Baron Funds' Top 5 Trades of the 4th Quarter
- By James Li
Baron Funds, a New York-based firm founded by Ron Baron (Trades, Portfolio), disclosed last week that its top five trades during the fourth quarter of 2020 included new positions in Opendoor Technologies Inc. (NASDAQ:OPEN) and Farfetch Ltd. (NYSE:FTCH) and reductions in Tesla Inc. (NASDAQ:TSLA), Teladoc Health Inc. (NYSE:TDOC) and American Well Corp. (NYSE:AMWL).
The firm invests primarily in small- and mid-cap companies through a bottom-up, value-oriented company research discipline. Baron seeks companies that have open-ended growth opportunities and defensive niches; the fund normally holds investments for more than five years on average.
As of the quarter-end, Baron Funds' $40.42 billion equity portfolio contains 377 stocks, with 39 new positions and a turnover ratio of 5%. The top four sectors in terms of weight are consumer cyclical, technology, health care and financial services, representing 27.65%, 20.72%, 14.79% and 13.57% of the equity portfolio.
Opendoor
The fund purchased 6,132,499 shares of Opendoor (NASDAQ:OPEN), giving the position 0.32% weight in the equity portfolio. Shares averaged $22.60 during the month of December.
The San Francisco-based company operates a platform that allows customers to buy and sell houses online.
Farfetch
Baron Funds purchased 1,561,131 shares of Farfetch (NYSE:FTCH), giving the position 0.25% weight in the equity portfolio. Shares averaged $44.49 during the fourth quarter.
The U.K.-based company operates an online platform that allow customers to buy and sell luxury goods from hundreds of partners. According to GuruFocus, Farfetch has a strong Altman Z-score of 4.84 and a cash-to-debt ratio that outperforms over 66% of global competitors.
Other gurus with holdings in Farfetch include Jim Simons (Trades, Portfolio)' Renaissance Technologies and Chase Coleman (Trades, Portfolio)'s Tiger Global Management.
Tesla
The fund sold 588,835 shares of Tesla (NASDAQ:TSLA), trimming the position 8.04% and the equity portfolio 0.78%. Shares averaged $512.96 during the fourth quarter.
GuruFocus ranks the Palo Alto, California-based electric vehicle manufacturer's financial strength 6 out of 10: Although the company has a high Piotroski F-score of 8 and a double-digit Altman Z-score, Tesla's debt ratios are underperforming more than half of global competitors.
Teladoc
The fund sold 375,000 shares of Teladoc (NYSE:TDOC), trimming the equity portfolio 0.25%. Shares averaged $203.06 during the fourth quarter.
GuruFocus ranks the company's financial strength 5 out of 10: Although the company has a double-digit Altman Z-score, Teladoc also has a low Piotroski F-score of 3 and a debt-to-equity ratio that underperforms more than half of global competitors.
American Well
The fund sold 2,292,894 shares of American Well (NYSE:AMWL), trimming the position 73.62% and the equity portfolio 0.21%. Shares averaged $28.95 during the fourth quarter.
According to GuruFocus, the Boston-based telehealth company's debt-to-equity ratio of 0.01 outperforms over 88% of global competitors, suggesting good financial strength.
Disclosure: No positions.
Read more here:
Wallace Weitz's Top 5 Trades of the 4th Quarter
Francisco Garcia Parames' Top 5 4th-Quarter Trades
Top 4 4th-Quarter Trades of Chuck Royce's Firm
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This article first appeared on GuruFocus.
