Baron International Growth Fund (BINIX)

Portfolio Management

MichaelKass
Michael Kass

Fund Manager since 2008

View All Commentary by Michael

Fund Description

Baron International Growth Fund invests primarily in non-U.S. growth companies.

   

   

Portfolio Commentary

Institutional 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)
  • 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.

  • Mellanox Technologies Ltd. supplies semiconductor-based systems for computing, storage and communications applications that connect servers to servers and servers to storage. Mellanox's stock rose on reports of better Q2 results and Q3 guidance, as the latest generation of Intel chips spurred customer demand for high performance interconnect systems. We believe we are still in the early innings of the Mellanox growth story.

  • French firm Ingenico SA manufactures point-of-sale (POS) payment terminals and provides secure electronic payment services. The stock rose in Q3 as revenue growth and margin expansion beat expectations. POS terminal sales are growing rapidly due to (i) a merchant refresh cycle in the U.S. driven by the adoption of a more secure payment technology called EMV; (ii) rapid growth in emerging markets; and (iii) market share gains. In addition, margins have expanded due to strong operational execution and successful integration of recent acquisitions.

Detractors (for quarter ended 9/30/2014)
  • Germany-based RIB Software AG is the leading provider of efficiency software for the construction industry, combining the power of 3-D modeling and enterprise resource planning (ERP) business management solutions. RIB’s flagship software is quickly becoming the new standard in construction and its shares have more than tripled since their trough in 2011. We believe the decline in Q3 represents quarterly volatility inherent in businesses that depend on the timing of contract wins, and is not indicative of the vast potential of RIB Software.

  • Shares of plasma products company Grifols SA declined in Q3, after the company reported a weak Q2, including one-time expenses in conjunction with the integration of its recently acquired Novartis diagnostics unit, and incremental price competition in a small commoditized product line. We regard these developments as either one-off or regionally isolated events that do not impact Grifols' competitive advantage derived from its vast plasma collection network, coupled with what we expect to be significant growth of the plasma industry.

  • Shares of Indian cable TV provider DEN Networks Ltd. declined in Q3, as the deadline for pan-India digitization was pushed back by two years. DEN is also experiencing near-term challenges in collecting its fair share of subscription revenue from local cable operators. The company is well positioned to benefit from the ongoing digitization of cable systems as mandated by the Government of India. We retain conviction in DEN due to the expected multifold increase in subscription revenue/earnings post-digitization.

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