Baron Asset Fund (BARIX)

Portfolio Management

AndrewPeck
Andrew Peck

Fund Manager since 2003

View All Commentary by Andrew

Fund Description

Baron Asset Fund invests primarily in mid-sized growth companies.

    

Portfolio Commentary

Institutional Performance

Review and Outlook (for quarter ended 12/31/2016)

The Review and Outlook for period ending December 31, 2016 is not yet available

Top Contributors/Detractors to Performance

Contributors (for quarter ended 12/31/2016)
  • Shares of Gartner, Inc., a provider of syndicated IT research, contributed to Q4 performance. We believe that Gartner’s key forward-looking metrics continue to be solid. We expect to see continued acceleration due to easing comparisons, growing productivity, and sales tactics that have been fine-tuned to match current macro conditions. We believe that the company has significant financial flexibility, and will begin to deploy capital more aggressively on share repurchases or M&A.

  • Shares of brokerage business The Charles Schwab Corp. increased in Q4 on the potential of multiple interest rate increases into 2017, which will potentially improve the company’s earnings. Charles Schwab also reported solid asset growth reaching over $2.7 trillion. The business continued to shift to fee-based advice from trading activity, a move that we believe creates more stability and the potential for increased profitability.

  • Arch Capital Group Ltd. is a specialty insurance and reinsurance company based in Bermuda. Shares were up in Q4 on good financial results with profitable underwriting, modest catastrophe losses, and favorable reserve development. Arch Capital also benefited from increasing optimism toward its acquisition of United Guaranty which makes Arch the largest provider of mortgage insurance, a market we think has attractive profitability and growth prospects. We continue to own the stock due to Arch’s strong management team and underwriting discipline.

Detractors (for quarter ended 12/31/2016)
  • Shares of FleetCor Technologies, Inc., a global payment processing services provider, fell in Q4 following disappointing quarterly results and a modest reduction in full-year revenue guidance. Investors expected an acceleration in the second half of 2016, but organic growth modestly decelerated. Sentiment was also hit after a large contract loss and intensifying forex market headwinds into year-end. We expect these headwinds to abate and strong earnings growth to persist.

  • Shares of P&C insurance software vendor Guidewire Software, Inc. detracted in Q4 as it was forced to delay revenue on a large new deal. Guidewire is the leading P&C core systems vendor, with near-perfect retention rates, growing installed base, and accelerating adoption. The company is early in its core system replacement cycle, and has tripled its addressable market through new products and cloud delivery. We believe Accenture’s new relationship with Guidewire will help to enhance pricing and win rates and shorten sales cycles.

Quarterly Attribution Analysis (for quarter ended 12/31/2016)

The Quarterly Attribution Analysis for period ending December 31, 2016 is not yet available

Yearly Attribution Analysis (for year ended 12/31/2016)

The Yearly Attribution Analysis for period ending December 31, 2016 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 judgment 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 Baron Funds are subject to risk.