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Baron Mid Cap Growth Strategy

Symbol MIDGROWTH
M
Mid-Cap Growth

Total Strategy Assets

$4.88 B

As of 06/30/2024

Inception date

06/30/1998

Performance

PerformanceAs of 06/30/2024

YTD11 Year3 Years5 Years10 yearsSince Inception
06/30/1998
Baron Mid Cap Growth Strategy (Net)2.29%9.97%-2.28%7.21%10.32%8.62%
Baron Mid Cap Growth Strategy (Gross)2.79%11.05%-1.33%8.26%11.41%9.70%
Russell Midcap Growth Index5.98%15.05%-0.08%9.93%10.51%8.61%
Russell 3000 Index13.56%23.13%8.05%14.14%12.15%8.27%

Performance InformationAs of 03/31/2024

3 Years5 Years10 Years
Standard Deviation (%)21.0820.8717.50
Sharpe Ratio-0.030.380.56
Alpha (%)-2.14-0.810.48
Beta0.940.930.94
R-Squared (%)94.4894.5193.48
Tracking Error (%)5.115.154.61
Information Ratio-0.49-0.34-0.05
Upside Capture (%)96.5396.1399.00
Downside Capture (%)104.57101.0599.59
Except for Standard Deviation and Sharpe Ratio, the performance based-characteristics above were calculated relative to the Baron Mid Cap Growth Strategy's benchmark Russell Midcap Growth Index. Performance statistics for additional periods will be provided on request. Source FactSet: SPAR.

Portfolio Holdings & Characteristics

HoldingsAs of 06/30/2024

HoldingSector% of Net Assets
Gartner, Inc.
Gartner, Inc. (IT) is the leading independent provider of research and advisory services for IT, HR, sales, finance, and marketing leaders.
Gartner has a vast addressable market, which management estimates exceeds $70 billion annually, implying a penetration rate of less than 3%. IT is rapidly changing and growing in strategic importance, leading users to turn to third-party providers for insight into trends. Gartner enjoys retention rates of more than 100%, driven by the low price of its research relative to value. We think consistent execution in Global Technology Sales and improvements in Global Business Sales will help accelerate Research growth into the low double digits.
Information Technology9.5%
IDEXX Laboratories, Inc.
IDEXX Laboratories, Inc. (IDXX) is the leading provider of diagnostics to the veterinary industry.
IDEXX has continued to benefit from secular growth spending on pets, due to a growing human-animal bond, favorable demographics, increased use of diagnostics, and enhanced focus on preventative care. We think IDEXX has the best menu of diagnostics, which it continuously improves by spending six times more on R&D annually than all its competitors combined. The company's products are sold via a razor/razorblade model, which creates high retention rates and incremental margins. IDEXX generates strong cash flow, which it has returned to shareholders via repurchases.
Health Care6.1%
Verisk Analytics, Inc.
Verisk Analytics, Inc. (VRSK) provides risk information to insurance companies that enables them to better understand and manage their risks and optimize their decision-making processes.
We believe Verisk has a unique competitive position. The company is investing to expand its product set in Insurance and has divested its Financial Services and Energy segments. We think the pure-play focus on insurance offers an attractive financial profile with mid/high single-digit organic growth, robust margins (with room for expansion), and strong free cash flow generation.
Industrials5.5%
Mettler-Toledo International Inc.
Mettler-Toledo International Inc. (MTD) is a leading provider of precision instruments and services for customers in the life sciences, food, and chemical industries, among others.  
Mettler has a track record of consistent growth. The company has strong brand recognition, customer diversification, pricing power, and margin expansion opportunities. We think the business has attractive financial characteristics, including high returns on capital, minimal capital requirements, and strong free cash flow generation, all of which it uses to repurchase its stock. We believe the management team is an excellent steward of capital and skilled at developing sales and marketing initiatives to enhance growth.
Health Care5.0%
Arch Capital Group Ltd.
Arch Capital Group Ltd. (ACGL) is a Bermuda-based insurance company providing property & casualty insurance, reinsurance, and mortgage insurance.
Arch is led by an experienced management team with a successful track record across insurance cycles. The company excels at underwriting specialized policies and can nimbly shift its business mix to target the most profitable lines as market conditions change. The company operates in a large global market and is currently benefiting from favorable pricing trends across many of its product lines. In our view, management has demonstrated strong underwriting discipline and capital stewardship, allowing Arch to maintain industry-leading returns on equity with less volatility.
Financials4.8%
Guidewire Software, Inc.
Guidewire Software, Inc. (GWRE) is a leading provider of core systems software to the global P&C insurance industry.
Guidewire is a small player in a vast addressable market and has been benefiting from the inevitable need for P&C insurers to upgrade 30-year-old systems. The company offers best-in-class functionality, as evidenced by its growing installed base and near-100% retention rates. The company has passed the midpoint of its cloud transition, and we expect to see accelerating revenue, expanding margins, and improving FCF over the next several years. We believe that recent M&A in the vertical software space supports a meaningful value creation opportunity for shareholders.
Information Technology4.1%
CoStar Group, Inc.
CoStar Group, Inc. (CSGP) is the leading provider of information and marketing services to the commercial real estate industry.
CoStar has built a proprietary database through data collection over a 20-year period, creating high barriers to entry. We think CoStar's suite should grow at mid-teens rates, and we believe its Loopnet marketing platform can grow even faster. Its Apartments.com platform is the dominant multi-family internet listing service and should grow revenue by more than 20%. CoStar is starting to expand into residential, creating additional significant growth opportunities. Its balance sheet and cash generation create M&A optionality.
Real Estate3.9%
Fair Isaac Corporation
Fair Isaac Corporation (FICO) is a data and analytics company focused on predicting consumer behavior through re-sellable algorithms (FICO Scores) and software (Applications and Decision Management Software).
We believe Fair Isaac has meaningful growth opportunities across all its business lines. In FICO Scores, special pricing initiatives in B2B seem likely to continue. In Software, years of substantial investment are bearing fruit and should lead to notable margin expansion over the next several years. Management has a shareholder-friendly capital allocation strategy with nearly all free cash flow used for share repurchases.
Information Technology3.5%
Roper Technologies, Inc.
Roper Technologies, Inc. (ROP) is a diversified industrial technology company. The company provides engineered products and solutions for global niche markets, including software information networks, medical, water, energy, and transportation.
Roper owns a portfolio of high-quality niche businesses that have generated substantial cash flow due to high margins and low capital requirements. The company seeks growth in sales and earnings by emphasizing continuous improvement in the operating performance of the core business. Roper has been using the cash generated and a modest amount of leverage to make acquisitions that are consistent with its investment thesis and make the business larger and more capital light.
Information Technology3.1%
Space Exploration Technologies Corp.
Space Exploration Technologies Corp. (SpaceX) designs, manufactures, and launches rockets, satellites, and spacecrafts. Its ultimate goal is to make humanity multi-planetary. Products include reusable orbital launch offerings and a broadband service leveraging its satellite constellation, Starlink.
We believe SpaceX will continue to drive down the cost of space launches and capture market share with its unique, reliable, and improving reusable launch capabilities. As costs decline, we also expect demand for access to space to increase. By leveraging its launch cost leadership, vertical integration, and innovative design approach, we think SpaceX will have an advantage in building and operating its rapidly expanding satellite-based broadband services, creating an even more attractive growth profile for the company.
Industrials3.0%
Total
Total
48.5%
Top Ten Holdings, Portfolio Holdings, and Sector Breakdown based on net assets. Positions smaller than 0.05% round to 0.0%. Portfolio holdings may change over time.
Portfolio holdings are subject to change. Current and future portfolio holdings are subject to risk.

Contributors / DetractorsQuarterly as of 03/31/2024

Top ContributorsAverage WeightContribution
Arch Capital Group Ltd.3.85%0.88%
Gartner, Inc.9.77%0.57%
CoStar Group, Inc.4.36%0.45%
Mettler-Toledo International Inc.4.40%0.41%
Veeva Systems Inc.1.80%0.34%
Source:  FactSet PA.  Based on the gross performance results of the representative account. 

GICS Sector BreakdownAs of 06/30/2024

Portfolio Characteristics

Information Technology

30.0%

Health Care

21.5%

Industrials

18.1%

Financials

13.4%

Consumer Discretionary

7.5%

Real Estate

6.1%

Communication Services

3.0%

Materials

0.2%

Cash & Cash Equivalents

0.1%

Sub-Industry
06/30/2024
Application Software15.30%
Life Sciences Tools & Services11.00%
IT Consulting & Other Services9.50%
Research & Consulting Services7.70%
Health Care Equipment7.00%
Financial Exchanges & Data5.00%
Real Estate Services 5.00%
Property & Casualty Insurance4.80%
Aerospace & Defense3.30%
Hotels, Resorts & Cruise Lines3.30%
Investment Banking & Brokerage3.10%
Electronic Components2.60%
Leisure Facilities2.30%
Technology Distributors1.90%
Movies & Entertainment1.80%
0369121518
Application Software15.30%
Life Sciences Tools & Services11.00%
IT Consulting & Other Services9.50%
Research & Consulting Services7.70%
Health Care Equipment7.00%
Financial Exchanges & Data5.00%
Real Estate Services 5.00%
Property & Casualty Insurance4.80%
Aerospace & Defense3.30%
Hotels, Resorts & Cruise Lines3.30%
Investment Banking & Brokerage3.10%
Electronic Components2.60%
Leisure Facilities2.30%
Technology Distributors1.90%
Movies & Entertainment1.80%
0369121518

Portfolio CharacteristicsAs of 03/31/2024

Baron Mid Cap Growth StrategyRussell Midcap Growth Index
Inception DateJune 30, 1998
# of Issuers / % of Net Assets53 / 99.8%
Turnover (3 Year Average)4.92%
Active Share82.0%
Median Market Cap$24.56 billion$12.84 billion
Weighted Average Market Cap$36.43 billion$31.94 billion
EPS Growth (3-5 year forecast)14.2%11.9%
Price/Earnings Ratio (trailing 12-month)37.628.7
Price/Book Ratio5.37.9
Price/Sales Ratio5.62.5
Total Strategy Assets$4.88 billion
Price/Book Ratio and Price/Sales Ratio are calculated using the Weighted Harmonic Average. Source: FactSet PA. Internal valuation metrics may differ.