Ron Baron, Baron Capital chairman & CEO, shares where he is his seeing long-term investment opportunities in technology and brick &mortar plays. Ron Baron was on CNBC this morning.
Video and computer transcript can be found below
Baron’s Long-Term Theme Picks
let’s get back to our special guest, ron baron, chairman and ceo of baron this morning. tom had a question, he was mid-way into the question when we decided to make some money with commercial breaks. i will go back to tom, ask the question. ron, i followed you with envy and greed forever and you have been the best at long-term picks of teams and themes. what you have done with hyatt with sands with starwood even in the hospitalities sector. wren you look at that sector, bricks and mortar an managers vs. what’s happening in tech, expedia, orbits, is there an intersection in which it’s going to start compromising those great companies? well, first of all, tom the way you do research, you live on your airplanement i never seen a guy travel more than you do. you meet more people than anybody i know. the reason you ared a good it’s because of. that you understand how it is to meet people, judge them, this past week we were in on tuesday, a travel week. so on tuesday, this is a travel week for me. you do this every single day. and this week we were in baltimore for a half a day on tuesday to visit under armour, since they have been a publicly owned company. i think we’re the largest investors, we made four or five times our money since we invested. every years ago you visit us, we visit them a half a day every 84. in the afternoon, we went down to reston, virginia where i used to ride my motorcycle out there in law school and resue a sign to visit that company, verisign, one of our funds has been purchasing. what they do, they have dot-net or dot-com, that’s them. they get $7.95 whether you are ron baron or becky quick.com. that’s a business that will grow from these whenever there is india or china, all those guys are coming on. they will benefit from that. more names will benefit. so farce figuring out in the intersection between technology and bricks and mortar, the businesses that we have invested in historically have been businesses, business models that can’t be challenged, that they’re going to exist. they’re not going to change a high toelt hole for electron, new trorngs protons flying around in the air. you got to stay somewhere. veil mountain, you got to ski somewhere. you don’t have to ski, if are you going to ski, they can’t make more mountains, so the businesses in general we invest in, transmission towers. there is something physical about them. a lot more than physical. there are poles, wires, you need them. the things we invested for the most part, they have big growth opportunities and technology, they’re making the world, they’re changing the world to all the, i watched these commercials on television, they say all the gods and service, 25% in the past ten years, technology is expanding in an exponential rate. there are all kind of things to ange it. hi, ron, it’s brian, verisign, highia. those are names i doubt you are mentioning them accidentally. what other industries or companies do you see this are truly irreplaceable and potentially under valued? wel, our firm has about 400 investments. so those just are a few. in the top ten, they represent 20 or 2% of asset the top 20 represent 30% of our assets. that’s because those businesses perform very well over time. our average holding period, i was talking before people trading the news the average holding period is seven years, seven years. tom’s like that, most public investors, hedge funds are days, weeks, month, we’re seven years ago five for a firm as a whole, so irreplaceable. electricity transmike, you got to have electricity transmission. energy, the ability to exploit all this shale oil and gas there. is as much shale oil and gas in the ground as all the oil that’s been taken out of the ground for the past 100 years. we’re starting to exploit that right now. that’s irreplace about. have you short line railroads. you can’t replace them. it costs a million dollars a mile if you can ever get zoning and can’t get the zoning. so we think, what we’re trying to do is whenever you have these long-term investments, then all of a sudden something will happen in the market and stocks will fall because of that something. so scientists have heart valves. when you get older, it calsifies. you can’t replace so it easily. these guys have 60% of the market for the hart valve. so what happens is, the doctor says, you know what, it’s risky. you ve to open heart surgery, open you up. when you do that, maybe you will survive. maybe you won’t if are you 80 years old, we’ll wacht. take medicine, rest a little bit. all of a sudden they come up with a new procedure where they can put the valve at the end of the kat their and not have open heart surgery and take months — go ahead. my question, though in all of this, it’s a question i water thinki about, doug sent in a similar question by e-mail as ump speaking. it said, why should stocks trade at the average price earnings multiple the last 50 years given the secular head winds to global growth and likelihood we are in a slower growth environment than in professor cycles. even if you are a long-term investors, i assume the gamble given everything, we will not grow as fast as before, if that is true, why should multiples hold up? well, the growth rate for the economy in america had been 6.8% a year since 1960. and it’s been about that rate since 1,900 as well. and for the past 14 years, it’s
Baron: Why Now is the Time to Buy Strategy
“You can’t store value in money,” said Ron Baron, Baron Capital chairman & CEO, explaining why he is “confident” in the markets and why short-term interest rates aren’t likely to go up any time soon.
markl continue it. let’s bring