CWAN - Tracking Ron Baron's BAMCO Portfolio - Q3 2023 Update

2023-12-21 18:55:25 ET

Summary

• BAMCO Inc.'s 13F portfolio value decreased from $36.11B to $34.42B in Q3 2023.
• The largest five stakes in the portfolio are Tesla Motors, Arch Capital Group, Gartner Inc, CoStar Group, and FactSet Research.
• Baron Capital owns significant ownership stakes in companies such as CoStar Group, FactSet Research, Vail Resorts, Iridium Communications, and Choice Hotels International.

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 11/14/2023. The 13F portfolio value decreased from $36.11B to $34.42B this quarter. The holdings are diversified with recent 13F reports showing around 350 positions. There are 37 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, Arch Capital Group, Gartner Inc, CoStar Group, and FactSet Research. 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 Q2 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 ( BARIX ) incepted in 1987 and Baron Partners Fund ( BPTIX ) incepted in 1992. Both funds have produced significant alpha over their lifetimes – 11.09% annualized for Baron Asset Fund compared to 9.86% for the Russell Midcap Growth and 15% annualized for Baron Partners Fund compared to 9.52% for the Russell Midcap Growth.

Stake Increases:

CoStar Group ( CSGP ) : CSGP is a top five stake at 4.29% 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 $87.07. 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.

FactSet Research ( FDS ) : FDS is a 3.50% 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 ~2.75M shares and the stock is at ~$470. The last several quarters have seen only minor adjustments.

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

MSCI Inc. ( MSCI ) : MSCI is a 3.37% 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 ~$553. The last several quarters have seen only minor adjustments.

Vail Resorts ( MTN ) : MTN is a ~3% 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 ~$224. The last eleven quarters have seen only minor adjustments.

Note: Baron Capital owns ~11.6% of Vail Resorts.

Iridium Communications ( IRDM ) : IRDM is a 1.93% 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 $40.52. There was a marginal increase in the last two quarters.

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

ANSYS Inc. ( ANSS ) : The bulk of the 1.73% 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 ~$303. The seven quarters through Q3 2022 saw a ~17% trimming while the last four quarters saw a minor increase.

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 ~$113. The eleven quarters through Q1 2023 saw marginal trimming while the last two quarters saw a minor increase.

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

Hyatt Hotels ( H ) : The 1.64% 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 ~$130. There was a marginal increase this quarter.

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

Guidewire Software ( GWRE ) : Guidewire had an IPO in January 2012. The 1.63% 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 ~$107.

Note: Baron Capital owns ~7.6% of Guidewire Software.

Charles Schwab (SCHW), Ceridian HCM Holding (CDAY), FIGS Inc. (FIGS), Morningstar Inc. (MORN), Nvidia Corp (NVDA), Red Rock Resorts (RRR), and Verisk Analytics (VRSK): These small (less than ~1.5% of the portfolio) stakes were increased during the quarter.

Note: Baron Capital owns significant ownership stakes in the following businesses: FIGS Inc., and Red Rock Resorts.

Stake Decreases:

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 ~$255 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 very bullish and expect to hold it long-term.

Note 2: The prices quoted above are adjusted for the stock splits.

Arch Capital Group ( ACGL ) : ACGL is a 4.92% 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 $74.16.

Note: Baron Capital owns ~5.7% of Arch Capital Group.

Gartner Inc. ( IT ) : IT is a 4.65% 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 ~$443. The last several quarters have also seen minor trimming.

Note: Baron Capital owns ~5.6% of Gartner Inc.

Idexx Labs ( IDXX ) : IDXX is a ~3% 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 four years through Q1 2023 have seen a ~40% selling. The stock currently trades at ~$553. The last two quarters have seen only minor adjustments.

Kinsale Capital ( KNSL ) : KNSL is a 2.39% 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 ~$338. There was a ~15% increase over the six quarters through Q2 2022 while the last five quarters saw minor trimming.

Note: Baron Capital owns ~8.7% of Kinsale Capital.

Mettler-Toledo International ( MTD ) : MTD is a ~1% 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 ~$1209. They are harvesting long-term gains.

Bio-Techne Corp (TECH) : The ~1% 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 $77.72.

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

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 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 stake was decreased by another ~30% this quarter at prices between ~$84 and ~$105. The stock currently trades at ~$103, and the stake is now at ~0.65% of the portfolio.

Alibaba Group Holdings (BABA), Bright Horizons Family (BFAM), DexCom Inc. (DXCM), Floor & Decor Holdings (FND), Gaming and Leisure Properties (GLPI), ICON plc (ICLR), Marriott Vacations Worldwide (VAC), Primerica Inc. (PRI), SiteOne Landscape (SITE), Trex Co Inc. (TREX), Vertiv Holdings (VRT), and West Pharma (WST): These small (less than ~1.2% of the portfolio each) stakes were decreased during the quarter.

Note: Baron Capital owns significant ownership stakes in the following businesses: Marriott Vacations Worldwide.

Kept Steady:

ASGN Inc. ( ASGN ) : The small 0.52% stake in ASGN was kept steady this quarter.

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), Cohen & Steers (CNS), FIGS Inc. (FIGS), Grid Dynamics (GDYN), Installed Building Products (IBP), indie Semi (INDI), PENN Entertainment (PENN), Repay Holdings (RPAY), and Utz Brands (UTZ).

The spreadsheet below highlights changes to Ron Barron’s US stock holdings in Q3 2023:

Source: John Vincent. Data constructed from Ron Baron’s 13F filings for Q2 2023 and Q3 2023.

For further details see: