Review and Outlook

as of 03/31/21

The Review and Outlook for period ending March 31, 2021, is not yet available.

Top Contributors/Detractors to Performance

as of 03/31/21

Contributors

  • Shares of Gartner, Inc., a provider of syndicated research, contributed to performance after reporting financial results that bested analyst forecasts. Growth in the company’s research business has stabilized and is poised to return to double-digit levels, while its events business should add to financial results as travel restrictions ease. We expect improved revenue growth combined with renewed focus on cost control will drive margin expansion and enhanced free cash flow generation. Gartner's balance sheet is in excellent shape, and we expect an acceleration in repurchases.
  • Bio-Techne Corporation is a leading developer and manufacturer of high-quality purified proteins and protein analysis and other life sciences tools, which it sells to biomedical researchers and clinical research laboratories. The stock did well in the quarter after the company reported a 19% acceleration in organic growth in the fourth quarter, driven by strength across the business including a small contribution from COVID-19- related products. We continue to believe Bio-Techne has a solid long-term outlook with multiple growth drivers.
  • Tripadvisor Inc an online travel company where users can browse reviews and plan trips, contributed for the period held following a well-received launch of its travel-focused subscription offering. In our view, Tripadvisor is a unique asset with over 460 million unique monthly visitors to its travel sites and the business is well positioned to benefit from pent-up consumer demand as pandemic-related travel restrictions ease. We believe there are a number of positive changes underway at Tripadvisor that will drive improved monetization going forward.

Detractors

  • Shares of P&C insurance software vendor Guidewire Software, Inc. detracted from performance as shares of high-multiple growth stocks lagged. The company is near the midpoint of its cloud transition, which should correspond with improving financial results. Despite short-term headwinds, we believe Guidewire has tripled its addressable market through new products and cloud delivery and will become the critical software vendor for the global P&C insurance industry, capturing 30% to 50% of its $15 billion to $30 billion total addressable market and generating margins above 40%.
  • Ceridian HCM Holding Inc., a leader in payroll and workforce management software, detracted on concerns that increased pandemic-related mobility restrictions will slow the rate of employment recovery in its customer base. We expect its cloud-based Dayforce product to generate rapid revenue growth, leading to meaningful margin expansion, improved free cash flow conversion, and rapid deleveraging. We are also excited about the potential for Dayforce Wallet, which will allow employees access to earned wages on a real-time basis rather than the traditional two-week pay cycle.
  • Shares of Verisk Analytics, Inc., a leading data and analytics vendor, detracted from performance after the company reported fourth quarter earnings that came in slightly below Street expectations. The core insurance segment remained strong, but pandemic-related weakness impacted the Energy and Financial Services segments. We remain positive about the competitive positioning, long-term growth, margin expansion, and capital deployment prospects for the business.

Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectuses contain this and other information about the Funds. You may obtain them from the Funds’ distributor, Baron Capital, Inc., by calling 1-800-99BARON or visiting www.BaronFunds.com. Please read them carefully before investing.

The performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate; an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund’s transfer agency expenses may be reduced by expense offsets from an unaffiliated transfer agent, without which performance would have been lower. Current performance may be lower or higher than the performance data quoted.

Risks:All investments are subject to risk and may lose value.

The discussion of market trends is not intended as advice to any person regarding the advisability of investing in any particular security. The views expressed on this page reflect those of the respective writer. Some of our comments are based on 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 and are subject to change at any time based on market and other conditions and Baron has no obligation to update them

Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

The index performance is not fund performance; one cannot invest directly into an index.