Baron Focused Growth Fund (BFGFX)

Portfolio Management

Ron Baron

Fund Manager since 1996

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Fund Description

Baron Focused Growth Fund invests in a focused portfolio of small and mid-size growth companies.



Fund Resources

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Portfolio Commentary

Retail Performance

Review and Outlook (for quarter ended 12/31/2015)

The Review and Outlook for period ending December 31, 2015 is not yet available

Top Contributors/Detractors to Performance

Contributors (for quarter ended 12/31/2015)
  • Shares of Vail Resorts, Inc., an operator of ski resorts across the U.S. and Australia, increased in Q4 as the company generated strong results from its first season at Perisher in Australia, as well as robust pass sales for the current ski season in the U.S. In addition, snow storms across Tahoe, Colorado, and Utah resulted in positive sentiment on the stock. The company continued to generate significant cash flow, and it has started to use it to repurchase stock.

  • Shares of CoStar Group, Inc., a real estate information and marketing services company, contributed to Q4 performance. The company’s financial results beat Street expectations, particularly on margin expansion. Bookings growth was strong, with net annualized subscription bookings more than doubling versus the prior year. We believe CoStar is poised to generate accelerating organic revenue growth and significant margin expansion as it leverages the multifamily marketing investments made over the last 18 months.

  • Shares of quartz countertop manufacturer CaesarStone Sdot-Yam Ltd. contributed in Q4, recapturing some of the ground it lost in Q3 that resulted from Q2 financial results that, while impressive, fell short of Street expectations. A negative report by a short seller also pressured the stock in Q3. We remain positive on our investment in CaesarStone, as earnings growth continues to accelerate from successful new product launches and quartz market share gains over other countertop materials such as granite and marble.

Detractors (for quarter ended 12/31/2015)
  • Shares of sporting goods retailer Dick’s Sporting Goods, Inc. fell in Q4 on reports of a weak Q3 and lowered guidance for the key holiday season. While we feel that demand is strong, consumers seek deals and discounts and are migrating incremental purchases to e-commerce where Dick’s locations and merchandise are not as competitively advantaged. Adding to these pressures has been unseasonably warm weather, resulting in excess inventory.

  • Shares of electric vehicle company Tesla Motors, Inc. fell in Q4 due to skepticism about the sustainability of demand and its ability to meet annual goals. The Model X launch was met with customer enthusiasm, but the ramp seemed slower than initially hoped for. Tesla has successfully executed on two top-of-the-line cars in an impressively short time frame. As it moves down market in its price point, we think operation will be a bigger challenge than demand. We look forward to the expected introduction of Model 3 in the spring of 2016.

  • Shares of CarMax, Inc., the country's leading used car retailer, detracted during Q4 after reporting weaker sales and earnings growth owing to a variety of factors we believe are transitory, including inventory mix and heavier than usual new car incentives. We maintain our positive outlook on CarMax’s business. With low single digit share of a vast and fragmented market, a young and growing store base, and pent up industry demand, we believe CarMax is poised to deliver double-digit earnings growth over the next several years.

Quarterly Attribution Analysis (for quarter ended 12/31/2015)

The Quarterly Attribution Analysis for period ending December 31, 2015 is not yet available

Yearly Attribution Analysis (for year ended 12/31/2015)

The Yearly Attribution Analysis for period ending December 31, 2015 is not yet available

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The prospective performance of the companies discussed herein is based on our internal analysis and reflect our opinions only. We cannot promise future returns and our opinions are a reflection of our best judgement at the time of publication. Our views are not intended as recommendations or investment advice to any person and are subject to change at any time based on market and other conditions and Baron has no obligation to update them. Investing in the stock market is always risky. Current and future portfolio holdings in the Fund are subject to risk.

Source: FactSet PA.