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

  • Baron Opportunity Fund Comments on CoStar Group

    CoStar Group, Inc. (NASDAQ:CSGP) has been one of the Fund’s longest investments. As we described earlier, the stock fell when CoStar’s management announced an incremental $20 million investment to target a $200 million, high-margin incremental and recurring revenue opportunity. CoStar’s stock reached a high of just under $225 this summer but fell to a low of $180 after this announcement. We thought the market significantly overreacted and decided to “max out” (we can buy up to a 5% position at cost) our CoStar investment. Over the 15 years we’ve been investors in CoStar, we’ve witnessed first-hand the company’s successful track record of investments and believe this latest one will be no different. The stock has already recovered a good amount, and sits around $200 at this writing.


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Ultragenyx Pharmaceutical

    Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) is a developer of drugs for rare diseases whose patients number in the hundreds to thousands and tend to have no available treatments with dire associated outcomes. Ultragenyx currently has four drugs in clinical development targeted at treating six rare disease disorders. Lead program KRN23 for bone-related disorders could be on the market as soon as this year, with its next product, triheptanoin for metabolic disorders, generating pivotal data throughout 2017. Led by Emil Kakkis, the former chief medical officer of Biomarin, a $15 billion rare disease pioneer, we expect continued execution and excellence from Ultragenyx as it helps discover, develop, and commercialize therapies for these orphan disorders.


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Splunk

    We purchased Splunk, Inc. (NASDAQ:SPLK) as the stock came back in from its mid-summer high when many software and internet stocks sold off after Election Day. Splunk is one of the leading “big data” businesses, providing a real-time operational intelligence software platform that enables its customers to search, monitor, analyze, and visualize machine-generated data coming from websites, applications, servers, networks, sensors, and mobile devices. Its software transforms machine generated data into valuable insights in areas such as security and fraud, IT operations, log management, business analytics, and application delivery. Splunk’s growth is being propelled by the explosion of “big data”–data volumes are growing at roughly a 50% rate (with machine-generated data growing closer to 80%) and this data can now be captured, stored, and analyzed to extract actionable business intelligence. Growth in the frequency and severity of cybersecurity breaches are accelerating demand for security monitoring software, which represents around 40% of Splunk’s bookings, as many customers have made Splunk the “nerve center” of their security operations. The emerging Internet of Things should dramatically accelerate the growth and analysis of machine data. Splunk is undergoing a transition from a perpetual software license model– where the software is paid for upfront and loaded behind a customer’s firewall–to cloud-delivered and ratable pricing models. This has caused a lot of confusion for Wall Street, and has led to what we believe is Splunk’s attractive valuation in light of its free cash flow generation and long-term growth opportunity.


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Edwards

    Edwards (NYSE:EW) is the world’s leading manufacturer of tissue heart valves and repair products, which are used to replace or repair a patient’s diseased or defective heart valve. Edwards has leveraged the knowledge and experience from its surgical tissue heart valve business to develop transcatheter heart valve replacement technologies, designed to treat heart valve disease using catheter-based approaches as opposed to open surgery. Transcatheter aortic valve replacement (TAVR) is an innovative procedure in which a valve is inserted through a catheter and implanted within the diseased aortic valve. The procedure is significantly less invasive than surgery, takes about 90 minutes and recovery can be as short as a few days. TAVR is transforming the market because it provides a new, less invasive treatment option for patients ineligible for surgery or at high surgical risk. Edwards believes there are about 650,000 aortic stenosis patients addressable with TAVR–over twice their prior view of the addressable market–only a fraction of which are being treated with TAVR today. Edwards is also investing in transcatheter valve technologies to treat patients with mitral and tricuspid diseases–which present large, untapped addressable markets (2.5 million for mitral and 1.5 million for tricuspid)–and have the potential to open up significant new growth opportunities for the company.


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Intuitive Surgical

    Intuitive Surgical (NASDAQ:ISRG) manufactures and markets the da Vinci Surgical System, a robotic surgical system consisting of a surgeon’s console, a patient-side cart, a high performance vision system and proprietary “wristed” instruments and surgical accessories. The da Vinci system seamlessly translates the surgeon’s natural hand movements on instrument controls at the console into corresponding micro-movements of instruments inserted into the patient through small puncture incisions or ports. The da Vinci provides the surgeon with the intuitive control, range of motion, fine tissue manipulation capability and 3-D vision characteristics of open surgery, while simultaneously allowing the surgeon to work through the small ports of minimally-invasive surgery. Patients treated with the da Vinci system benefit from improved clinical results, smaller incisions, fewer complications, less blood loss, less nerve damage, reduced pain and faster recovery compared with open surgery. The company is targeting four million annual surgical procedures worldwide and, we believe, this target is likely to increase over time. In 2016, roughly 750,000 procedures were performed using Intuitive’s robotic systems, implying substantial runway for growth.


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Illumina

    Shares of Illumina, Inc. (NASDAQ:ILMN), the leading provider of DNA sequencing technology to academic and commercial laboratories, fell in the fourth quarter after reporting disappointing third quarter financial results. The third quarter shortfall was driven by weak high-throughput instrument sales. However, at the J.P. Morgan Healthcare Conference in January, Illumina announced an exciting new high-throughput sequencing platform, called NovaSeq, which has the potential in future years to deliver the world’s first $100 full human genome. We continue to believe Illumina has a long runway for growth driven by increasing adoption of DNA sequencing in clinical markets such as cancer screening, diagnosis, and treatment. (Neal Kaufman)


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on CoStar Group

    Shares of CoStar Group, Inc. (NASDAQ:CSGP), a real estate information and marketing services company, fell in the fourth quarter on news that it is planning a $20 million investment for 2017 to expand its research, sales, and marketing capabilities. We believe this strategy will enable CoStar to upsell existing LoopNet customers to its core CoStar product, potentially driving $200 million of incremental annual recurring revenue at very high margins. We think trends in the core business are excellent, with accelerating CoStar Suite information services revenue growth of 14% and total company operating cash flow margins that improved from 19% to just over 35% year-over-year in the most recently reported quarter. (Neal Rosenberg)


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Amazon.com

    Shares of Amazon.com, Inc. (NASDAQ:AMZN), the world’s largest retailer and cloud services provider, declined in the fourth quarter. The company reported disappointing operating margins and guidance below Street expectations driven primarily by investments in India and abroad. In addition to India, Amazon is investing in several growth initiatives, including Amazon studios, Alexa (voice interface), Amazon Web Services and distribution center expansions. We see the company as the leading retail and cloud provider globally, and believe it possesses both deep moats and expansive addressable markets in both of these areas. (Ashim Mehra)


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Guidewire Software

    Shares of property and casualty insurance software vendor Guidewire Software, Inc. (NYSE:GWRE) detracted in the fourth quarter as accounting rules and commercial terms will force it to delay revenue recognition on a large new deal into next fiscal year. Guidewire is the leading P&C core systems vendor, with 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 Accenture’s new relationship with Guidewire will help to enhance pricing and win rates and shorten sales cycles. (Neal Rosenberg)


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Benefitfocus

    Shares of benefits software vendor Benefitfocus, Inc. (NASDAQ:BNFT) detracted from fourth quarter performance. The company provided modestly lower-than-expected guidance for the fourth quarter of 2016. The company’s management team addressed several short-term headwinds, including longer-than-expected implementation periods for new national accounts (these larger and more complex accounts will go live in the first half of 2017 rather than the second half of 2016), slower employer signings because of a sales restructuring to create a team focused on national accounts, and a revenue share with traditional brokers of BenefitStore voluntary benefit commissions. While these headwinds will likely weigh on reported growth through mid-2017, we don’t believe they impact the significant long-term opportunity. In fact, we believe the company’s success winning large national accounts is a major long-term positive, as these accounts are far larger and typically purchase multiple products. Indeed, in the third quarter, the company signed six national accounts with between 10,000-120,000 employees (vs. typical accounts that average around 3,000 employees). (Neal Rosenberg)


    From Baron Funds' Baron Opportunity Fund fourth quarter 2016 commentary.

      


  • Baron Opportunity Fund Comments on Sage Therapeutics

    Sage Therapeutics, Inc. (NASDAQ:SAGE) is a biopharmaceutical company focused on central nervous system disorders. Shares of Sage were up in the fourth quarter on news that the FDA and EMA (European FDA) are allowing an expedited pathway to approval for the company’s drug to treat post-partum depression. Additionally, Sage announced an expansion into other disease indications, including other types of depression, Parkinson’s and tremor. We believe Sage is poised to become a leader in its space. (Josh Riegelhaupt)

      


  • Baron Opportunity Fund Comments on Tesla Motors

    The shares of electric-vehicle pioneer Tesla Motors, Inc. (NASDAQ:TSLA) grew in the fourth quarter after its shareholders approved the SolarCity merger, aligning the company with management’s long-term vision. Tesla also started to enjoy the benefits of its multi-year investment in the Gigafactory as it becomes operational and provides a competitive advantage in scale and battery prices. We believe that Tesla, as an important U.S.-based auto manufacturer, can potentially benefit from a pro-“U.S. jobs” administration. (Gilad Shany/ Ishay Levin)

      


  • Baron Opportunity Fund Comments on The Charles Schwab Corp

    Shares of brokerage business The Charles Schwab Corp. (NYSE:SCHW) increased during the fourth quarter on the potential of multiple interest rate increases into 2017, which should materially improve the company’s earnings. Charles Schwab also reported solid asset growth reaching over $2.7 trillion. The business continued to shift to fee-based advice from trading activity, a move that we believe creates more stability and the potential for increased profitability. (Michael Baron)

      


  • Baron Opportunity Fund Comments on Gartner

    Shares of Gartner, Inc. (NYSE:IT), a provider of syndicated IT research, contributed to fourth quarter performance. We believe that Gartner’s key forward-looking metrics continue to be solid. We expect to see continued acceleration due to easing comparisons, growing productivity, and sales tactics that have been fine-tuned to match current macro conditions. Neal Rosenberg’s first draft of this write-up concluded: “We believe that the company has significant financial flexibility, and will begin to deploy capital more aggressively on share repurchases or M&A.” Neal was prescient. On January 5, Gartner announced the acquisition of CEB Inc., whose primary asset is the Corporate Executive Board business, in a cash and stock transaction valued at approximately $3.3 billion (about 70% cash and 30% Gartner stock). Gartner’s management team believes the deal will be immediately accretive to Gartner’s adjusted earnings for 2017, double-digit percent accretive to adjusted earnings for 2018, and enable Gartner to further expand its services beyond the IT function. (Neal Rosenberg)

      


  • Baron Opportunity Fund Comments on Netflix Inc.

    Shares of on-demand video service provider Netflix, Inc. (NASDAQ:NFLX) were up in the fourth quarter on strong quarterly subscriber additions, which, as we wrote last quarter, are historically difficult to predict and fluctuate for many reasons. The company has recently reached an all-time high after reporting a solid fourth quarter and providing favorable guidance for 2017. We expect the company to continue to differentiate itself by continuing its unmatched investment in content. Netflix’s investment in original programming could, in our view, reduce the time it takes to achieve its long-term goal of 150 million global subscribers. We retain high conviction in our core investment thesis that the way people watch TV is undergoing a major disruption from legacy time-based networks to on-demand streaming, and that Netflix will be a winner in this shift. (Ashim Mehra)

      


  • Baron Opportunity Fund Shareholder 4th Quarter Commentary

    After this poor end to 2016, the Fund has had a strong start to 2017. The mere act of putting up the new calendar seemingly ushered in another flip in market sentiment and leadership. As I write (reflecting the close of January 25), the Fund is up just under 9% to start the year, leading the Russell 3000 Growth Index by over 450 basis points (and about 600 ahead of the S&P 500 Index). I provide this real-time data neither to dismiss the Fund’s disappointing fourth quarter performance nor to make any promise about how it will continue to perform in 2017, but to underscore the following points:

      


  • Baron Emerging Markets Fund Comments on WH Group Ltd

    During the fourth quarter we established four new positions while adding to a number of existing investments. WH Group Ltd (HKSE:00288) (Hong Kong), under the trade name Shuanghui, is the largest pork processor in China, which recently acquired Smithfield Foods, the largest U.S. player. We believe the growth potential in China is significant, given the country’s preference for pork, and particularly given that China appears to be in the early stages of a secular trend towards fresh processed and packaged proteins, which earn premium pricing and margins. The merger will allow for shared best practices, technology transfer, and operating synergies, while allowing this global leader to take advantage of pricing differences across its major markets. The combined company should generate attractive return on capital and cash flow, and with roughly half of its profits now coming from the U.S., we believe WH Group offers an attractive natural hedge against any future depreciation in the RMB. We also initiated positions in three banks.


    From Baron Emerging Markets Fund fourth quarter 2016 commentary.

      


  • Baron Emerging Markets Fund Comments on NAVER Corp

    Shares of Korea’s leading search company NAVER Corporation (XKRX:035240) fell in the fourth quarter due to a global internet sector correction and asset rotation away from emerging markets. We believe the company’s fundamentals remain strong as the e-commerce platform continues to drive ad revenue and gross merchandise volume. We remain optimistic on NAVER’s performance in 2017. (Shu Bai)


    From Baron Emerging Markets Fund fourth quarter 2016 commentary.

      


  • Baron Emerging Markets Fund Comments on Bellamy’s Australia Limited

    Shares of leading Australian infant nutrition company Bellamy’s Australia Limited (ASX:BAL) declined in the fourth quarter. The stock fell after management announced fiscal year guidance that missed Street expectations. The company is losing market share in China to other imported brands from Australia and Europe. We decided to exit our position owing to deteriorating company fundamentals amidst intensifying competition. (Anuj Aggarwal)


    From Baron Emerging Markets Fund fourth quarter 2016 commentary.

      


  • Baron Emerging Markets Fund Comments on Bharat Financial Inclusion Limited

    Shares of Bharat Financial Inclusion Limited (BOM:533228), India’s leading microfinance leading institution, declined in the fourth quarter due to growing concerns over an increase in non-performing loans in the microfinance industry (MFI). MFI operations have also been impacted by post-demonetization political interference in states such as Maharashtra and Uttar Pradesh, adding to industry stress. (Anuj Aggarwal)


    From Baron Emerging Markets Fund fourth quarter 2016 commentary.

      


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