Ron Baron (Trades, Portfolio), leader of Baron Capital Management, released his firm’s first-quarter equity portfolio earlier this month.
The guru’s New York-based firm implements a bottom-up research process to find small and mid-size growth companies with open-ended opportunities and significant competitive advantages to invest in for the long term while they are trading at attractive prices. Baron, who manages the Baron Asset Fund, the Baron Growth Fund and Baron Partners Fund, is known for ignoring short-term market fluctuations, especially when he believes the fundamental reasons for purchasing the stock have not changed.
During the three months ended March 31, 13F filings show the guru established 15 new positions, sold out of 29 stocks and added to or trimmed a number of other existing investments. His most notable trades included a new holding in Wynn Resorts Ltd. (WYNN, Financial), a boost to the Charles Schwab Corp. (SCHW, Financial) stake and reductions of the SBA Communications Corp. (SBAC, Financial), Baidu Inc. (BIDU, Financial) and Argenx SE (ARGX, Financial) positions.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Wynn Resorts
The guru invested in 419,413 shares of Wynn Resorts (WYNN, Financial), allocating 0.14% of the equity portfolio to the position. The stock traded for an average price of $104.59 per share during the quarter.
He previously sold out in the third quarter of 2021.
The Las Vegas-based company, which operates luxury casinos and resorts, has an $11.99 billion market cap; its shares were trading around $105.37 on Tuesday with a price-sales ratio of 2.82.
The GF Value Line suggests the stock is fairly valued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 63 out of 100, the GF Score indicates the company has poor performance potential. While it received moderate ratings for profitability, value and momentum, the growth and financial strength ranks were low.
Of the gurus invested in Wynn Resorts, Ken Fisher (Trades, Portfolio) has the largest stake with 1.95% of outstanding shares. Steven Cohen (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Jefferies Group (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) also have positions in the stock.
Charles Schwab
As previously disclosed, the investor picked up 915,388 shares of Charles Schwab (SCHW, Financial), expanding his stake by 13.63%. The transaction had an impact of 0.14% on the equity portfolio. Shares traded for an average price of $73.23 each during the quarter.
Baron now holds 7.63 million shares in total, which occupy 1.20% of the equity portfolio. GuruFocus estimates he has gained 71.27% on the long-held investment.
The company headquartered in Westlake, Texas, which offers banking and investment services, has a market cap of $96.26 billion; its shares were trading around $52.89 on Tuesday with a price-earnings ratio of 14.45, a price-book ratio of 3.54 and a price-sales ratio of 4.68.
According to the GF Value Line, the stock is significantly undervalued currently.
The company has a GF Score of 78 on the back of high ratings for profitability, growth and value as well as low financial strength and momentum ranks. As such, it will likely have average performance going forward.
With a 4.31% stake, Dodge & Cox is the company’s largest guru shareholder. Other gurus with large positions in Charles Schwab include Fisher, Al Gore (Trades, Portfolio)’s Generation Investment, Ruane Cunniff (Trades, Portfolio), Baillie Gifford (Trades, Portfolio) and Yacktman Asset Management (Trades, Portfolio).
SBA Communications
Baron curbed his SBA Communications (SBAC, Financial) holding by 25.40%, selling 190,805 shares. The transaction impacted the equity portfolio by -0.18%. During the quarter, the stock traded for an average per-share price of $275.19.
The guru now holds 560,491 shares, which make up 0.44% of the equity portfolio. GuruFocus found he has gained an estimated 329.09% on the investment over its lifetime.
The Boca Raton, Florida-based real estate investment trust, which owns and operates wireless infrastructure, has a $25.36 billion market cap; its shares were trading around $234.07 on Tuesday with a price-earnings ratio of 68.44 and a price-sales ratio of 9.50.
Based on the GF Value Line, the stock appears to be a possible value trap currently. As such, potential investors should do thorough research before making a decision.
The GF Score of 85, however, implies the company has good outperformance potential, driven by high profitability, growth and value ratings, a more moderate momentum rank and low financial strength.
Diamond Hill Capital (Trades, Portfolio) is SBA Communications’ largest guru shareholder with 0.53% of its outstanding shares. The stock is also being held by Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Paul Tudor Jones (Trades, Portfolio), Greenblatt and several others.
Baidu
The Baidu (BIDU, Financial) investment was slashed by 56.01%, or 414,157 shares. The transaction had an impact of -0.16% on the equity portfolio. The stock traded for an average price of $141.83 per share during the quarter.
Baron now holds 325,255 shares, which account for 0.15% of the equity portfolio. GuruFocus says he has lost around 5.70% on the investment so far.
The Chinese company, which operates an online search engine, has a market cap of $43.32 billion; its shares were trading around $123.92 on Tuesday with a price-earnings ratio of 22.01, a price-book ratio of 1.30 and a price-sales ratio of 2.38.
The GF Value Line suggests the stock is modestly undervalued currently.
The company also has good outperformance potential with a GF Score of 83. In addition to high ratings for profitability and value, it received moderate ranks for the other three criteria.
Holding a 2.68% stake, PRIMECAP Management (Trades, Portfolio) is Baidu’s largest guru shareholder. Dodge & Cox, John Rogers (Trades, Portfolio) and Baillie Gifford (Trades, Portfolio) also have notable positions.
Argenx
The guru reduced the Argenx (ARGX, Financial) position by 31.66%, dumping 115,331 shares. The transaction had an impact on the equity portfolio of -0.15%. During the quarter, shares traded for an average price of $370.17 each.
Baron now holds 248,955 shares, representing 0.28% of the equity portfolio. GuruFocus data shows he has gained about 88.09% on the investment to date.
Headquartered in the Netherlands, the biotech company has a $23.16 billion market cap; its shares were trading around $417.98 on Tuesday with a price-book ratio of 7.97 and a price-sales ratio of 53.35.
According to the GF Value Line, the stock is a possible value trap currently. Therefore, potential investors should use caution when making a decision.
The GF Score of 75 means the company will likely have average performance going forward. It is supported by high ratings for three of the criteria, middling marks for value and a low profitability rank.
The Vanguard Health Care Fund (Trades, Portfolio) is Argenx’s largest guru shareholder with a 2.52% stake. Simons’ firm, the Eaton Vance Worldwide Health Sciences Fund (Trades, Portfolio) and Cohen also own the stock.
Additional trades and portfolio performance
During the quarter, Baron also entered a position in Caesars Entertainment Inc. (CZR, Financial), sold out of Progyny Inc. (PGNY, Financial), added to his holding of Taiwan Semiconductor Manufacturing Co. Ltd. (TSM, Financial) and cut back on the bets in Installed Building Products Inc. (IBP, Financial) and Gartner Inc. (IT, Financial).
The guru’s $33.31 billion equity portfolio, which is composed of 360 stocks, is most heavily invested in the consumer cyclical, technology and financial services sectors.
GuruFocus data shows the firm returned -42.56% in 2022, underperforming the S&P 500’s return of -18.11%.
