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 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)
  • In April, Nomad Foods Limited announced its €2.6 billion acquisition of Igloo Foods, Europe’s leading frozen-food company. The stock surged on the announcement. With this anchor investment, Nomad plans to build a portfolio of best-in-class companies and brands within this attractive, yet fragmented sector. Nomad’s management has a strong track record of creating value through strategic investments and acquisitions, and plans to build a world-class, global consumer foods company through a prudent M&A strategy.

  • Golar LNG Ltd. is a liquefied natural gas (LNG) midstream services company. The stock rebounded in Q2 on news of progress in Golar’s liquefaction projects. We see LNG gaining share in the global energy trade and Golar as a direct beneficiary of this trend. While LNG projects have long lead times and shifts in timing may create short-term disruption to pricing and earnings, with its current fleet and future liquefaction projects, we see Golar’s long term earnings capacity as significantly higher than what current financials suggest.

  • Shares of Kingdee International Software Group Co. Ltd. rose during Q2 on reports of an investment by leading e-commerce operator JD.com. Kingdee is a software vendor to small and medium-sized businesses in China. Kingdee is undergoing a strategic transformation from a direct to an indirect sales approach, which we think will allow it to sell software more profitably and earn higher returns on capital over the long run.

Detractors (for quarter ended 6/30/2015)
  • Shares of European budget airline easyJet plc declined during Q2, after the company reported a solid first-half trading update tempered with cautionary remarks regarding competitive activity. While average fare prices can fluctuate over the short term as incremental capacity over specific routes shifts, we think the long-term consolidation underway will be difficult to reverse. We expect easyJet to continue gaining market share from larger, loss-making incumbent airlines.

  • Shares of Indonesian department store PT Matahari Department Store Tbk declined on reports of Q1 revenue growth that missed expectations as a result of weak consumer spending. While monthly sales patterns can fluctuate, we are encouraged that Matahari continues to see a large opportunity to build new stores throughout the country. We believe Matahari’s excellent operating model and significant cash flow generation will allow it to continue expanding its store base from 133 stores to as many as 400 over the long run.

  • Rakuten, Inc. operates the largest online shopping mall in Japan. After renewed investor optimism over Rakuten's loss-making businesses drove up the share price in Q1, shares gave back some gains in Q2. Rakuten’s stock was also pressured by an unexpected capital raise in June that was 7% dilutive. We continue to own Rakuten based on its prospects for, in our view, 15-20% earnings growth over the long-term.

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. Investing in the stock market is always risky. Current and future portfolio holdings in the Fund are subject to risk.

Source: FactSet PA