Baron Capital’s four pillars of investing shared during the 31st Annual Baron Conference held recently at the Lincoln Center in New York City offers valuable insights for those seeking guidance for how to grow their money.
Paul Dykewicz and Emma Flynn cover the Baron conference.
The conference included several high-profile corporate chiefs who were invited to present their respective strategies and answer questions from Baron leaders, as well as some of the more than 5,000 attendees who included financial professionals and shareholders of the company’s mutual funds. The corporate presenters featured Gwynne Shotwell, president and chief operating officer of privately held Space Exploration Technologies Corp. (SpaceX), Henry A. Fernandez, chief executive officer (CEO) of MSCI, Inc. (NYSE: MSCI), Lee M. Shavel, president and CEO of Verisk Analytics Inc. (NASDAQ: VRSK) and Frank and Lorenzo Fertitta, CEO and vice chairman, respectively, of Red Rock Resorts, Inc. (NASDAQ: RRR).
Ron Baron, the host of the conference, founded Baron Capital in 1982, after graduating from Bucknell University with a B.A. in Chemistry, and attending George Washington University Law School while working for the U.S. Patent Office. He has amassed 54 years of research experience and is the CEO, chairman and a portfolio manager at Baron Capital.
Ron Baron meets Emma Flynn.
In sync with this year’s theme of “legacy,” the conference also featured Baron Capital’s Co-Presidents David and Michael Baron, who engaged in a discussion with COO Rachel Stern about their professional experiences and the success of the company’s long-term investing approach.
As Ron Baron spoke, he emphasized that his success came from sticking to his values and investing in the visions of entrepreneurs he believed in.
Baron Capital’s Four Pillars of Investing: Entrepreneurial People
During the conference, the Baron Capital team, including Ron Baron himself, emphasized the importance of investing in innovative and driven people, not just companies.
It was evident that the companies that Baron Capital invests in are also people-focused, as the speakers mentioned their dedication to finding strong teams run by quality individuals.
To them, it isn’t just about a number, it is the work and expertise the people deliver. Baron Capital invests in people who can achieve strong growth.
Frank and Lorenzo Fertitta, CEO and vice chairman, respectively, of Red Rock Resorts, Inc., explained that even during the global pandemic, they did not lay off any of their employees, despite other casinos and companies within the gaming industry doing so due to adverse economic conditions. They stayed loyal to the people who make their company operate successfully. The focus on taking care of employees who help make companies successful was a common theme among the corporate leaders who spoke at the conference.
Gwynne Shotwell, COO of SpaceX, explained that she is eager to hear from people of all levels of her company in order to continue to innovate, spur productivity and attain lofty goals. She mentioned that sometimes she deals directly with addressing and resolving parking issues that affect her employees, since she does not want that to be a barrier to employees getting to and from their workplaces.
Shotwell explained that listening to her employees, more than 15,000 of them, is important to the efficient functioning of her fast-growing company. This approach is people-focused, with a key goal of keeping the company running smoothly.
According to Baron Capital’s website, it is “laser-focused on each company’s business fundamentals and our vision of what a business could become.”
While data and current financial information are valuable in determining what is a worthwhile investment, Baron Capital takes the view that the people behind the company are a major factor behind determining which ones belong in the portfolios of its mutual funds.
Baron Capital’s Four Pillars of Investing: Technology
Based on the companies represented at the latest conference, innovation and technological advancement is not only encouraged, but a key feature of what Baron Capital seeks in its investments.
Competition is a driving force to encourage growth, and Shotwell explained that she wants to see SpaceX thrive, regardless of competition.
Long-term investing, which is a key strategy of Baron Capital, is all about finding companies one can stick with and that will continue to expand. But to survive in today’s ever-evolving market, growth depends on innovation.
Chart courtesy of Stockcharts.com.
A key part of expansion is technology. Evidenced by finance company MSCI, SpaceX and Verisk, among other investments, Baron prioritizes companies with room to soar in their respective fields. By looking at not only what a company is currently working on, but its growth potential, the investment firm seeks to find gems that will bring in profits for many years to come.
Baron Capital’s Four Pillars of Investing: Culture
At Baron Capital, a culture of excellence and obsession with success are vital components in what makes a company attractive for investing.
Each of the company leaders who spoke at the conference conveyed drive and passion for their specific industries. There was a common theme of facilitating and promoting a healthy culture within their respective organizations to create a growth atmosphere.
Red Rock Resorts, which is run by two brothers, is an example of maintaining culture. They want all their employees to feel a family atmosphere and genuinely enjoy their work so that customers receive the best service possible.
Chart courtesy of Stockcharts.com.
In fact, in their presentation, the Fertitta brothers shared that their company was voted the Top Casino Employer from 2021-2024. Aside from placing high value on the people at the companies Baron Capital invests in, the culture within the organization is important in promoting growth.
Verisk’s Lee Shavel said he looks for those who are experts in the industry and have a willingness to innovate, which promotes a positive and effective environment.
Baron Capital’s Four Pillars of Investing: Data
The companies that were represented at the conference were clear about how they use specific and cutting-edge data to continue to innovate within their respective sectors of the market.
The Verisk CEO shared examples of the depth the company goes into to provide accurate risk assessments in the global insurance industry. He gave attendees a detailed overview of the safety of the Metropolitan Opera House where they were seated and mentioned the New York City Fire Department that serves the venue rated highly in comparison to others in Verisk’s database. To go a step further, he explained that this approach to insurance is data driven, allowing his company to adapt its practices and risk ratings to the changing atmosphere of the world we live in today.
Chart courtesy of Stockcharts.com.
The theme of relying on data to grow extended past Baron’s investment in the data analytics company. In the presentations given, each company had several data points to back up their respective growth projections and the financial performance they were achieving. Those analytics help to plow a path to their success.
Baron Capital’s Four Pillars of Investing: Conclusion
The Baron Conference provided a unique insight into investing and emphasized the power of long-term investing. More than provide an overview of selected companies that Baron Capital invests in, its leaders who presented at the conference described the reasoning behind their choices and why they are confident in the growth prospects for the companies that were featured at the event.
