Tracking Ron Baron's BAMCO Portfolio - Q1 2020 Update

Summary

• BAMCO’s 13F portfolio decreased from $26.19B to $20.41B this quarter.
• Ron Baron increased GDS Holdings while reducing Zillow.
• Their top five positions are at ~21% of the overall portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to BAMCO Inc.’s 13F stock portfolio on a quarterly basis. It is based on Ron Baron’s regulatory 13F Form filed on 05/15/2020. The 13F portfolio value decreased ~22% from $26.19B to $20.41B this quarter. The holdings are diversified with recent 13F reports showing around 350 positions. There are 54 securities that are significantly large (more than ~0.5% of the portfolio each) and they are the focus of this article. The largest five stakes are CoStar Group, IDEXX Labs, Tesla Motors, FactSet Research, and Vail Resorts. They add up to 20.50% of the portfolio. Please visit our Tracking Ron Baron’s BAMCO Portfolio series to get an idea of their investment philosophy and the fund’s moves during Q4 2019.

Baron Capital currently has ~$30B under management. The assets are distributed among several mutual funds with the common theme of long-term research-driven growth investment solutions. Their flag ship mutual funds are Barron Asset Fund (MUTF:BARIX) incepted in 1987 and Baron Partners Fund (MUTF:BPTIX) incepted in 1992. Both funds have produced significant alpha over their lifetimes – 11.17% annualized for Baron Asset Fund compared to 9.52% & 9.17% respectively for the Russell Midcap Growth & S&P 500 Indexes respectively and 12.34% annualized for Baron Partners Fund compared to 9.09% & 8.95% respectively for the Russell Midcap Growth & S&P 500 Indexes. The other funds in the group are Baron Discovery Fund (BDFIX), Baron Growth Fund (BGRIX), Baron Small Cap Fund (BSFIX), Baron Focused Growth Fund (BFGIX), Baron Durable Advantage Fund (BDAIX), Baron Fifth Avenue Growth Fund (BFTIX), Baron Opportunity Fund (BIOIX), Baron Emerging Markets Fund (BEXIX), Baron Global Advantage Fund (BGAIX), Baron International Growth Fund (BINIX), Baron FinTech Fund (BFIIX), and Baron Health Care Fund (BHCHX), Baron Real Estate Fund (BREIX), Baron Real Estate Income Fund (BRIIX), and Baron WealthBuilder Fund (BWBIX).

Note: Some of the top holdings in their Emerging Market, International and Global funds are not in the 13F report as they are not 13F securities. Such holdings include Tencent Holdings (OTCPK:TCEHY), Samsung Electronics (OTC:SSNLF), Sberbank of Russia (OTCPK:SBRCY), Reliance Industries, and Midea Group.

New Stakes:

None.

Stake Disposals:

None.

Stake Increases:

MSCI Inc. (MSCI): MSCI is a 3.26% of the portfolio position established in 2007. Next year saw the stake built to a ~9.9M share position at prices between ~$12.50 and ~$36. The 2012-2014 timeframe saw the position reduced by ~75% at prices between ~$26 and ~$50. Since then, the stake has remained relatively steady. Last four quarters saw marginal trimming while this quarter there was a ~5% stake increase. The stock currently trades at ~$321.

Iridium Communications (IRDM): IRDM is a 1.42% of the portfolio position first purchased in 2014 at prices between ~$6 and ~$10. The position had remained relatively steady since. H1 2019 saw a one-third stake increase at prices between ~$18.50 and ~$28 and that was followed with minor increases over the next two quarters. The stock currently trades at $25.69. This quarter also saw a marginal further increase.

Note: Baron Capital owns ~10% of Iridium Communications.

Choice Hotels (CHH): CHH was already a huge 19.4M share position in their first 13F filing in Q1 1999. That original stake was reduced by ~90% to a ~1.9M share stake by 2004 at prices between ~$3 and $22. 2007 saw a ~70% stake increase at prices between ~$26.50 and ~$34. Since then the position was relatively steady till 2014. The five years thru 2019 had seen minor trimming most quarters – overall, there was a ~15% selling during that period at prices between ~$42 and ~$105. The stock currently trades at $83. This quarter saw a marginal increase.

Note: Baron Capital owns ~8.5% of Choice Hotels.

GDS Holdings (GDS): The 1.15% GDS stake was established in 2018 and built over the last five quarters at prices between ~$23 and ~$63. The stock is now at $67.25.

Hyatt Hotels (H): The 1.55% H stake was established in the high-20s price range in 2009 following their IPO that November. The next five years saw the position almost doubled at prices between ~$29 and ~$64. 2016 saw a ~30% selling at prices between ~$37 and ~$58. Since then, the stake has remained relatively steady although adjustments were made every quarter. The stock currently trades at $55.92. This quarter saw a minor increase.

Note: Baron Capital owns ~12.5% of Hyatt Hotels.

Kinsale Capital (KNSL): KNSL is a 0.91% of the portfolio stake. A very small position was established in 2016 following Kinsale’s IPO. Most of the current position was built next year at prices between ~$28 and ~$45. Last four quarters have seen a ~22% stake increase at prices between ~$57 and ~$107. The stock currently trades at ~$152. There was a marginal increase this quarter.

Note: Baron Capital owns ~8% of Kinsale Capital.

Alexandria Real Estate (ARE): ARE is a 0.84% of the portfolio stake established in 2009 at prices between ~$32 and ~$64. The sizing had remained relatively steady over the last decade. Last year saw a ~25% stake increase at prices between ~$113 and ~$162. The stock currently trades at ~$159. This quarter saw a marginal increase.

Ceridian HCM Holding (CDAY): The 0.69% CDAY stake was established in Q2 2018. CDAY had an IPO in April 2018 and shares started trading at ~$34 per share. The position has since been increased by ~85% through consistent buying every quarter. The stock currently trades at $72.61.

Amazon (AMZN), Americold Realty (COLD), Clarivate Analytics (CCC), Dexcom Inc. (DXCM), Illumina Inc. (ILMN), MarketAxess Holdings (MKTX), Penn National Gaming (PENN), Red Rock Resorts (RRR), SBA Communications (SBAC), Teladoc Inc. (TDOC), Transunion (TRU), Veeva Systems (VEEV), Verisign Inc. (VRSN), and Zai Lab (ZLAB): These small (less than ~1.5% of the portfolio each) positions were increased during the quarter.

Stake Decreases:

CoStar Group (CSGP): CSGP is now the largest position in the 13F portfolio at ~6%. It is a very long-term stake that has been in the portfolio for almost two decades. The position was first purchased in 2000 and the stake remained very small for the next three years. The bulk of the current position was built in the 2003-2004 timeframe at prices between ~$17.50 and ~$47. 2014 also saw a ~45% stake increase at prices between $142 and $212. Since then, the position had remained relatively steady although adjustments were made in most quarters. Recent activity follows: last nine quarters saw a ~20% selling at prices between ~$295 and ~$740. The stock currently trades at ~$668.

Note: Baron Capital owns ~6% of CoStar Group.

Idexx Labs (IDXX): IDXX is a top three 4.20% of the portfolio first purchased in 2005. The next three years saw a large stake build-up at prices between ~$15 and ~$30. Since then, the position has remained relatively steady although adjustments were made every quarter. Last five quarters have seen a ~14% trimming. The stock currently trades at ~$303.

Tesla Motors (TSLA): TSLA was a minutely small stake first purchased in 2012. The current position was built from 2014 at an average cost of ~$220 per share. Last five quarters saw minor trimming. The stock currently trades at ~$935.

Note: Ron Baron has indicated that he is extremely bullish on Tesla Motors saying it could be worth ~$1.5T by 2030.

FactSet Research (FDS): FDS is a 3.54% long-term stake first purchased in 2006. The next two years saw a 4.7M share stake built at prices between $34 and $69. The position has since been reduced thru minor selling almost every quarter. The stake is now at ~2.77M shares and the stock is at ~$287. They are harvesting gains. This quarter saw a ~3% trimming.

Note: Baron Capital owns ~7.3% of FactSet Research.

Vail Resorts (MTN): MTN is a top-five 3.27% very long-term stake. During their first 13F filing in Q1 1999, the position was already very large at 11.6M shares. That original stake was sold down by around two-thirds in the 2003-2004 timeframe at prices between ~$11.50 and ~$23. Since then, there has only been minor activity. Last five quarters saw a ~7% trimming. The stock currently trades at ~$184.

Note: Baron Capital owns ~11% of Vail Resorts.

Arch Capital Group (ACGL): ACGL is a ~3% of the portfolio stake first purchased in 2007 at prices between ~$7 and ~$8.25. The position remained relatively steady over the next three years. 2011 saw a ~17% stake increase at prices between ~$9.50 and ~$12.50 and that was followed with a similar increase in 2018 at prices between ~$25.50 and ~$31. Last five quarters saw a ~6% trimming. The stock is now at $30.61.

Note: Baron Capital owns ~5.3% of Arch Capital Group.

Gartner Inc. (IT): IT is a 2.92% of the portfolio position first purchased in 2007 at prices between ~$16 and ~$28. The next three years saw consistent buying as the original position was increased by ~50% at prices between ~$9 and ~$28. The 2014-2015 timeframe saw a ~22% reduction at prices between ~$66 and ~$93. Since then, the stake has been relatively steady. Recent activity follows: last five quarters saw a ~15% trimming at prices between ~$80 and ~$170. The stock currently trades at ~$119.

Note: Baron Capital owns ~6.8% of Gartner Inc.

Ansys Inc. (ANSS): The bulk of the 2.86% ANSS position was purchased in 2009 at prices between ~$20 and ~$43. The stake was increased by ~15% over the next two years but was reduced since. The four years thru 2018 saw a ~25% selling at prices between ~$143 and ~$190. Last five quarters have seen only minor adjustments. The stock currently trades at ~$270.

Guidewire Software (GWRE): The original 2.40% GWRE position was purchased in the 2012-2013 timeframe at prices between ~$20 and ~$49. Guidewire had an IPO in January 2012. 2017 also saw a ~25% stake increase at prices between ~$51 and ~$83. Last five quarters have seen minor trimming. The stock currently trades at ~$104.

Note: Baron Capital owns ~7.5% of Guidewire Software.

Alibaba Group Holdings (BABA): BABA is a 1.85% of the portfolio position first purchased in 2014 at prices between ~$85 and ~$115 following their IPO in September 2014. The stake was built over the next three years at prices between ~$59 and ~$191. 2018 saw a ~27% selling at prices between ~$130 and ~$208 while last year there was a 75% increase at prices between ~$140 and ~$210. The stock currently trades at ~$218. This quarter saw a ~2% trimming.

Mettler Toledo International (MTD): MTD is a 1.59% of the portfolio position established in 2008 at prices between ~$68 and ~$110. Next year saw a ~150% stake increase at prices between ~$47 and ~$100. Since 2009, the position has seen consistent selling: ~80% reduction since at prices between ~$100 and ~$870. The stock is now at ~$764. They are harvesting long-term gains.

Bright Horizons Family Solutions (BFAM): The 1.24% BFAM stake was established in 2013 at prices between ~$28 and ~$38. BFAM had an IPO in Jan 2013 and shares started trading at ~$28 per share. The position has seen consistent selling since 2015. The stake was reduced by ~55% over that period at prices between ~$55 and ~$175. The stock currently trades at ~$122.

Gaming & Leisure Properties (GLPI): The 1.22% GLPI stake was established in 2013 as a result of its spin-off from Penn National Gaming. 2016 saw the stake increased by ~30% at prices between ~$25.50 and ~$36 while next year saw a similar reduction at prices between ~$30 and ~$39. Last five quarters have also seen a ~14% trimming. The stock currently trades at $38.28.

Marriott Vacations Worldwide (VAC): VAC is a 0.82% portfolio position. A minutely small stake was purchased in 2012 and the following two years saw the position built to a ~2M share position at prices between ~$42 and ~$75. 2018 also saw a ~50% increase at prices between ~$62.50 and ~$152. The stock is now at $89.17. There was marginal trimming this quarter.

Note: Baron Capital owns ~7% of Marriott Vacations Worldwide.

Taiwan Semiconductors (TSM): A very small position in TSM was established in 2013 at prices between ~$16 and ~$20. Since then, every year has seen consistent buying. Recent activity follows: 2018 saw a ~30% stake increase at prices between ~$35 and ~$46 and that was followed with a ~12% further increase last year at prices between ~$35 and ~$59. The stock currently trades at ~$56 and the stake is at 0.86% of the portfolio. This quarter saw a ~4% trimming.

Zillow Group (Z): The 0.26% Z position goes back to 2011 when they established a very small stake following Zillow’s IPO that July. Shares started trading at ~$34 per share. 2015 saw the position built to ~3.8M shares at prices between ~$23 and ~$125. Since then, the stake has wavered. Recent activity follows: last four quarters had seen a ~50% stake increase at prices between ~$29.50 and ~$50. That was followed with a two-thirds reduction this quarter at prices between ~$25 and ~$65. The stock currently trades at $56.79.

SS&C Technologies (SSNC), Bio-Techne Corp (TECH), Primerica Inc. (PRI), and Charles Schwab (SCHW): These small (less than ~1.5% of the portfolio each) positions saw reductions during the quarter.

Note: Baron Capital owns ~5.7% of Primerica.

Aspen Technology (AZPN), Cohen & Steers Inc. (CNS), Douglas Emmett Inc. (DEI), Equinix Inc. (EQIX), Fidelity National Information Services (FIS), Manchester United (MANU), Morningstar Inc. (MORN), Siteone Landscape Supply (SITE), Trex Co Inc. (TREX), Verisk Analytics (VRSK), West Pharma (WST), and Wix.com (WIX): These very small (less than ~1% of the portfolio each) stakes were reduced this quarter.

Note: Baron Capital owns ~31% of Manchester United, ~16% of Red Rock Resorts, ~9% of Penn National Gaming, and ~5.4% of Cohen & Steers Inc.

Kept Steady:

None.

Note: Although the positions as a percentage of the portfolio are very small, Baron Capital has significant ownership stakes in the following businesses: Endava plc (DAVA), Repay Holdings (RPAY), Altair Engineering (ALTR), Installed Building Products (IBP), Hudson Ltd (HUD), and BRP Group (BRP).

The spreadsheet below highlights changes to Ron Barron’s US stock holdings in Q1 2020:

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Analyst’s Disclosure: I am/we are long AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.