Baron Fifth Avenue Growth Fund (BFTIX)

Portfolio Management

AlexUmansky
Alex Umansky

Fund Manager since 2011

View All Commentary by Alex

Fund Description

Baron Fifth Avenue Growth Fund invests in large growth companies.

    

Portfolio Commentary

Institutional Performance

Review and Outlook (for quarter ended 9/30/2014)

The Review and Outlook for period ending September 30, 2014 is not yet available

Top Contributors/Detractors to Performance

Contributors (for quarter ended 9/30/2014)
  • Facebook Inc. is the world's largest social network. Shares of Facebook were up in Q3 on reports of continued improvements in consumer engagement and mobile monetization. We believe that Facebook is in the early innings of building out its global advertising business while investing in newer synergistic offerings such as Instagram and WhatsApp.

  • Twitter, Inc. is an online social networking and micro-blogging service that enables users to send and read short messages. Shares of Twitter performed well in the quarter as investors saw signs of greater consumer engagement and improved monetization on the platform. We believe Twitter is in the early stages of its overall growth and has substantial runway ahead of it.

  • Shares of Apple, Inc. increased in Q3 as investors purchased the stock ahead of the new iPhone 6 launch. Lines, both virtual and physical, were longer than any other launch in Apple’s history, and 10 million devices were sold in the first weekend. Apple also introduced a payment system and a watch, which helped shift investor sentiment around new product innovation and categories in the post-Jobs era. Being the most valuable company on earth makes it harder to grow but so far, Apple is proving the naysayers wrong.

Detractors (for quarter ended 9/30/2014)
  • Shares of Las Vegas Sands Corp., which operates casinos in Las Vegas, Singapore and Macau, fell in Q3 as China's corruption crackdown and more stringent visa restrictions dampened growth in Macau. In addition, the junkets which bring in VIP rollers, lend them money, and settle their debts, are proving less willing to extend generous credit terms, as it has become harder to collect debts. Despite these setbacks, we believe that as new supply comes online and infrastructure improves, Las Vegas Sands will continue to grow in this underpenetrated market.

  • Shares of Illumina, Inc. declined in Q3. Illumina is the leading provider of next generation DNA sequencing instruments and consumables. There was no specific reason for the decline. The shares are up significantly over the past year, driven by strong momentum following the announcement of multiple new product introductions. We believe Illumina has further distanced itself from its competitors and holds an effective monopoly on DNA sequencing at a time when demand is accelerating, and our conviction in the long-term investment thesis remains unchanged.

  • Shares of leading seed and traits company Monsanto Co. fell in Q3, driven down by weak grain prices, which has dampened investor enthusiasm across the agricultural complex. Monsanto also issued lower-than-expected guidance following its biennial investor event in August. Monsanto is not immune to lower grain prices, but we continue to own the stock as we believe it is a highly cash generative franchise with dominant market share, high barriers to entry, and compelling long-term global growth prospects.

Quarterly Attribution Analysis

This Fund does not have an Attribution Analysis for this time period.

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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. Investing in the stock market is always risky. Current and future portfolio holdings in the Fund are subject to risk.

Source: FactSet PA.