The discussion of market trends and companies throughout this interview are not intended as advice to any person regarding the advisability of investing in any particular security. Some of our comments are based on current management expectations and are considered “forward-looking statements.” Actual future results, however, may prove to be different from our expectations. Our views are a reflection of our best judgment at the time of this interview and are subject to change any time based on market and other conditions, and we have no obligation to update them. Investing in the stock market is always risky. Current and future portfolio holdings are subject to risk.
The average three-year turnover as of June 30, 2011 for our two small cap funds are as follows:
Baron Growth Fund 18.85%
Baron Small Cap Fund 33.17%
Clarifications:
As of June 30, 2011, Dick’s Sporting Goods had $626 million of cash on its balance sheet.
According to the Kauffman Foundation on Entrepreneurship, more than half of the companies on the 2009 Fortune 500 list (not the S&P 500) were launched during a recession or bear market.
In 2010, an average of 0.34 percent of adults created a new business each month, equaling about 565,000 new businesses per month, representing the highest level of entrepreneurship over the past decade and a half.
As of June 30, 2011, Baron received $95 million in dividends and made $850 million in profits from its investment in Wynn Resorts. Its initial investment was approximately $135 million. Subsequent investments totaled about $420 million. As of September 23, 2011, Baron owns about $135 million in Wynn shares. The profits were as follows:
| Fund/Account |
Amount |
| Baron Asset Fund |
$241 million |
| Baron Partners Fund |
$88 million |
| Baron Growth Fund |
$332 million |
| Baron Small Cap Fund |
$120 million |
| Baron Fifth Avenue Growth Fund |
$1 million |
| Baron Focused Growth Fund |
$16 million |
| Other Accounts Managed by Baron |
$52 million |
Wynn Resorts, Ltd. was founded in 2002 and Baron Funds invested in its initial public offering. Ron Baron and certain Baron Funds invested in its privately held predecessor. In addition, at various times from the 1980s until the formation of Wynn Resorts, Ron Baron and certain Baron Funds had investments in the following companies: Golden Nugget Las Vegas, Golden Nugget Atlantic City, Mirage, Treasure Island Hotel and Casino and Bellagio. These properties were sold to MGM Grand in 2000. With his new company, Wynn Resorts, Wynn opened Wynn Las Vegas in 2005 and Wynn Macau in 2006.
Baron lost $350 million of the $640 million invested in Sotheby’s. The loss was as follows:
| Fund/Account |
Loss |
Amount Invested
|
| Baron Asset Fund |
$215 million |
$450 million |
| Baron Focused Growth Fund |
$5 million |
$8 million |
| Baron Growth Fund |
$76 million |
$111 million |
| Baron Opportunity Fund |
$1 million |
$3 million |
| Baron Partners Fund |
$11 million |
$17 million |
| Other Accounts Managed by Baron |
$42 million |
$51 million |
Ron Baron has been able to double people’s money every four to five years on average since the 1980’s.
Holdings of the Companies mentioned in the interview -
Funds that owned Dick's Sporting Goods as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
1.7% |
| Baron Focused Growth Fund |
3.9% |
| Baron Growth Fund |
2.8% |
| Baron Partners Fund |
6.6% |
Funds that owned Hyatt Hotels Corp. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
1.2% |
| Baron Fifth Avenue Growth Fund |
1.4% |
| Baron Focused Growth Fund |
4.6% |
| Baron Partners Fund |
7.3% |
| Baron Real Estate Fund |
2.3% |
Funds that owned Pegasystems, Inc. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Focused Growth Fund |
3.5% |
| Baron Growth Fund |
1.1% |
| Baron Opportunity Fund |
2.0% |
Funds that owned Wynn Resorts as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
2.5% |
| Baron Fifth Avenue Growth Fund |
2.4% |
| Baron Small Cap Fund |
1.2% |
Funds that owned Charles Schwab Corp. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
3.0% |
| Baron Opportunity Fund |
1.3% |
| Baron Partners Fund |
5.7% |
No Funds owned Chicago Mercantile Exchange as of 6/30/2011.
Funds that owned Robert Half International, Inc. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
0.5% |
Funds that owned DeVry, Inc. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
2.5% |
| Baron Focused Growth Fund |
2.1% |
| Baron Growth Fund |
3.2% |
| Baron Partners Fund |
3.5% |
Funds that owned Ralph Lauren Corp. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
2.9% |
Funds that owned Apple, Inc. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Fifth Avenue Growth Fund |
2.9% |
| Baron Opportunity Fund |
2.8% |
Funds that owned Vail Resorts, Inc. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
2.9% |
| Baron Growth Fund |
1.3% |
| Baron Partners Fund |
3.6% |
| Baron Real Estate Fund |
1.0% |
Funds that owned Choice Hotels as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
1.0% |
| Baron Focused Growth Fund |
3.4% |
| Baron Growth Fund |
1.5% |
Funds that owned FactSet as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
3.2% |
| Baron Focused Growth Fund |
3.6% |
| Baron Growth Fund |
2.5% |
| Baron Opportunity Fund |
1.7% |
| Baron Partners Fund |
9.2% |
Funds that owned MSCI, Inc. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Asset Fund |
1.7% |
| Baron Focused Growth Fund |
5.7% |
| Baron Growth Fund |
2.3% |
| Baron Opportunity Fund |
2.9% |
| Baron Partners Fund |
5.7% |
| Baron Small Cap Fund |
1.0% |
Funds that owned EcoLab, Inc. as of 6/30/2011
| Fund |
Percent of Net Assets |
| Baron Partners Fund |
1.5% |
