Ron Baron (Trades, Portfolio), leader of Baron Capital Management, disclosed this week he expanded his position in Marriott Vacations Worldwide Corp. (VAC, Financial) by 24.96% on June 30.
The guru, who manages the New York-based firm’s Baron Asset Fund as well as the Growth and Partners Funds, takes long positions in growth companies that have open-ended opportunities and significant competitive advantages.
According to GuruFocus real-time picks, Baron picked up 539,145 shares of the Orlando-based timeshare company for an average price of $112.96 per share. The trade had an impact of 0.28% on the portfolio. He now owns roughly 2.7 million shares, which represent 1.4% of his overall portfolio.
GuruFocus data shows he has made an estimated gain of 86% on the investment since the third quarter of 2012.
Marriott has a market cap of $3.14 billion; its shares were trading around $117.68 on Wednesday with a price-earnings ratio of 14.16, a price-book ratio of 2.96 and a price-sales ratio of 1.58.
According to the Peter Lynch chart below, the stock is undervalued since it is trading below its fair value.
GuruFocus estimates the stock has fallen 14% year to date.
In April, the company announced it is acquiring ILG Inc. (ILG, Financial) for approximately $4.7 billion.
Marriott reported first-quarter earnings on May 3, posting adjusted earnings of $1.39 per share on $570.8 million in revenue.
GuruFocus rated Marriott Vacations’ financial strength 6 out of 10. While the company’s debt load has been increasing over the past several years, from $678.79 million in 2015 to nearly $1.1 billion in 2017, it is still at a manageable level. In addition, the Altman Z-Score of 3.22 indicates the company is in good financial standing.
The company’s profitability and growth was rated 8 out of 10, supported by an expanding operating margin and a moderate Piotroski F-Score of 6, which indicates stable business operations.
With 10% of outstanding shares, Baron is the company’s largest guru shareholder. Caxton Associates (Trades, Portfolio) and Murray Stahl (Trades, Portfolio) also own the stock.
Other hotel and resort-related stocks in Baron’s portfolio are Hyatt Hotels Corp. (H, Financial), MGM Resorts International (MGM, Financial), Choice Hotels International Inc. (CHH, Financial), Hilton Grand Vacations Inc. (HGV, Financial), Red Rocks Resorts Inc. (RRR, Financial), Hilton Worldwide Holdings Inc. (HLT, Financial), Marriott International Inc. (MAR, Financial) and Vail Resorts Inc. (MTN, Financial).
The portfolio, which is composed of 352 holdings, is largely invested in the consumer cyclical and technology sectors. According to GuruFocus, the Baron Partners Fund outperformed the S&P 500 index in 2017 with a return of 31.54%. The benchmark posted a 21.71% return.
Disclosure: No positions.
