Tracking Ron Baron's BAMCO Portfolio - Q2 2023 Update

Summary

• BAMCO Inc.'s 13F portfolio value increased from $33.31B to $36.11B in Q2 2023.
• The largest five stakes in the portfolio are Tesla Motors, CoStar Group, Gartner Inc., Arch Capital Group, and IDEXX Labs.
• Baron Capital's flagship mutual funds, Barron Asset Fund and Baron Partners Fund, have produced significant alpha compared to benchmark indices.

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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 8/14/2023. The 13F portfolio value increased from $33.31B to $36.11B this quarter. The holdings are diversified with recent 13F reports showing around 375 positions. There are 38 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 Tesla Motors, CoStar Group, Gartner Inc, Arch Capital Group, and IDEXX Labs. They add up to ~30% of the portfolio. Please visit our Tracking Ron Baron's BAMCO Portfolio series to get an idea of their investment philosophy and our last update for the fund's moves during Q1 2023.

Baron Capital currently has ~$55B 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 - 11.31% annualized for Baron Asset Fund compared to 10.10% for the Russell Midcap Growth and 15.40% annualized for Baron Partners Fund compared to 9.79% for the Russell Midcap Growth.

Stake Increases:

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 ~$14.50 per share. The three quarters through Q1 2021 had seen a ~25% selling at prices between ~$148 and ~$294. The stock currently trades at ~$256 and is now the largest 13F position at ~13% of the portfolio. The last several quarters saw a marginal increase.

Note 1: In a CNBC interview in October 2021, it was revealed that their TSLA cost-basis is ~$14.50 per share. They are still very bullish and expect to hold it long-term.

Note 2: The prices quoted above are adjusted for the 3-for-1 stock split last August.

CoStar Group (CSGP): CSGP is a top three stake at 4.71% of the portfolio. It is a very long-term position that has been in the portfolio for over two decades. The stake was first purchased in 2000 and the position remained very small for the next three years. The bulk of the current position was built in the 2003-2004 timeframe at prices between ~$1.75 and ~$4.70. 2014 also saw a ~45% stake increase at prices between $14.20 and $21.20. Since then, the position remained relatively steady although adjustments were made in most quarters. Recent activity follows. The two years through Q4 2020 saw a ~22% selling at prices between ~$29.50 and ~$94. The stock currently trades at $78.23. The last several quarters have seen only minor adjustments.

Note: Baron Capital owns ~5% of CoStar Group. The prices quoted above are adjusted for the 10-for-1 stock-split in June 2021.

Arch Capital Group (ACGL): ACGL is a 4.41% 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. Since then, the activity has been minor. The stock is now at $80.29.

Note: Baron Capital owns ~5.8% of Arch Capital Group.

IDEXX Labs (IDXX): IDXX is a 3.31% of the portfolio stake first purchased in 2005. The next three years saw a large stake build-up at prices between ~$15 and ~$30. The last four years have seen a ~40% selling. The stock currently trades at ~$439. There was a marginal increase this quarter.

Vail Resorts (MTN): MTN is a 3.26% 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. The two years through 2020 saw a ~10% trimming. The stock currently trades at ~$245. The last ten quarters have seen only minor adjustments.

Note: Baron Capital owns ~11.5% of Vail Resorts.

FactSet Research (FDS): FDS is a ~3% 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 through minor selling almost every quarter. The stake is now at ~2.7M shares and the stock is at ~$427. The last several quarters have seen only minor adjustments.

Note: Baron Capital owns ~7.1% of FactSet Research.

MSCI Inc. (MSCI): MSCI is a 2.92% 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 position has remained relatively steady. The stock currently trades at ~$515. The last several quarters have seen only minor adjustments.

Iridium Communications (IRDM): IRDM is a 2.50% of the portfolio position first purchased in 2014 at prices between ~$6 and ~$10. The stake had remained relatively steady since. H1 2019 saw a one-third increase at prices between ~$18.50 and ~$28 and that was followed with minor increases over the next two quarters. Q4 2021 saw another ~15% stake increase at prices between ~$37 and ~$43. The stock currently trades at $47.34. There was a marginal increase this quarter.

Note: Baron Capital owns ~11% of Iridium Communications.

ANSYS Inc. (ANSS): The bulk of the 1.82% ANSS position was purchased in 2009 at prices between ~$20 and ~$43. The stake increased by ~15% over the next two years but has been reduced since. The four years through 2018 saw a ~25% selling at prices between ~$143 and ~$190. The two years through 2020 saw a ~10% trimming. The stock currently trades at ~$301. The seven quarters through Q3 2022 saw a ~17% trimming while the last three quarters saw a minor increase.

Hyatt Hotels (H): The 1.69% Hyatt stake was established in the high-20s price range in 2009 following their IPO that November. The next five years saw the position almost double at prices between ~$29 and ~$64. 2016 saw a ~30% selling at prices between ~$37 and ~$58. Since then, the stake had remained relatively steady although adjustments were made every quarter. There was a ~15% stake increase in Q3 2021 at prices between ~$69 and ~$81. The stock currently trades at ~$103. There was a minor ~3% increase this quarter.

Note: Baron Capital owns ~9.5% of Hyatt Hotels.

Choice Hotels International (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 through 2019 saw minor trimming in most quarters - overall, there was a ~15% selling during that period at prices between ~$42 and ~$105. The stock currently trades at ~$120. The last eleven quarters saw marginal trimming while this quarter saw a minor increase.

Note: Baron Capital owns ~8% of Choice Hotels.

Guidewire Software (GWRE): Guidewire had an IPO in January 2012. The 1.50% GWRE position was purchased in the 2012-2013 timeframe at prices between ~$20 and ~$49. 2017 also saw a ~25% stake increase at prices between ~$51 and ~$83. Since then, the activity has been minor. The stock currently trades at $88.21.

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

Bio-Techne Corp (TECH): The 1.22% of the portfolio TECH stake goes back to 2014 when it was acquired at a cost-basis of ~$22.50 per share. By 2018, the stake was built from ~1M shares to ~1.5M shares at prices up to ~$50. Since then, there has only been minor activity. The stock is currently at $69.92.

Note: the prices quoted above are adjusted for the 4-for-1 stock split last November.

ASGN Inc. (ASGN), Alibaba Group Holding (BABA), Charles Schwab (SCHW), Ceridian HCM Holding (CDAY), FIGS, Inc. (FIGS), Morningstar, Inc. (MORN), Marriott Vacations Worldwide (VAC), NVIDIA Corp. (NVDA), Red Rock Resorts (RRR), Trex Co. Inc. (TREX), and Verisk Analytics (VRSK): These small (less than ~1.2% of the portfolio each) stakes were increased this quarter.

Note: Baron Capital owns significant ownership stakes in the following businesses: FIGS Inc., Marriott Vacations Worldwide, and Red Rock Resorts. The FIGS stake increased to ~25M shares (15.58% of business) since the quarter ended. This is compared to ~23.6M shares in the 13F report.

Stake Decreases:

Gartner Inc. (IT): IT is a 4.58% 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. Recent activity follows: the seven quarters through Q3 2020 saw a ~20% selling at prices between ~$83 and ~$171. The stock currently trades at ~$349. The last several quarters have also seen minor trimming.

Note: Baron Capital owns ~5.8% of Gartner Inc.

Kinsale Capital (KNSL): KNSL is a 2.13% 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. The six quarters through Q2 2020 saw a ~30% stake increase at prices between ~$58 and ~$157. The stock currently trades at ~$412. There was a ~15% increase over the six quarters through Q2 2022 while the last four quarters saw minor trimming.

Note: Baron Capital owns ~9% of Kinsale Capital.

Mettler-Toledo International (MTD): MTD is a 1.22% 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: ~87% reduction at prices between ~$100 and ~$1702. The stock is now at ~$1094. They are harvesting long-term gains.

Taiwan Semiconductor (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 next year at prices between ~$35 and ~$59. There was a ~25% reduction over the first three quarters of 2020 at prices between ~$44 and ~$86. H2 2021 had seen a ~55% stake increase at prices between ~$108 and ~$125. Q2 2022 saw a ~15% trimming at prices between ~$77 and ~$105. The last quarter saw a ~11% increase while this quarter there was a similar reduction. The stock currently trades at $85.36, and the stake is at ~1% of the portfolio.

Bright Horizons Family (BFAM), Cohen & Steers (CNS), DexCom Inc. (DXCM), Floor & Décor Holdings (FND), Gaming and Leisure Properties (GLPI), ICON plc (ICLR), PENN Entertainment (PENN), Primerica, Inc. (PRI), SiteOne Landscape (SITE), and West Pharma (WST): These small (less than ~1.20% of the portfolio each) stakes were decreased this quarter.

Note: Baron Capital owns significant ownership stakes in the following businesses: Cohen & Steers and Penn Entertainment.

Note: Although the positions as a percentage of the portfolio are very small, Baron Capital has significant ownership stakes in the following businesses: Afya Limited (AFYA), BRP Group (BRP), Clearwater Analytics (CWAN), FIGS, Inc. (FIGS), Grid Dynamics (GDYN), Installed Building Products (IBP), indie Semiconductor (INDI), Repay Holdings (RPAY), and Utz Brands (UTZ).

The spreadsheet below highlights changes to Ron Barron's US stock holdings in Q2 2023:

Ron Baron - BAMCO - Baron Capital's Q2 2023 13F Report Q/Q Comparison (John Vincent (author))

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/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

Comments

[Michael Dolen]

@John Vincent Great work. So much more useful than just looking at the 13-F, since you dive into the history of adds and trims on each position.

[katmandu100]

Excellent data and commentary.