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Ron Baron Increases Holdings of Bloom Energy Corp

- By Holly LaFon

Ron Baron (Trades, Portfolio) continued to expand his interest in green energy startup Bloom Energy Corp. (BE) on March 31, the firm disclosed Tuesday.


Funds controlled by Baron grew their aggregate position by 12.18%, buying 374,726 shares. The purchase brought Baron's holdings of Bloom Energy to 3,452,381 shares, representing approximately 3.06% of the Sunnyvale, California-based company's shares outstanding.

Baron Funds originally disclosed its position in the company last July after its initial public offering. They purchased additional shares in fourth quarter, increasing the holdings by 17.23%.

In a third-quarter letter, Baron and co-portfolio manager of the Baron Growth Fund Neal Rosenberg commented on the company, which creates solid-oxide fuel cell systems, at length:


"Bloom has developed a proprietary distributed on-site electric power solution, branded the Bloom Energy Server, which delivers highly reliable, uninterrupted power that is also clean and sustainable. Installing Bloom servers allows businesses to disconnect from the electric grid, which is aging, unreliable, and vulnerable to weather outages and cyber attacks. Bloom's fuel source is the natural gas infrastructure, which we estimate is almost 40 times more reliable than traditional electric infrastructure. We believe that Bloom's proprietary solid-oxide technology is significantly ahead of fuel cell competition with regard to system efficiency, costs, and the footprint. Unlike renewables such as wind and solar, Bloom can deliver "baseload" power on a 24/7 basis, and can be deployed in a space-efficient and modular manner. As a result, Bloom has garnered significant market share among early adopting commercial and industrial (C&I) customers with high power reliability needs, and has outsized representation in data centers and in health care facilities. We believe that Bloom serves a vast global addressable market. We consider Bloom's primary competitor to be the utility grid."


Bloom Energy's priced its shares at $15 at their IPO, which closed with shares at $22.60. The price has since dropped 44% to $12.34 at close Tuesday. Year to date, the stock rose 22.33%.

The company reported its fourth-quarter results on Feb. 5, with $213.6 million in revenue, reflecting 73.3% growth from the same quarter of 2017. It attributed the revenue increase to higher volume, changes in its revenue recognition and the reinstatement of the federal investment tax credit.

Bloom's recorded a net loss of $99.8 million, compared to $67.76 million the prior year. The cash on its balance sheet stood at $220.73 million at year-end.

Baron Funds is an asset management firm founded by Ron Baron (Trades, Portfolio) with approximately $30 billion in assets under management. At fourth quarter-end, it held 369 stocks among various funds. Its largest holdings were Vail Resorts Inc. (MTN), Gatner Inc. (IT) and CoStar Group Inc. (CSGP).

See Ron Baron (Trades, Portfolio)'s portfolio here.

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This article first appeared on GuruFocus.