This week, we speak with legendary fund manager Ron Baron of Baron Funds. Founded in 1982, the firm is known for long-term, fundamental, active approach to growth investing, and has $49 billion in AUM. 16 of 17 Baron Funds, representing 98.3% of assets outperformed their passive benchmark since inception; the Baron Partners Fund was up +148% in 2020.
We discuss how as a broker in the 1970s, Baron was buying small cap companies such as Disney and Hyatt and International Gaming — they were considered small cap back then. He would flip them for doubles and triples, only to watch them rise another 30X. The impact of this on Baron was to turn him into a super long-term holder of equities.
He explains how he has owned Charles Schwab since 1992, Choice Hotels since 1996, Veil Resorts since 1997. His current turnover ratio ranges from 3-7% depending on the fund. Compare this with mutual funds that have turnover ratios of 50%, 100% even 200% per year.
He has been an investor in Tesla since 2014 — both in his funds and (with permission of his Board) personally. The firm also owns about 1% of Space X.
A transcript of our conversation is available here.
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Be sure to check out our Masters in Business next week with Kevin Landis, Firsthand Funds. The firm’s Firsthand Technology Opportunities Fund (TEFQX) was created in 1999, and has gained 21.1% annually over the past 10 years vs 13.9% for the S&P500 and 18.5% for the Nasdaq Index. It gained 102% over the past 12 months.