Baron Focused Growth Fund (BFGFX)

Portfolio Management

RonBaron
Ron Baron

Fund Manager since 1996

View All Commentary by Ron

Fund Description

Baron Focused Growth Fund invests in a focused portfolio of small and mid-size growth companies.

    

  

Portfolio Commentary

Retail Performance

Review and Outlook (for quarter ended 9/30/2014)

The Review and Outlook for period ending September 30, 2014 is not yet available

Top Contributors/Detractors to Performance

Contributors (for quarter ended 9/30/2014)
  • Shares of Concur Technologies, Inc. increased in Q3. Concur is a leading provider of travel booking and expense management software.  On September 18, SAP SE announced an agreement to acquire Concur for $129 per share, a 28% premium to the closing price on September 2, the day before Bloomberg reported that Concur was exploring a sale. The $8.3 billion acquisition implied a valuation of roughly 9.7 times Concur’s estimated fiscal year 2015 revenue and confirmed our view that Concur was a valuable strategic asset.

  • Shares of Vail Resorts, Inc., the largest ski resort operator in the U.S., increased in Q3 as the company resolved its litigation with the owners of Park City and bought the resort from them at what we believe is an attractive price. The resort gives Vail access to two adjacent resorts in Utah which, when combined, will make it the largest ski resort in the U.S. The company believes that by adding Park City to its season pass, it should be able to increase sales, which should help to insulate it from weather abnormalities.

  • Mobileye N.V. is a software and systems design leader for camera-based advanced driver assistance systems (ADAS). The share price increased after we participated in Mobileye's IPO in the quarter. We believe the company has the potential to become a multi-decade leader in the race to autonomous driving, a trend that we believe will improve transportation safety and efficiencies.

Detractors (for quarter ended 9/30/2014)
  • Shares of industrial machinery company Colfax Corporation fell in the wake of weaker-than-expected Q2 results. Strong margins in welding were offset by operational missteps in the legacy fluid handling business combined with a weak macro environment. Colfax recently announced a new president for the fluid handling business, and we expect this business to get back on track soon. We believe that Colfax will continue to use its proven business strategy to improve operations at acquired companies, generating substantial shareholder value over time.

  • Shares of Benefitfocus, Inc. fell in Q3, partly due to a secondary offering in July that increased the public float by more than 30%. Benefitfocus is the leading provider of cloud-based benefits software, offering an integrated suite of solutions to help customers more efficiently shop, enroll, manage, and exchange benefits information. We think Benefitfocus serves an addressable market more than 100 times larger than its current business, which should allow it to compound revenue at more than 30% annually.

  • Helmerich & Payne, Inc. is the leading land drilling contractor in the U.S. Shares fell in the quarter despite the fact that rising demand for its new rigs spurred clients to continue to add to the company’s record backlog of new rig contracts. The company’s fiscal third quarter earnings were a bit below expectations, which contributed to the stock weakness, but it appears that most of the weakness was related to concerns that lower oil prices would short-circuit the upturn in U.S. drilling.

Quarterly Attribution Analysis

This Fund does not have an Attribution Analysis for this time period.

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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. Current and future portfolio holdings in the Fund are subject to risk.

Source: FactSet PA.