Baron Opportunity Fund (BIOIX)

Portfolio Management

MichaelLippert
Michael Lippert

Fund Manager since 2006

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Fund Description

Baron Opportunity Fund invests in innovative high-growth companies.

    

  

Fund Resources

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Michael Lippert discusses how he invests in innovative companies

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Portfolio Commentary

Institutional Performance

Review and Outlook (for quarter ended 3/31/2014)

The Review and Outlook for period ending March 31, 2014 is not yet available

Top Contributors/Detractors to Performance

Contributors (for quarter ended 3/31/2014)
  • Shares of Illumina, Inc., the leading provider of next generation DNA sequencing instruments and consumables, rose in Q1, driven by better than expected Q4 financial results, strong 2014 financial guidance, and the announcement of multiple new product introductions, including an ultra-high throughput sequencing platform that will be the first to sequence a full human genome for less than $1,000. 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.

  • Coupons.com Inc. is a leading digital couponing platform. We participated in Coupons.com’s recent IPO as we believe it should benefit from secular growth around the early penetration of digital coupons. Digital coupons represented less than 1% of U.S. coupons in 2012, but accounted for almost 7% of total coupons used. Looking ahead, we believe that Coupons.com will benefit from the increasing prevalence of online couponing through mobile app offerings from retail loyalty programs and companies like Paypal.

  • Shares of cloud-based health care tech company Castlight Health Inc. rose in Q1. Castlight helps large self-insured employers lower health care costs through the creation of databases that allow employees to make more informed purchasing decisions. Castlight had a successful IPO in March, driven by strong investor demand for the limited number of available shares. Investors appeared to recognize that Castlight has significant growth potential based on its ability to lower health care costs for its customers.

Detractors (for quarter ended 3/31/2014)
  • Shares of DigitalGlobe, Inc., a satellite imagery provider, decreased in Q1 as it missed earnings and lowered guidance for the 2014 fiscal year. The company experienced an unexpected slowdown in the commercial side of its business, due largely to emerging markets project delays, as well as a slight delay in the launch timing of a new imagery satellite. We believe that DigitalGlobe has a unique satellite constellation and imagery database, and has numerous opportunities to increase growth going forward.

  • Dreamworks Animation SKG, Inc. is a leading developer, producer, and marketer of animated films, TV shows, and home entertainment. The company also merchandises and licenses its characters globally. Shares of Dreamworks were down in Q1 based on slightly lower than anticipated results associated with the movie “Turbo.” We believe shares will recover based on this summer’s upcoming release of “How to Train Your Dragon 2” and the potential for a larger TV and licensing business going forward.

  • After more than doubling in 2013, Benefitfocus, Inc. shares gave back some gains, as investors digested higher planned investment spending. Benefitfocus is the leading provider of cloud-based benefits software, offering an integrated suite of solutions to help customers more efficiently shop, enroll, manage, and exchange benefits information. The company serves an addressable market that is more than 100 times larger than its current business, which we think should allow it to compound revenue at more than 30% annually.

Quarterly Attribution Analysis (for quarter ended 3/31/2014)

The Quarterly Attribution Analysis for period ending March 31, 2014 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