Baron Funds recently released its portfolio updates for the third quarter of 2020, which ended on Sept. 30.
Founded by Ron Baron (Trades, Portfolio) in 1982, Baron Funds is a long-term asset management firm that invests in well-researched value opportunities led by quality management teams. The firm seeks to ignore short-term market fluctuations as long as they do not change a company's fundamentals. Baron manages the Growth and Partners funds and co-manages the Asset Fund, with a preference for small and mid-cap companies that might be struggling now but which demonstrate strong competitive advantages and growth prospects.
Based on its investing criteria, the firm's top new holdings established during the quarter were American Well Corp. (AMWL, Financial), GoodRx Holdings Inc. (GDRX, Financial) and Snowflake Inc. (SNOW, Financial).
American Well
The firm established a new holding of 3,114,318 shares in American Well, impacting the equity portfolio by 0.28%. During the quarter, shares traded for an average price of $26.39.
American Well, or Amwell, is a telemedicine company based in Boston. It connects patients with their doctors and other care providers through video for virtual health visits, as well as providing patient engagement, EMR integration and other related services.
On Nov. 17, shares of Amwell traded around $21.72 for a market cap of $5.18 billion. Shares have gained 20% since the company's initial public offering on Sept. 17 at a price of $18 per share.
GuruFocus gives the company a financial strength rating of 5 out of 10. The cash-debt ratio is 115.85, though the company is not yet profitable.
Baron's firm is the top guru shareholder of the stock with 1.35% of shares outstanding, followed by Chase Coleman (Trades, Portfolio) with 0.17% and Paul Tudor Jones (Trades, Portfolio) with 0.04%.
GoodRx Holdings
Baron Funds also invested in 1,558,997 shares of GoodRx Holdings, impacting the equity portfolio by 0.27%. Shares traded for an average price of $52.94 during the quarter.
GoodRx is a company that finds prescription drugs at a discount for the users of its services. Founded in 2011, the company works by providing users with a list of free discount cards and coupons while collecting fees from the pharmacy benefits managers for getting the drugs sold.
On Nov. 17, shares of GoodRx traded around $36.14 for a market cap of $14.44 billion. Shares have gained 9% since the company's initial public offering on Sept. 23 at a price of $33 per share.
GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rating of 4 out of 10. GoodRx has been profitable since 2016, earning net income of $66 million in full-year 2019.
Baron's firm is the most notable guru shareholder of the company with 0.40% of shares outstanding, followed by Chase Coleman (Trades, Portfolio) with 0.36% and Daniel Loeb with 0.13%.
Snowflake
The firm bought 299,339 shares of Snowflake, impacting the equity portfolio by 0.23%. During the quarter, shares traded for an average price of $238.10.
Snowflake's core product is a cloud-based data warehouse that seamlessly operates across the three major public clouds. Founded in 2012, it seems that the founders of the company anticipated the shift to the cloud, as they began to build a cloud computing data warehouse right near the beginning of the cloud's rise in popularity.
On Nov. 17, shares of Snowflake traded around $248.03 for a market cap of $68.49 billion. Shares have gained 1% since the company's initial public offering on Sept. 16 at a price of $245 per share.
GuruFocus gives the company a financial strength rating of 5 out of 10. The cash-debt ratio is 2.93, though the company is not yet profitable.
Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway (BRK.A)(BRK.B) is the biggest shareholder of the company with 2.21% of shares outstanding, followed by Philippe Laffont (Trades, Portfolio) with 1.46% and Frank Sands (Trades, Portfolio) with 0.86%.
Portfolio overview
As of the quarter's end, Baron Funds held shares in 356 stocks valued at a total of $32.58 billion. The firm made 31 new common stock investments during the quarter, sold out of 18 stocks and made several additions and reductions to existing positions, resulting in a turnover rate of 3%. The most notable sell was for 9.44% of the firm's number one holding, Tesla Inc. (TSLA).
The top holdings as of the quarter's end were Tesla with 9.64% of the equity portfolio, CoStar Group Inc. (CSGP) with 5.22% and IDEXX Laboratories Inc. (IDXX) with 3.91%. In terms of sector weighting, the firm was most invested in consumer cyclical, technology and health care.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.
Read more here:
- Akre Capital Management's Top 3rd-Quarter Trades
- Prem Watsa's Top 3 Buys of the 3rd Quarter
- Sarah Ketterer's Top 3rd-Quarter Trades
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