Baron Fifth Avenue Growth Fund (BFTHX)
Portfolio Management
Alex Umansky
Fund Manager since 2011
View All Commentary by AlexFund Description
Baron Fifth Avenue Growth Fund invests in large growth companies.
Portfolio Commentary
Retail PerformanceReview and Outlook (for quarter ended 3/31/2013)
This Fund does not have a Review and Outlook for period ending March 31, 2013
Top Contributors/Detractors to Performance
Contributors (for quarter ended 3/31/2013)
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Google, Inc. is the largest search and online display advertising company in the world. Shares of Google were up 12% in Q1 based on improving sentiment around the company’s mobile opportunity, evidenced by improving Cost Per Click (CPC) trends and recognition that recently acquired Motorola Mobility’s impact on the overall business will be negligible. We believe the shift to mobile by consumers will ultimately be positive for Google, and the company will have the ability to lower its operating expenses.
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CME Group, Inc. operates exchanges for financial derivatives. The stock rose during Q1 due to expectations of higher trading volumes. CME’s share price also benefited from increased M&A speculation after a competitor announced a large acquisition.
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Visa, Inc. is a payment network that authorizes and facilitates payments for consumers, merchants, and financial institutions around the world. The stock rose during Q1 due to strong earnings growth that exceeded expectations. The stock also benefited from a higher valuation multiple as investors increasingly seek out strong companies with secular growth characteristics.
Detractors (for quarter ended 3/31/2013)
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Despite surpassing its own quarterly guidance, earnings results from Apple, Inc. disappointed investors. In particular, the company’s gross margins were pressured by some of its newer, lower-priced products (such as iPad minis), and its future revenue growth projections were muted. We believe the current share price does not reflect the market opportunity for Apple and the potential profitability of the business. We think there are many ways for Apple to generate strong shareholder returns.
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Rackspace Hosting, Inc. is a leading hosting and cloud computing service provider. This quarter Rackspace executed on building and transforming its cloud infrastructure to “Open Stack” which is an open source cloud orchestration project initiated by Rackspace and NASA. This transition impacted the core business growth and caused Rackspace to miss revenue expectations. Recent price cuts the company made left us with a cautious view of the competitive landscape and the sustainability of its business model and ROIC. As a result, we exited the position.
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Millennial Media, Inc. is the third largest U.S. mobile ad-network, after Google’s Admob and Apple’s iAd businesses. Millennial’s shares were down sharply in Q1, impacted by lower than expected Q4 results. The company attributed the weaker results to fewer brand dollars being spent in mobile advertising in Q4. We exited our position in Millennial Media in Q1 based on new evidence that the company was losing market share to new entrants in the mobile advertising market.
Quarterly Attribution Analysis (for quarter ended 3/31/2013)
This Fund does not have a Quarterly Attribution Analysis for period ending March 31, 2013
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