Ron Baron

Ron Baron

Last Update: 02-14-2017

Number of Stocks: 322
Number of New Stocks: 35

Total Value: $17,759 Mil
Q/Q Turnover: 3%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Ron Baron Watch

  • Ron Baron's First Quarter Letter to Baron Funds Shareholders

    “Would you like to know the easiest way to make a billion dollars? Take a penny. Bury it in the ground for a thousand years. Then dig.” J.P. Morgan. Chairman and Founder. J.P. Morgan & Company. 1880. “The Last Days of Night.” Graham Moore. 2016.

      


  • Baron Opportunity Fund Comments on Mellanox Technologies

    We sold about half of our Mellanox Technologies Ltd. (NASDAQ:MLNX) position after the company reported a weaker-than-expected fourth quarter and gave first quarter guidance that also missed expectations. In 20/20 hindsight our sale was hasty and in error. As we dug in, we came to the conclusion that the short-term pressure on sales was merely due to timing and certain product transitions. We did not wish to compound our error, and we added back to our position even as the shares recovered. We remain quite confident in the opportunity ahead of Mellanox and its ability to capture it.


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Proofpoint

    We recently established a position in Proofpoint, Inc. (NASDAQ:PFPT). We believe it is addressing a large market opportunity through its leading cloud-based cybersecurity and archiving platform, enabling companies to protect assets such as e-mail, cloud software applications and social media. We believe Proofpoint is positioned to gain market share as customers rethink their security architecture following deployments of new cloud applications, such as Office365, as well as the rising complexity of the IT environment and the evolving cyber-threat landscape. In addition, we believe the recently announced partnerships with vendors such as Palo Alto, Splunk and McAfee should provide the company additional opportunity for accelerated growth. Lastly, we expect the company to continue to use the data it collects to create improved threat protection products, and to leverage its strong brand and customer relationships to cross- and up-sell these enhanced solutions into its expanding customer base.


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Varonis Systems

    We initiated a position in Varonis Systems, Inc. (NASDAQ:VRNS) this quarter. Varonis helps organizations manage and protect their unstructured human-generated data (think office documents, PDFs, etc.) through a unique mouse trap – a proprietary software engine that captures, stores and analyzes the metadata of files in real time. We like to think that Varonis is doing inside the enterprise what Google is doing over the internet – if you have an easy way to index every file and track its use, you can provide high value-add services. One of these important services is insider threat protection. Varonis enables information technology managers to understand, in real time, where their data is, who has access to it and how it’s being used. This service has proven to be a highly effective tool in combatting the growing problem of ransomware. This has been one of the fundamental growth drivers for the company over the last year. Varonis has additional products and services, which we believe over time it will be able to sell into their existing and new customers. We believe Varonis plays in a large market with strong growth trends and benign competition. We like the pace of innovation and execution of the company and its consistency and look forward to seeing more from team Varonis in the future.


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Wix.com

    We initiated a position in Wix.com Ltd. (NASDAQ:WIX) during the quarter. Wix is the global leader in the do-it-yourself website building market, with 100 million registered users and 2.5 million premium subscribers. In addition to website building, Wix provides micro-businesses with tools to run their businesses, including marketing, scheduling and relationship management, among others, while charging them only about $13 a month on average. Wix’s growth is driven by extending its horizontal and vertical features as well as increasing the number of targeted verticals, such as hotels, restaurants, e-commerce and photographers. As highlighted above, Wix’s product innovation drives increasing conversion rates and enables Wix to increase its wallet share. The source of Wix’s competitive edge is its brand name and marketing reach along with its technological lead resulting in faster iteration with first-to-market features and vertical offerings. Wix’s subscription business model yields strong cohort economics, creating a predictable and a profitable business model (acquire a cohort once, get subscriptions forever). We believe Wix has major upside as it continues to innovate and convert an increasing number of businesses to premium subscribers.


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on SS&C Technologies Holdings

    The Fund initiated a new position in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) during the quarter. SS&C is a leading provider of mission-critical software products and services that allow financial service companies to automate and outsource business processes. SS&C offers a vast portfolio of applications and services for portfolio management and accounting, financial modeling, trading, treasury management, and in particular, fund administration. The company’s products offer critical functionality to users, carry high ROIs relative to internally-developed software or paper-based processes, and are needed to meet regulatory requirements. We were able to acquire shares at attractive prices during the quarter due to market concerns about the health of the company’s hedge fund administration business. We believe that SS&C is poised to generate accelerating organic growth as it benefits from its enhanced scale and an improved competitive environment in the fund administration space, cross-sells products and services to its dramatically expanded customer base, and focuses on revenue growth from the integration of the Advent, Citi and Wells Fargo’s fund administration services, Conifer and Primatics acquisitions. SS&C now has a business that will generate almost $500 million per year in free cash flow, which opens up optionality around capital deployment, including continued M&A activity, deleveraging and a potential return of capital to shareholders.


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Synchrony Financial

    Synchrony Financial (NYSE:SYF), the largest issuer of private label credit cards in the U.S., reported better-than-expected financial results with 12% growth in receivables, 13% growth in net interest income and significant margin expansion. However, the stock underperformed due to increasing concerns over consumer credit and broader underperformance of bank stocks, reversing their significant outperformance in the aftermath of the election. We continue to own the stock because we believe credit losses will be manageable and that the company has a long runway for profitable growth. (Josh Saltman)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Proofpoint

    Proofpoint, Inc. (NASDAQ:PFPT) offers cloud-based cybersecurity and archiving tools to help companies protect assets such as e-mail, cloud software applications and social media. Shares fell in the first quarter due primarily, in our view, to a Street analyst downgrade that raised concerns regarding potential increased competition from Microsoft Office 365’s built-in e-mail capabilities and risks of a deceleration of billing growth. We retain conviction in Proofpoint’s growth drivers, including the importance of e-mail in today’s workflow, the increasing need to protect against social engineering attacks, McAfee displacement, migration to Office 365 and growing channel partner programs. (Ishay Levin)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Zillow Group

    Zillow Group, Inc. (NASDAQ:ZG) is the leading online real estate company in the U.S. Shares were down after the company gave a 2017 profit outlook that missed Street expectations, due to strategic investments and what we believe are conservative expectations for the revenue impact of several recently launched new products. We believe these products will meaningfully drive Zillow’s revenue capture of real estate advertising and will increase in their impact as we move through 2017. As the leader in a highly fragmented market, we think Zillow remains well positioned to continue to grow its market share. (Ashim Mehra)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Benefitfocus

    Shares of benefits software vendor Benefitfocus, Inc. (NASDAQ:BNFT) were down in the quarter after the company reported 2017 guidance that was lower than analysts expected. We are aware of several short-term headwinds, including longer-than-expected implementation periods for large national accounts (resulting in delayed revenue recognition of these sizable deals), slower employer signings because of a sales restructuring (which created the national account team) and uncertainty in the market due to the political situation surrounding the Affordable Care Act. While we believe these headwinds will weigh on reported growth through mid-2017, we don’t believe they impact the significant long-term opportunity. (Neal Rosenberg)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Under Armour

    Shares of athletic apparel company Under Armour, Inc. (NYSE:UA) declined in the first quarter after the company reported fourth quarter revenues and earnings and provided 2017 guidance that missed Street expectations. Increased promotional activity in the athletic apparel space, improved competitor positioning and the bankruptcy of Sports Authority is pressuring UA’s wholesale business. We exited our remaining UA shares during the quarter. (Michael Baron)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Guidewire Software

    Shares of P&C insurance software vendor Guidewire Software, Inc. (NYSE:GWRE) were up in the first quarter. Guidewire is the leading P&C core systems vendor, as evidenced by near-perfect retention rates, growing installed base, and accelerating adoption. The company is early in its core system replacement cycle, and has tripled its addressable market through new products and cloud delivery. We believe that Accenture’s new relationship with Guidewire will help to enhance pricing and win rates and shorten sales cycles. (Neal Rosenberg)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Glaukos Corp

    Shares of Glaukos Corporation (NYSE:GKOS), a pioneer of minimally-invasive products and procedures for the treatment of glaucoma, were up in the first quarter due to strong financial results that beat Street expectations, with revenues growing 64%. The company also raised 2017 guidance and announced favorable Medicare reimbursement. Glaukos’ products and procedures are currently approved for only a subset of the market. We believe the company will continue to deliver strong growth as its product coverage broadens. (Josh Riegelhaupt)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Mobileye N.V.

    Shares of Mobileye N.V. (NYSE:MBLY), maker of vision-based advanced driver assistance systems, rose in the first quarter in response to Intel’s offer to acquire the company. We have long believed in the potential for Mobileye to become the “Intel Inside” of cars of the future. We think Mobileye’s entrepreneurial management team has clear goals that can benefit society, and we look forward to its product development around semi-autonomous and autonomous driving. (Gilad Shany)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund Comments on Amazon.com

    Shares of Amazon.com, Inc. (NASDAQ:AMZN), the world’s largest retailer and cloud services provider, rose during the first quarter after the company reported strong financial results. Amazon continues to benefit from its flywheel strategy, where more participation from Prime members drives greater loyalty and purchasing on Amazon.com. Indeed, according to recent surveys, Amazon captured 53% of U.S. e-commerce sales growth in 2016 (EMarketer, Inc.) and a full 55% of U.S. online shoppers begin their product discovery right on Amazon’s site (Activate Tech and Media Outlook). Moreover, Amazon is the world’s dominant provider of cloud computing services, with its Amazon Web Services (AWS) segment achieving an over $14 billion run rate and still growing almost 50%. We believe AWS will be a significant incremental contributor to Amazon’s overall value creation. Finally, the company also continues to invest in new and potentially large business opportunities, such as TV content, voice-controlled services (Echo and Alexa), digital advertising, e-finance, business supplies and apparel. (Ashim Mehra)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund 1st Quarter Shareholder Letter

    Shares of electric vehicle company Tesla, Inc. (NASDAQ:TSLA) rose during the first quarter on the back of several positive developments. In January, Tesla officially launched cell and battery production at the Gigafactory, one of the world’s largest manufacturing facilities, which will potentially drive significant electric battery cost reductions. On its fourth quarter earnings call, Tesla forecast 47,000 to 50,000 first half deliveries of its Model S and X vehicles, an increase of 65%. Moreover, Tesla announced that it remains on target for a 2017 launch of its mass market Model 3, potentially the largest product cycle in history, with initial production slated to begin this summer. In March, Tesla raised almost $1.4 billion of capital, strengthening its balance sheet to support investments ahead of the Model 3 launch. Additionally, the company’s SolarCity acquisition is on track, showing less cash drain than initially feared by investors. Finally, we believe a pro-U.S. jobs administration is a tailwind for Tesla as it is one of North America’s fastest growing employers. (Ishay Levin/Gilad Shany)


    From the Baron Opportunity Fund first quarter 2017 shareholder letter.

      


  • Baron Opportunity Fund First Quarter 2017 Shareholder Letter

    Dear Baron Opportunity Fund Shareholder:

      


  • Virtu Financial to Buy KCG Holdings

    Virtu Financial Inc. (NASDAQ:VIRT) announced Thursday it has agreed to buy rival high-frequency trading company KCG Holdings Inc. (NYSE:KCG) for $1.4 billion in cash.


    Paying $20 per share, Virtu’s offer falls at the higher end of the range it proposed in an unsolicited offer last month. The deal would create an electronic trading giant that is responsible for nearly one-fifth of the volume in U.S. equities.

      


  • Baron Asset Fund Comments on SBA Communications

    Another top ten holding, SBA Communications Corp. (SBAC), is the third largest independent owner of wireless towers in the U.S., with a growing presence in Canada, Central America, and Brazil. SBA owns and operates over 25,000 towers in total. Because of regulatory and zoning requirements, supply is restricted, creating an advantage for existing tower operators like SBA. At the same time, demand in increasing as consumers use increasing amounts of wireless data bandwidth, forcing carriers to augment their networks. To increase network density, carriers lease space for equipment on towers. We think SBA can generate additional revenue from new lease and amendment activity, leading to strong cash flow growth. Given its strong balance sheet, we believe SBA has many opportunities to grow internationally, particularly in Brazil, where SBA has acquired over 5,000 towers.


    From Baron Asset Fund first quarter 2017 shareholder letter.

      


  • Baron Asset Fund Comments on Vail Resorts

    Ski resort owner and operator Vail Resorts, Inc. (MTN) is the Fund’s third largest holding, representing 5.2% of net assets. The stock has increased more than eight-fold since we first invested. Restrictions on and expenses associated with developing new ski resorts create high barriers to entry. Vail is focused on increasing season pass sales, which helps immunize it from poor snowfall seasons. It has embarked on an aggressive acquisition strategy to enhance the attractiveness of its multi-resort season passes. In the last several years, it has added Park City in Utah, Perisher in Australia, Whistler Blackcomb in Canada, and most recently, Stowe in Vermont. It has also been upgrading its properties to offer new and improved services and amenities.


    From Baron Asset Fund first quarter 2017 shareholder letter.

      


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