Baron Global Advantage Fund (BGAIX)

Portfolio Management

AlexUmansky
Alex Umansky

Fund Manager since 2012

View All Commentary by Alex

Fund Description

Baron Global Advantage Fund invests in growth companies of all sizes anywhere.

  

Fund Resources

Latest Fact Sheets

Standard Fact Sheet

Expanded Fact Sheet - Institutional Shares

  

Portfolio Commentary

Institutional Performance

Review and Outlook (for quarter ended 6/30/2015)

The Review and Outlook for period ending June 30, 2015 is not yet available

Top Contributors/Detractors to Performance

Contributors (for quarter ended 6/30/2015)
  • Shares of SunEdison, Inc., the world’s largest renewable energy developer, rose in Q2, driven by the announcement of several acquisitions in emerging markets and an IPO filing for TerraForm Global, SunEdison’s emerging market “yieldco.” SunEdison also announced that it is considering a General Partnership structure to better recognize the value of the incentive distribution rights it will receive. These announcements were viewed positively as investors gained confidence that the company will successfully execute on its strategy.

  • Shares of Amazon.com, Inc., the world’s largest retailer, were up due to better-than-anticipated operating margins for Q1 and guidance for Q2. It also broke out Amazon Web Services margins for the first time, and at 17%, these margins were meaningfully higher than what investors had feared. We believe retail margins through the rest of the year will improve as Amazon focuses on productivity gains. With e-commerce less than 10% of global retail sales, we believe the shift to online retailing represents a multi-year growth opportunity for Amazon.

  • Illumina, Inc. is the leading provider of next generation DNA sequencing instruments and consumables. Shares rose on reports of better-than-expected revenue and earnings driven by strong sales of sequencing instruments. We maintain conviction because we believe Illumina holds a monopoly on DNA sequencing at a time when DNA sequencing is increasingly being used in cancer research and diagnosis and reproductive health.

Detractors (for quarter ended 6/30/2015)
  • Westlake Chemical Partners LP is a petrochemical master limited partnership (MLP). In May, the IRS floated a proposal under which petrochemical companies would lose their MLP status, and the stock fell. We believe this was an over-reaction because: (1) Westlake has the right to appeal; (2) Westlake’s MLP status may be grandfathered; (3) even with the ruling, Westlake will keep its MLP status for at least 10 years; and (4) the economic impact of loss of MLP status in 10 years is lower than that implied by the current stock price.

  • TerraForm Global, Inc. is a yield-oriented growth company known as a “yieldco” that owns a portfolio of long-term contracted renewable energy assets in emerging markets. Parent company SunEdison has a deep pipeline of assets that we expect to drive substantial growth. We invested in TerraForm Global in advance of its expected IPO at a 5% discount off the IPO price. Our investment contributed to weak performance due to the recognition of private company and illiquidity discounts, which we expect to reverse when the company goes public.

  • Atlas Energy Group, LLC continued to lag in Q1 after the completion of the sale of its midstream assets to Targa. We believe pricing pressure as a result of lower commodity prices was exacerbated in Atlas' case due to higher-than-average leverage and lack of liquidity. While it is clear that Atlas' cash flow quality has deteriorated over the last 12 months, the equity value assigned to the existing assets is negligible, and we maintain conviction in management's ability to create value by developing new businesses.

Quarterly Attribution Analysis (for quarter ended 6/30/2015)

The Quarterly Attribution Analysis for period ending June 30, 2015 is not yet available

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