Ron Baron (Trades, Portfolio) is the founder of Baron Capital Management. He is Co-Portfolio Manager of Baron Asset Fund and remains Portfolio Manager of the Growth and Partners Funds. Baron graduated from Bucknell University with a B.A. in Chemistry, and later attended George Washington University Law School in the evenings.
He invests primarily in small and mid-size growth companies. He likes companies with open-ended growth opportunities and defensible niches. He applies a bottom-up company research, invests for the long-term, and tries to purchase companies at what he believes are attractive prices. He invests in growth companies using a value-oriented purchase discipline. Baron ignores short-term market fluctuations when he believes the fundamental reasons for purchasing a company have not changed. He holds investments for longer than five years on average.
According to Guru Focus Stocks that Ron Baron keeps buying, these are the stocks stocks :
1) Benefitfocus Inc. (BNFT)
Baron started to buy BNFT in Q4 of the year 2013. On the last quarter of 2014 he heavily increased his position by 42.08%, reaching a total of 3,435,622 shares at an average price of 42.17$/share, with an average negative return of 48%.
On the letter to shareholders for the first quarter 2014, Baron Funds said :
“After strong performance in 2013, the shares of Benefitfocus, Inc. (BNFT) gave back some gains, as investors digested higher planned investment spending. Benefitfocus is the leading provider of cloud-based benefits software, offering an integrated suite of solutions to help customers more efficiently shop, enroll, manage and exchange benefits information. The company serves an addressable market that is more than 100 times larger than its current business, which we think should allow it to compound revenue at more than 30% annually. We believe Benefitfocus provides a compelling long-term investment opportunity at its current valuation. (Neal Rosenberg)”
The financial situation is rated 4/10 and is not in good shape as well as the Growth situation, with heavy negative returns such as a ROA of -42%.
Over the last 12 months the company Revenue dropped by 72%.
Other Guru holding small quantity of shares of BNFT is Steven Cohen, holding 0.29% of Outstanding Shares.
2) Masonite International Corp. (DOOR)
Mandel started to buy HUM on Q2 of 2014. On the last quarter he increased his position by 37.63% reaching a total of 2,109,234 shares at an average price of 55.01$ with a positive return of 20%.
When he started to buy DOOR, Baron commented this way his decision :
“We initiated a new position during the second quarter in Masonite International Corp (DOOR). Masonite is a leading, vertically-integrated manufacturer of interior and exterior doors. In 2013, Masonite sold 32 million doors to over 7,000 customers in 80 countries. Sales are split 58% U.S., 16% Canada, and 26% rest of world. Masonite has dominant market positions in its product categories, particularly in North America, and is poised to benefit from an improvement in residential and non-residential construction activity off of depressed levels. Additionally, the doors industry has consolidated recently for certain product categories, improving Masonite’s ability to raise prices, even though capacity is underutilized. The management team is impressive and has inculcated a culture of operational discipline and innovation. We believe that EBITDA can triple as construction levels normalize and pricing firms. Accretive automation investments and acquisitions should be additive to growth. (David Kirshenbaum)
From Ron Baron (Trades, Portfolio)’s Second Quarter 2014 Report.
Currently the stock is trading at 2.60 P/B, with negative returns (ROE -3%, ROA -1%) and troubled financial situation (rated 5/10).
Over the last 12 months, while the Revenue is almost flat, the company EBIT dropped by 40% and the Book Value by 8.90%.
Other Gurus holding DOOR are Howard Marks (Trades, Portfolio) (with 9.99% of Outstanding shares) and Hotchkis & Wiley (9.64% of Outstanding Shares).
3) Air Lease Corp (AL)
Baron started to buy AL on Q2 of 2011. On the last quarter he increased his position by 14.16% reaching a total of 7,304,124 shares at an average price of 28.75$ with an average positive return of 34%.
Talking about Air Lease Corp, on Q3 2014 report, He said :
“Air Lease Corp. (AL) is an aircraft leasing company with a young, fuel-efficient fleet, addressing demand for replacement of older aircraft and more lift in emerging markets, namely Asia. It has strong growth and predictable cash flows, as evidenced by a 23% rise in sales and 42% rise in earnings-per- share in the second quarter. Deliveries are 100% booked through 2015 and 50% placed for 2016.We believe the stock fell in the third quarter due more to general market weakness than reported results, and that Air Lease is well positioned for a long “runway” of profitable growth. (David Goldsmith) “
The Stock is currently trading at ttm P/E of 17.10
Over the last 12 months the company Revenue grew by 23%, the Book Value by 8.90% and the EPS growth rate has been 41.10%. AL has positive returns (9.49% of ROE, 2.53% of ROA and 7.39% of ROC) with a global Profitability & Growth situation rated 6/10.
Other Gurus holding AL are John Keeley (7.13% of Outstanding Shares) and Chuck Royce (1.4% of Outstanding Shares)
4) Tesla Motors Inc (TSLA)
Baron started to buy TSLA on Q2 of 2012. On the last quarter he increased his position by 11.40% reaching a total of 1,151,237 shares at an average price of 214.54$ with an average negative return of 5%.
Talking about his trade, on Q3 2014 report, He said :
"During the quarter we purchased shares in Tesla Motors, Inc (TSLA). The pace of innovation at Tesla is head spinning and the progress being made towards the goal of revolutionizing the auto industry is impressive. Recently, Tesla announced an all-wheel-drive (AWD) model with two electric motors. Tesla’s model D has a longer range due to its dual motor performance optimization! In addition, Tesla announced initial Autonomous Driving capabilities and the potential for the car to serve as a valet for its driver. For those of you who used to watch David Hasselhoff in “Knight Rider,” it must bring a smile to your face. Tesla continues to delight customers and out-innovate its competition. (Gilad Shany) “
The Stock is currently trading at a Forward P/E of 52.08
Over the last 5 years the company Revenue grew by 6.50% while EPS and Free Cash Flow dropped by 40% and 38.80%. TSLA has negative returns (-25% of ROE, -5% of ROA) with a global Profitability & Growth situation rated 5/10. Financial Strenght is stronger with a global ratio of 7/10.
Other Gurus holding TSLA are Primecap Management (1.01% of Outstanding Shares) and Eric Mindich (0.16% of Outstanding Shares)
