Baron Small Cap Fund (BSCFX)

Portfolio Management

CliffGreenberg
Cliff Greenberg

Fund Manager since 1997

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Fund Description

Baron Small Cap Fund invests primarily in small growth companies.

    

    

Fund Resources

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Cliff Greenberg seeks long-term growth from small companies.

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Performance Attribution


 

Portfolio Commentary

Retail 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)
  • DexCom, Inc. sells a continuous glucose monitoring device for insulin-dependent diabetics. Shares rose on anticipation that sales will beat Street estimates based on the launch of the Share system, which allows others such as parents or spouses to receive the user’s blood glucose data from the user’s handheld device. Strong new patient starts in Q1, a ramp up in marketing spending, a rising probability that DexCom’s addressable market will include Medicare patients, and greater visibility on the company’s second generation products also helped boost share price.

  • Shares of corporate-sponsored childcare provider Bright Horizon Family Solutions, Inc. rose in Q2 as management continued its exceptional execution. Making up for 2014’s relatively slower acquisition pace, the company acquired 40 new centers in May. Growth has continued apace, driven by the rising center count, a mix shift to higher-margin consortium centers, greater capacity utilization, international expansion, and the rollout of new higher-margin offerings, including back-up care and education advisory services.

  • Shares of INC Research Holdings, Inc., a leading global contract research organization (CRO), providing outsourced drug development services to biopharma, advanced on strong Q1 results. Significant expansion of gross, operating, and adjusted EBITDA margins was especially standout. We believe the CRO industry backdrop is quite favorable, with the benefit of record biotech funding and a return to a more normalized pharma R&D spend accruing disproportionately to top global CROs such as INC.

Detractors (for quarter ended 6/30/2015)
  • Shares of United Natural Foods, Inc., the largest distributor of natural, organic, and specialty products to North American supermarkets, declined in Q2 on a slight deceleration in sales growth that we believe will prove temporary. The natural and organic food sector is one of the brightest categories within grocery, and United Natural has been the leader in getting these products to market. We are also excited about a recent acquisition that we believe could double the company’s addressable market opportunity in fresh and perishable foods.

  • After several quarters of strong performance, shares of veterinary diagnostics leader IDEXX Laboratories, Inc. fell in Q2. We attribute a portion of the stock’s decline to greater-than-expected foreign exchange headwinds. Separately, the company noted increased competition and lower prices, impacting around 3% of revenue. We believe management will respond successfully with pricing programs, creative diagnostic bundles, and an expanded inside sales force to better serve its customers.

  • Shares of brand licensing company Iconix Brand Group, Inc. fell on news that its COO and CFO were leaving the company. We believe their departures are not reflective of anything amiss at the company. We are believers in the ability of management to execute on the company’s growth plan and think the long-term fundamental prospects remain bright.

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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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 advise to any person and are subject to chage 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.