q1 over concerns around slowing user growth. Twitter is actively investing in strategies to broaden its international presence and attract more advertising, including an accelerated rollout of products that help advertisers reach users. We believe Twitter is in the early stages of its overall growth and has substantial runway ahead of it.

  • After rising 70% last year, shares of credit card company MasterCard, Inc. fell in Q1 on lower than expected Q4 earnings and forward guidance, due to higher incentive payments to card issuers and the loss of a large bank customer. In addition, a recent court decision reduced the likelihood that MasterCard would take market share from Visa in signature debit processing. We retain conviction based on high barriers to entry and a long runway for growth in electronic payments, particularly outside the U.S., where MasterCard generates most of its revenue.

Quarterly Attribution Analysis (for quarter ended 3/31/2014)

The Quarterly Attribution Analysis for period ending March 31, 2014 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. Investing in the stock market is always risky. Investing in the stock market is always risky. Current and future portfolio holdings in the Fund are subject to risk.

Source: FactSet PA.