Baron Capital started in 1982. It started with about $10 million in management. We started with three people that always had a big idea. There was always a big dream. We started mutual funds in 1987, by that time we were about $150 million, and it’s now $21 billion,” says Ron Baron, 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. Since 1987, his Baron Asset Fund has returned 13.16% annualized returns through September 2007. His Baron Growth Fund has returned 16.85% annually since inception in 1994, and his Baron Partners Fund has averaged 17.85% annually since 1992.
Ron Baron invests primarily in small and mid-size growth companies. He likes to invest in companies with growth opportunities and invests for the long-term. In a company video, he spoke about the Baron Growth Fund, “[It] is a small-cap growth fund that invests in small companies. We invest in small companies, not because they’re small. But because we think they’re going to get to be big. Most small-capital funds buy them when they’re small and they sell them when they’re small. We think that you benefit if you identified these businesses, buy them when they’re small, and you hold them when they get to be big.”
Ron Baron invests in growth companies using a value-oriented purchase discipline, and 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.
In his web-release message to his investors, he wrote, “We define ''long term'' as years, not months.”
A 10-year look at the three funds: Baron Growth beat the street 8 out of 10 consecutive years; Baron Partners Fund…7 out of 10; and Baron Asset Fund…7 out of 10.
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In his latest interview: Looking ahead to Restructured Markets, Ron Baron stated that stocks are cheap right now, “down more than 40% from their peak in October of 2007.” The current stock prices are selling for less than their replacement cost, or base cost to build that business. He believes government will likely to restructure the financial system. What will the market look like then? Baron says there will be less proprietary trading, more leverage which translates to higher value, but less return. He held a five year or less timeline to the economic recuperation process. Ron Baron ended with the statement, “There are opportunities everywhere to invest at prices that I don't think we are going to see again in a generation.”
Arch Capital Group Ltd. (ACGL, Financial) places the top ten holdings in all three funds discussed above. Stericycle Inc. (SRCL, Financial) and XTO Energy Inc. (XTO, Financial) also position the top ten holding of the Baron Asset Fund. Other holdings are Immucor Inc. (BLUD, Financial) and Interactive Data Corp. (IDC, Financial).
Arch Capital Group Ltd. (ACGL)
Arch Capital Group Ltd. is a diversified financial services holding company, with a market cap of $4.09 billion; its shares were traded at around $69 with a P/E ratio of 8.72 and P/S ratio of 1.38. Arch Capital Group Ltd. had an annual average earning growth of 48.9% over the past 10 years. The Bermuda-based company has over $4.4 billion in capital as of second quarter.
The insurer reported its second-quarter net income to be $152.1 million, or $2.43 a share. That compares to profit of $192.3 million, or $2.92 a share, for the same quarter in 2008. Not including investment gains, the operating income totaled $163 million, or $2.60 a share. A subsidiary of ACGL, A rch Insurance Group announced two new principal underwriting groups: Arch Property & Casualty Group, and the Arch Financial & Professional Liability Group. The company says the new groups are designed to help Arch Insurance maximize underwriting opportunities as the market transitions.
Baron Partners and Growth Funds hold 4,790,503 shares of this company. Arch Capital was quoted in Baron’s December 2008 quarterly report as one of the top holdings. (See Table IV, page 36) Baron Partners Fund began acquisition of ACGL in 2002, with $0.6 billion in market cap. In December 2008, ACGL ended with $4.2 billion in market capital; this translates to $98.1 million of investment value under Partners. Ron Baron wrote, “At a time when it is difficult for virtually everyone to borrow money. Arch is significantly overcapitalized. This property and casualty insurer has a $10 billion fixed income investment portfolio with an embedded yield of 4.5% and duration of 3.4 years. We believe Arch is overcapitalized by at least $500 million and has at least $3 billion annual liquidity. Arch, in our view, is a beneficiary of the travails of the largest property and casualty insurer, AIG and others. Over time, we expect the problems of AIG to result in less rate competition for Arch. We also believe that conservatively managed Arch could add talented executives with attractive books of business who formerly worked for competitors now in distress.”
Stericycle Inc. (SRCL)
Stericycle Inc. (SRCL) provides a waste and environmental facilities services in the Americas and Europe. It has a market cap of $4.06 billion; its shares were traded at around $48.35 with a P/E ratio of 25.25 and P/S ratio of 3.75. Stericycle Inc. had an annual average earning growth of 41.8% over the past 10 years.
Ron Baron owns 1,141,303 shares which places 0.49% in the $11.99 billion Baron Funds. Stericycle Inc and its competitor Covanta Holding Corp. total 3.39% of Baron Asset Fund. Director of the company, Rodney F. Dammeyer made the list of top open-market purchases, where he acquired $241,244 or 5,000 shares of SRCL stock. The company’s second quarter earnings were down 22 percent. It dropped sharply as energy and recycling prices lowered. The company published net income of $247 million, or 50 cents per share, from $318 million, or 64 cents per share, previous year. Revenue decreased 15%, to $2.95 billion from $3.49 billion a year ago. Stericycle expanded its medical waste business through acquisition of MedServe Inc. for $200 million.
Immucor Inc. (BLUD)
Immucor is an international develops & manufactures products used by hospital blood banks clinical laboratories and large blood-donor centers to test detect and identify certain properties of human blood prior to patient transfusion. Immucor Inc. has a market cap of $1.25 billion; its shares were traded at around $18.63 with a P/E ratio of 16.11 and P/S ratio of 4.16. Immucor Inc. had an annual average earning growth of 40.8% over the past 10 years.
Ron Baron sold 60% of Immucor shares. He now owns 760,250 shares as of June 30, 2009. Immucor was added to Baron Small Cap Fund in 2003 with $57.1 million in investment value, as of December 2008. On April 24, 2009, the company was charged with securities fraud and violation of antitrust laws. As a result, Immucor’s closing price dropped 27% overnight. In the first quarter ended October 1 st, 2009, Immucor reports profit rise 7% on sales. The company said profit increased to $21.3 million, or 30 cents per share, from $20 million, or 28 cents per share, in the same quarter a year earlier. Revenue grew 14% to $83.1 million from $73.2 million.
XTO Energy Inc. (XTO)
XTO Energy Inc., developer of oil and gas properties, has grown mainly through acquisitions of proved oil and gas reserves followed by development and exploitation activities. The company said they are increasing 2010 commodity price hedges. XTO Energy Inc. has a market cap of $22.6 billion; its shares were traded at around $42.87 with a P/E ratio of 11.29 and P/S ratio of 2.94. The dividend yield of XTO Energy Inc. stocks is 1.28%. The company Energy Inc. had an annual average earning growth of
36.6% over the past 10 years.
Ron Baron owns 2,380,505 shares as of June 30, which accounts for 0.76% of the $11.99 billion portfolio of Baron Funds. XTO Energy’s second quarter profit fell with increase gas production. The Ft Worth based company said profits declined 14% as commodity prices lowered. The company reported a profit of $496 million, or 85 cents per share, compared with $575 million, or $1.11 per share, during the same quarter last year. Revenue rose 17% to $2.27 billion from $1.94 billion in the prior-year period. Production climbed 32% to 2.89 billion cubic ft, as natural gas prices declined: 17% for gas, and 57% for liquid.
Interactive Data Corp. (IDC)
Interactive Data (IDC) provides financial information and research. Interactive Data Corp. has a market cap of $2.4 billion; its shares were traded at around $26 with a P/E ratio of 17.38 and P/S ratio of 3.2. The dividend yield of Interactive Data Corp. stocks is 3.13%. Interactive Data Corp. had an annual average earning growth of 36.6% over the past 10 years.
Ron Baron bought shares of IDC. He now owns 1,072,934 shares. This position accounts for 0.21% of the $11.99 billion portfolio of Baron Funds. This month, CFO of IDC Andrew J. Hajducky III resigned from the company. IDC declared a quarterly cash dividend of $0.20 per share as the 12th consecutive quarterly cash dividend. In the company press release, MSNBC.com selected IDC to manage its financial market data via web.
Sources
Baron Funds Quarterly Reports
Ron Baron invests primarily in small and mid-size growth companies. He likes to invest in companies with growth opportunities and invests for the long-term. In a company video, he spoke about the Baron Growth Fund, “[It] is a small-cap growth fund that invests in small companies. We invest in small companies, not because they’re small. But because we think they’re going to get to be big. Most small-capital funds buy them when they’re small and they sell them when they’re small. We think that you benefit if you identified these businesses, buy them when they’re small, and you hold them when they get to be big.”
Ron Baron invests in growth companies using a value-oriented purchase discipline, and ignores short-term market fluctuations when he believes the fundamental reasons for purchasing a company have not changed. He holds investments for longer than five years on average.
In his web-release message to his investors, he wrote, “We define ''long term'' as years, not months.”
| 3-Year Turnover Rates for the Funds as of December 31, 2008 | |
|---|---|
| Baron Asset Fund: | 18.62% |
| Baron Growth Fund: | 25.19% |
| Baron Small Cap Fund: | 39.60% |
| Baron iOpportunity Fund: | 57.37% |
| Baron Partners Fund: | 35.15% |
| Baron Fifth Avenue Growth Fund: | 59.10% |
| Baron Retirement Income Fund: | 44.74% |
A 10-year look at the three funds: Baron Growth beat the street 8 out of 10 consecutive years; Baron Partners Fund…7 out of 10; and Baron Asset Fund…7 out of 10.
| Ron Baron's Funds | Symbol | Market-Cap | Since | Market Cap($ Billion) | 10-year Avg. % Change |
|---|---|---|---|---|---|
| Growth Fund | BGRFX | small-cap | 1995 | $2.34 | 10.01% |
| Partners Fund | BPTRX | mid-cap | 1992 | $3.30 | 6.09% |
| Baron Asset Fund | BARAX | mid-cap | 1987 | $3.25 | 6.66% |
In his latest interview: Looking ahead to Restructured Markets, Ron Baron stated that stocks are cheap right now, “down more than 40% from their peak in October of 2007.” The current stock prices are selling for less than their replacement cost, or base cost to build that business. He believes government will likely to restructure the financial system. What will the market look like then? Baron says there will be less proprietary trading, more leverage which translates to higher value, but less return. He held a five year or less timeline to the economic recuperation process. Ron Baron ended with the statement, “There are opportunities everywhere to invest at prices that I don't think we are going to see again in a generation.”
Arch Capital Group Ltd. (ACGL, Financial) places the top ten holdings in all three funds discussed above. Stericycle Inc. (SRCL, Financial) and XTO Energy Inc. (XTO, Financial) also position the top ten holding of the Baron Asset Fund. Other holdings are Immucor Inc. (BLUD, Financial) and Interactive Data Corp. (IDC, Financial).
Arch Capital Group Ltd. (ACGL)
Arch Capital Group Ltd. is a diversified financial services holding company, with a market cap of $4.09 billion; its shares were traded at around $69 with a P/E ratio of 8.72 and P/S ratio of 1.38. Arch Capital Group Ltd. had an annual average earning growth of 48.9% over the past 10 years. The Bermuda-based company has over $4.4 billion in capital as of second quarter.
The insurer reported its second-quarter net income to be $152.1 million, or $2.43 a share. That compares to profit of $192.3 million, or $2.92 a share, for the same quarter in 2008. Not including investment gains, the operating income totaled $163 million, or $2.60 a share. A subsidiary of ACGL, A rch Insurance Group announced two new principal underwriting groups: Arch Property & Casualty Group, and the Arch Financial & Professional Liability Group. The company says the new groups are designed to help Arch Insurance maximize underwriting opportunities as the market transitions.
Baron Partners and Growth Funds hold 4,790,503 shares of this company. Arch Capital was quoted in Baron’s December 2008 quarterly report as one of the top holdings. (See Table IV, page 36) Baron Partners Fund began acquisition of ACGL in 2002, with $0.6 billion in market cap. In December 2008, ACGL ended with $4.2 billion in market capital; this translates to $98.1 million of investment value under Partners. Ron Baron wrote, “At a time when it is difficult for virtually everyone to borrow money. Arch is significantly overcapitalized. This property and casualty insurer has a $10 billion fixed income investment portfolio with an embedded yield of 4.5% and duration of 3.4 years. We believe Arch is overcapitalized by at least $500 million and has at least $3 billion annual liquidity. Arch, in our view, is a beneficiary of the travails of the largest property and casualty insurer, AIG and others. Over time, we expect the problems of AIG to result in less rate competition for Arch. We also believe that conservatively managed Arch could add talented executives with attractive books of business who formerly worked for competitors now in distress.”
Stericycle Inc. (SRCL)
Stericycle Inc. (SRCL) provides a waste and environmental facilities services in the Americas and Europe. It has a market cap of $4.06 billion; its shares were traded at around $48.35 with a P/E ratio of 25.25 and P/S ratio of 3.75. Stericycle Inc. had an annual average earning growth of 41.8% over the past 10 years.
Ron Baron owns 1,141,303 shares which places 0.49% in the $11.99 billion Baron Funds. Stericycle Inc and its competitor Covanta Holding Corp. total 3.39% of Baron Asset Fund. Director of the company, Rodney F. Dammeyer made the list of top open-market purchases, where he acquired $241,244 or 5,000 shares of SRCL stock. The company’s second quarter earnings were down 22 percent. It dropped sharply as energy and recycling prices lowered. The company published net income of $247 million, or 50 cents per share, from $318 million, or 64 cents per share, previous year. Revenue decreased 15%, to $2.95 billion from $3.49 billion a year ago. Stericycle expanded its medical waste business through acquisition of MedServe Inc. for $200 million.
Immucor Inc. (BLUD)
Immucor is an international develops & manufactures products used by hospital blood banks clinical laboratories and large blood-donor centers to test detect and identify certain properties of human blood prior to patient transfusion. Immucor Inc. has a market cap of $1.25 billion; its shares were traded at around $18.63 with a P/E ratio of 16.11 and P/S ratio of 4.16. Immucor Inc. had an annual average earning growth of 40.8% over the past 10 years.
Ron Baron sold 60% of Immucor shares. He now owns 760,250 shares as of June 30, 2009. Immucor was added to Baron Small Cap Fund in 2003 with $57.1 million in investment value, as of December 2008. On April 24, 2009, the company was charged with securities fraud and violation of antitrust laws. As a result, Immucor’s closing price dropped 27% overnight. In the first quarter ended October 1 st, 2009, Immucor reports profit rise 7% on sales. The company said profit increased to $21.3 million, or 30 cents per share, from $20 million, or 28 cents per share, in the same quarter a year earlier. Revenue grew 14% to $83.1 million from $73.2 million.
XTO Energy Inc. (XTO)
XTO Energy Inc., developer of oil and gas properties, has grown mainly through acquisitions of proved oil and gas reserves followed by development and exploitation activities. The company said they are increasing 2010 commodity price hedges. XTO Energy Inc. has a market cap of $22.6 billion; its shares were traded at around $42.87 with a P/E ratio of 11.29 and P/S ratio of 2.94. The dividend yield of XTO Energy Inc. stocks is 1.28%. The company Energy Inc. had an annual average earning growth of
36.6% over the past 10 years.
Ron Baron owns 2,380,505 shares as of June 30, which accounts for 0.76% of the $11.99 billion portfolio of Baron Funds. XTO Energy’s second quarter profit fell with increase gas production. The Ft Worth based company said profits declined 14% as commodity prices lowered. The company reported a profit of $496 million, or 85 cents per share, compared with $575 million, or $1.11 per share, during the same quarter last year. Revenue rose 17% to $2.27 billion from $1.94 billion in the prior-year period. Production climbed 32% to 2.89 billion cubic ft, as natural gas prices declined: 17% for gas, and 57% for liquid.
Interactive Data Corp. (IDC)
Interactive Data (IDC) provides financial information and research. Interactive Data Corp. has a market cap of $2.4 billion; its shares were traded at around $26 with a P/E ratio of 17.38 and P/S ratio of 3.2. The dividend yield of Interactive Data Corp. stocks is 3.13%. Interactive Data Corp. had an annual average earning growth of 36.6% over the past 10 years.
Ron Baron bought shares of IDC. He now owns 1,072,934 shares. This position accounts for 0.21% of the $11.99 billion portfolio of Baron Funds. This month, CFO of IDC Andrew J. Hajducky III resigned from the company. IDC declared a quarterly cash dividend of $0.20 per share as the 12th consecutive quarterly cash dividend. In the company press release, MSNBC.com selected IDC to manage its financial market data via web.
Sources
Baron Funds Quarterly Reports
