Beppaun's

Industry	Name	Ticker	Crncy	Exch	Market Cap €	Investment Thesis	I#T#'s date	Who
Utilities_Gas Utilities	QUESTAR CORP	STR US	USD	New York	€ 2,622,931,160.43	Questar is a natural gas company with three primary businesses; Questar Market Resources, which engages in natural gas exploration and production; Questar Pipeline Company, which conducts interstate gas transportation and storage services; and Questar Gas Company, which provides retail gas distribution services in Utah, south-western Wyoming and south-eastern Idaho. The company’s last reported quarter was strong, with revenues 29% above consensus, while EPS was $0.02 below expectations. Management raised its 2010 production guidance and commented on the company moving forward to spin off its exploration and production business. There is no change to our thesis. We feel Questar is unique because it owns acreage in the northern part of the Pinedale Anticline, as well as significant acreage positions in the Bakken Shale and Andarko Basin Woodford Shale.	30/06/2010	Dennis Lynch, head of Equity Growth team, Morgan Stanley
Utilities_Electric Utilities	BROOKFIELD INFRASTRUCTURE PA	BIP US	USD	New York	€ 4,138,234,221.15	Brookfield Infrastructure Partners (2.5% of the Fund) is an externally managed limited partnership that invests in leading infrastructure investments globally. Its sole asset is a 60% interest in an infrastructure partnership managed by Brookfield Asset Management. The partnership’s current operations include transmission assets (utilities/energy), transportation (ports, rails), and timber. The company generates stable and growing cash flows — more than 70% of the cash flow is either regulated or under long-term contracts (transmission, ports, and rails). There are 4 components to the growth and value proposition: (i) a 5.6% dividend yield which we think should increase 3% to 7% each year with earnings growth; (ii) $800 million of development projects which over time we think could add $0.60 per share of earnings to its 2010 earnings of $1.80 per share; (iii) growth from improvement in the timber operations (currently no earnings); and (iv) an increase in port volumes from a recovery in the economy. We believe the company is poised to grow earnings from $1.80 per share to $3 per share in the next 3 to 4 years, which would result in 50% share price appreciation in the next 3 years. We believe the stock is attractively valued as it trades at a discount to its net asset value and relative to most REITs, despite its superior growth.	31/03/2011	Baron Funds
Telecommunication Services_Wireless Telecommunication Ser	SBA COMMUNICATIONS CORP-CL A	SBAC US	USD	NASDAQ GS	€ 3,830,739,777.78	SBA Communications’ shares resumed their recovery from their sell off last Fall, as the company took advantage of the dislocated credit markets by repurchasing its debt at large discounts. During the quarter, credit markets began to thaw, and comparable companies began successfully issuing new debt to repay upcoming maturities. We believe that SBA is now in far better shape to meet its upcoming debt maturities, largely through internal cash generation, but also through the continued availability of new debt financing at increasingly attractive rates. At the same time, we believe that the core fundamentals of SBA’s business –leasing towers to wireless carriers –remain strong, as smartphones and related wireless data usage continue to drive healthy tower leasing demand. (Rich Rosenstein).	31/03/2009	Baron Funds
Telecommunication Services_Integrated Telecommunication S	IDT CORP-CLASS B	IDT US	USD	New York	€ 151,836,868.19	The market has historically viewed IDT as a collection of unrelated businesses run by an undisciplined management team. Recently, however, management has reinvigorated the company with shareholder-friendly decision-making and prudent execution. IDT management has stated its intention to spin off more assets this year. We believe that the coming transactions will not only help the businesses strategically but also highlight their embedded worth. Using what we believe to be conservative assumptions, we see $38-$57 per share of value at IDT and expect the market to recognize this in the near to medium term. IDT’s net cash balance of $11 per share provides an adequate margin of safety.In 2008, as the company’s cash shrank and its stock price declined, the company drew a delisting notification from the NYSE. IDT’s founder, Howard Jonas, returned as CEO and embarked on what has proven to be an amazing turnaround story. The new management team slashed costs and divested cash-burning businesses, whittling down the old IDT into several valuable assets and a cash pile. Despite a history of investing in speculative enterprises and running a generous corporate budget, we believe Jonas and his management team have found religion in operating an efficient, shareholder-friendly company. Management even held its first ever investor day recently to highlight this change in philosophy and the opportunities that lie ahead. To listen to the company’s recent investor day and view the presentation, please go to http://www.idt.net/about/ir/overview.asp.In November 2010, IDT announced that it will be splitting apart the company by spinning off what will be called Genie Energy. Below is a summary of pro forma IDT and Genie.IDT ParentCoIDT Telecom is a global distribution network in which IDT provides telecommunication services primarily through calling cards, as well as gift cards and other products. Approximately 40% of revenue is currently generated through the sale of international minutes on calling cards, but “network” and “transaction” elements of this segment open up a wide range of future business opportunities; for example, the company plans to start a remittance business that will run through its existing network. Although revenues declined from 2007 through 2010, we believe this trend can be explained by IDT’s efforts to eliminate lower-margin products and reduce headcount. With this restructuring completed, IDT Telecom posted a strong and profitable Q1 2011, and we expect this business to grow through new product offerings. With minimal capital spend required to run IDT Telecom (maintenance capital expenditures are ~$8mm annually), management has also announced a dividend policy of $0.22/share per quarter. We value the business based on a 4.5x-5.5x multiple of run rate EBITDA less CapEx.The remainder of IDT ParentCo consists of several assets that do not significantly contribute to current earnings but do provide option value. One asset, Fabrix, offers over the cloud video computing options that can potentially replace set top DVR boxes. Following EMC Corp.’s $2.25b purchase of Isilon, several companies are rumored to have a strategic interest in Fabrix. However, Jonas highlighted at his investor day he would like to grow the business more before selling it. Fabrix recently won a contract with Cablevision, beating out Cisco’s Arroyo. Cisco purchased Arroyo for $92mm in 2006, implying a valuation of $100mm-$200mm for Fabrix. Zedge, another asset that will remain with IDT, provides a free online venue for sharing mobile applications. Unique Android visitors per month have grown from 250,000 to 2.5 million in just the last year. With 100% visitor growth in 2010, the site attracts almost 40 million unique visitors per month and plans to be the dominant destination for those searching for free Android applications (or “apps”). Jonas recognizes this growth potential and stated at IDT’s investor day he will not sell 10% of Zedge for	31/03/2011	Corsair Capital
Materials_Specialty Chemicals	ECOLAB INC	ECL US	USD	New York	€ 13,930,362,331.97	The Fund initiated a position in Ecolab (Market Cap = 7.109 bln $ at 03/05/09), which sells cleaning products and services to restaurants, hotels, food and beverage producers, healthcare facilities and other businesses. We believe Ecolab’s business model has attractive financial characteristics: consistent growth, predictable results, high returns on capital and strong free cash flow generation. We believe that Ecolab’s business has these characteristics because its end markets are stable and growing; because its products need constant replenishment and are delivered through proprietary dispensing devices, thereby driving recurring revenue; and because Ecolab has built a sustainable competitive advantage through its high level of customer service. Ecolab has more than 13,000 territory managers around the world who visit customer sites on a regular basis. These territory managers ensure systems are working correctly, make emergency service calls, and sell additional products and services. Customers are typically high-volume businesses in which cleanliness is critical and failures in core processes like proper dishwashing can be disastrous. The cost of cleaning products is a small part of the customer’s total budget, and we believe that customers are willing to pay Ecolab’s premium price to obtain peace of mind. Additionally, Ecolab’s products generate cost savings for their customers. For example, Ecolab recently introduced a new product called Apex to its restaurant customers, a product which analyzes how much water, electricity and dishwashing detergent its restaurant customers use each day, thereby providing customers with the data necessary to save meaningful dollars. We believe Ecolab can meaningfully increase its sales just by cross-selling additional products and services to its extensive existing customer base. Ecolab has expanded into ancillary businesses, such as commercial pest control and commercial kitchen equipment repair, which it cross-sells into its existing customer base. We also believe Ecolab has a large market opportunity in the healthcare sector, in which Ecolab offers cleaning and training solutions to address the problem of hospital-acquired infections, a major public health issue. The Centers for Disease Control estimates that hospital-acquired infections cost the healthcare system as much as $6 billion annually and are responsible for 100,000 deaths in the U.S. each year. As of October 2008, Medicare no longer reimbursed hospitals for complications associated with certain hospital-acquired infections. We believe Ecolab has an opportunity to grow its healthcare sales from $400 million to $1 billion in five years, through a combination of increased penetration of existing products, new products and acquisitions.We estimate Ecolab’s addressable market size to be approximately $50 billion, and Ecolab has just a 12% share of this opportunity. Recently Ecolab has taken market share from its only significant competitor, Johnson Diversey. Over the long-term, we believe that Ecolab is capable of generating 15% annual EPS growth and 20% Return on Equity. (Neal Kaufman).	31/12/2008	Baron Funds
Materials_Specialty Chemicals	MINERALS TECHNOLOGIES INC	MTX US	USD	New York	€ 877,545,228.84	We recently invested in Minerals Technology Inc., a company with $1 billion in sales. It operates in two segments: specialty minerals and refractories. The bulk of their specialty minerals revenue is from precipitated calcium carbonate (PCC), which adds bulk and whitening to paper. The refractory segment sells lining systems that protect large industrial furnaces. In the past, the company has at times diverted capital into high risk/high reward ventures, which ultimately failed. Under Joe Muscari, who was appointed CEO in 2007, their financial focus is now return on invested capital and cash flow metrics. He believes there are sufficient opportunities within existing businesses to significantly grow earnings. The company is currently working with certain paper customers to expand PCC loading levels in free sheet from 15% to 30%. If successful, this could nearly double their PCC output over time. It also wouldn’t surprise us if they decide to utilize some of their $12 per share of net cash to make an acquisition to deepen an existing product area. We believe that any such use of capital will be thoroughly examined against alternative options, including stock repurchase. At current levels, with the shares trading at 4.5x EBITDA, the valuation appears reasonable.	30/06/2010	The Delafield Fund
Materials_Specialty Chemicals	ROCKWOOD HOLDINGS INC	ROC US	USD	New York	€ 3,150,384,360.31	We initiated a position in Rockwood Holdings during the firstquarter of this year and added to the position during the secondquarter. Rockwood is a global developer,manufacturer and marketerof high value-added specialty chemicals and advanced materialsused for industrial and commercial purposes. The company has fiveprimary segments: Lithium, Surface Treatment, Advanced Ceramics,Titanium Dioxide Pigments, and Performance Additives.We believethat Rockwood is a very “differentiated” company within theMaterials sector. Rockwood has a portfolio of niche businesses withleading market positions, attractive end markets, high margins andstrong growth prospects.Rockwood is the leading global producer of lithium products andspecialty lithium compounds. The company has leased brine poolsfrom the Chilean government that has given it among the lowestcost structures for lithium extraction. Demand for lithium has beengrowing at a healthy clip, driven by new uses in laptop andcellphone batteries, electronics, hand tools, pharmaceuticals andgreases. Over the next decade, we expect demand for lithium toincrease meaningfully in response to higher production of allelectricallelectric(EV’s) and hybrid-electric vehicles (HEV’s), which arepowered by lithium-ion batteries. One HEV requires about 320times more lithium than a laptop and 3,200 times more than a cellphone. HEVs currently represent less than 1% of worldwide vehicleproduction, and one million HEVs (approximately 1.5% penetrationof the global car market) would require 20 million pounds of lithiumcarbonate (LCE), or an approximate 50% increase to global demandfor battery-grade LCE. We think Rockwood would likely be a keybeneficiary of this demand.In its Surface Treatment segment, Rockwood develops solutionsfor chemical pre-treatment of metals and other substrates. Therecovery in global auto production and the general pickup inindustrial activity have been important tailwinds for this business.In its Advanced Ceramics segment, Rockwood produces highperformanceceramic materials for specialized applications,including ceramic hip joints, where Rockwood has dominantmarket share. In its Titanium Dioxide segment, Rockwoodproduces TiO2, a base industrial product used to impart whitenessand durability to synthetic fibers, plastics and paints. The companyis the leading specialty player in this market, with approximately40% market share. A global supply shortage of TiO2 has resultedin unprecedented pricing power for TiO2 producers, with prices upmore than 30% year-to-date. Management views this business asnon-core and will likely sell it in the next few years.Rockwood is led by a capable CEO whom we expect to use thecompany’s significant free cash flow for debt repayment andpossibly dividends.We believe the company can grow its earnings inexcess of 20% per year over the next few years. Currently,Rockwood trades at a discount to many of its specialty chemicalpeers, despite, in our view, a better competitive position, highermargins, and better growth prospects. (David Kirshenbaum)	30/06/2011	Baron Funds
Materials_Specialty Chemicals	SYMRISE AG	SY1 GR	EUR	Xetra	€ 2,598,040,039.06	Symrise (Germany) is a specialtychemical company, manufacturing taste and smell solutions for the packaged food, beverage and household and personal care industries. Symrise reported strong first quarter earnings, partially as a result of its lesser exposure to large, multinational customers versus its peers. While higher penetration of multinational customers is important to Symrise’s long-term strategy, its current under-exposure is a source of benefit due to the widespread trend of consumers “trading down” amidst a global recession. Symrise currently generates 70% of its revenue from small and mid-size customers who have a greater exposure to value and private label products than their large, multinational counterparts. We expect the “trading down” phenomenon to continue, benefiting Symrise in future quarters. The company also has a disproportionately large exposure to the faster growing developing countries than its peers, another factor accounting for its recent strong performance. Furthermore, at 12 times this year’s earnings, Symrise has continued to trade at nearly a 10% discount to its competitors. (Kyuhey August)	30/06/2009	Baron Funds
Materials_Specialty Chemicals	WR GRACE & CO	GRA US	USD	New York	€ 3,093,829,546.94	W.R. Grace is a specialty-chemicals company producing petroleum refining and construction products. Their refining division is the world’s leading producer of fluid-cracking catalysts, which breaks down crude oil into lighter, cleaner, transportable fuel. International sales account for approximately 70% of revenues, with continued expansion into the emerging markets in recent years.In 2001, Grace voluntarily entered Chapter 11 bankruptcy to resolve over 130,000 asbestos claims against its construction division. Over the past nine years, Grace has successfully proven most of these claims to be without merit. In fact, in Feb. 2009 Grace filed a Joint Plan of Reorganization agreed upon by all asbestos claimants in the case, as a precursor to its eventual emergence from Chapter 11. A Personal Injury and Property Damage trust will be established to fund all current and future claims against Grace, which will require $250 million in Grace’s cash as a funding source. In February 2010, Judge Fitzgerald approved Goldman Sachs and Deutsche bank as lenders for Grace’s exit financing. Management now believes its emergence from bankruptcy could materialize as early as the second half of 2010.In the recent period during the bankruptcy, management has chosen to strategically reallocate its portfolio of businesses to higher margin products, reduce overhead expenses, and invest heavily in research and development. As a result, Grace’s operating cash flows increased nearly 15% from FY08 to FY09, and although revenues from their refining division were down, segment operating income increased nearly 20%, reflecting a 5% increase in margins. With emergence in sight, Grace has stockpiled nearly $900 million in cash to reduce required exit financing. Upon emergence from bankruptcy, we expect Grace to trade at a valuation closer to their industry peers, which include Albemarle ALB, Cytec CYT, Rockwood Holdings ROC, Solutia SOA, and Cabot CBT. Grace’s competitors trade at an average of 17.9x 2010 earnings, while Grace at this writing trades at 11.1x the same measure. In terms of price to 2010 estimated free cash flow, Grace’s competitors trade at 18.6x, while Grace trades at 15.7x. These metrics indicate price targets of $51.94 and $34.60, respectively. Our discounted cash flow analysis provides us with an intrinsic value of $41.07, assuming a WACC of 12% and an exit EBITDA multiple of 10x.Because of Grace’s relatively small size (market cap of $2.1 billion); its status as the largest global producer of specialty refining catalysts; and growing cash flows and gross margins, we feel it is a prime takeover target. Furthermore, any buyer would assume Grace’s significant net operating loss carryforwards (“NOLs”) as a means of sheltering future earnings from taxes. Possible acquirers could include Dow Chemical DOW, BASF BASFY, oil refiners looking to vertically integrate the refining catalyst business, or private equity firms who presently sit on an estimated $300 billion of capital on the sidelines. The mean EBITDA acquisition multiple for similar deals completed within the specialty chemicals sector in 2008 was approximately 9.6x, whereas the mean for 2009 deals was 7.3x. Analysts expect acquisition multiples to revert back towards 2008 levels in 2010 and 2011. In the event of an acquisition, we value Grace at $38.25, assuming a 9x EBITDA multiple and $4.25 EBITDA per share in 2010.Investment risks include any appeals to relevant court decisions that have been supportive of Grace’s legal positions, which could delay their exit from bankruptcy or cause a restructuring of the new equity that could dilute the value of the present shares. Furthermore, should there be a worsening of macroeconomic conditions, the outlook for global equity markets and economic growth would be revised significantly lower as the costs of capital increase to reflect greater uncertainty.Grace’s current earnings have been distorted due to extraordinary losses related	30/04/2010	Stock Investor (Morningstar)
Materials_Paper Products	SCHWEITZER-MAUDUIT INTL INC	SWM US	USD	New York	€ 847,278,238.14	Schweitzer-Mauduit International (SWM) is a manufacturer of specialty papers principally for the tobacco industry; based on our assessment of the company, there is significant opportunities for earnings growth and reasonable valuation. Shortly thereafter, the company reported second quarter earnings that were above market expectations and, as a result, the company raised guidance for the full year. The company has restructured its operations away from low-return base paper in high-cost jurisdictions towards high-margin specialty products, such as reconstituted tobacco leaf and low-ignition propensity papers. An increasing number of U.S. states and other countries have been mandating that cigarettes be self-extinguishing to reduce risk of fire or injury. This regulatory development, which appears to be gaining traction worldwide, is increasing demand for Schweitzer’s innovative and patented low ignition propensity (LIP) paper. We believe the company’s restructuring efforts, growth potential in developing world markets and shift toward highvalue/ high-margin products can increase earnings power several-fold, from a historic run-rate in the $1.00 per share range to well over $5.00 per share in 2010. Assuming Europe follows the U.S., Australia and others in mandating LIP papers over the next few years, we believe the company’s earnings power could perhaps exceed $10.00 per share, assuming the company maintains a dominant share of the LIP opportunity Europe market. Although SWM shares appreciated 74% for the quarter, we still find the shares attractive and continue to hold a sizeable position.	30/09/2009	Baron Funds
Materials_Industrial Gases	AIRGAS INC	ARG US	USD	New York	€ 4,661,256,430.77	Ever wonder where the local Hallmark store gets helium for balloons or how a hospital refills those portable oxygen tanks for patients? The answer, more often than not, is Airgas — a little-known Pennsylvania company that’s become the largest distributor of industrial, medical, and specialty gases in the U.S. With 1,000 service locations and $4 billion in revenue, Airgas is a critical supplier of packaged cylinders of oxygen, nitrogen, hydrogen and helium to over one million customer accounts. With 25% market share, Airgas is more than twice the size of its next competitor, with most of the industry still in the hands of mom and pops. This fragmentation is a result of the local dynamics of its model. Airgas buys gas from bulk liquid producers and also produces gases internally — purifying atmospheric gases and breaking them down into component parts — a very low-cost and high-margin strategy. Once in gaseous form, the company packages products into pressurized cylinders for sale to industrial and commercial users such as hospitals, universities, manufacturers and even florists. Transporting these gasses over long distances is cost-prohibitive given the weight of cylinders and the hazardous nature of some of the materials. As a result, the business is inherently local, where routing and delivery density are key. Over the last 20 years, Airgas has been connecting the dots across the U.S., by consolidating neighborhood providers, cross-selling product and exploiting economies of scale. Today it has a unique national footprint and low-cost position with dynamic drivers for growth. There are many attributes of the Airgas business model we find compelling, with the most attractive being the steady stream of revenue from cylinder rentals. At the heart of what Airgas does is the constant refill and maintenance of 10 million, “in-the-field” cylinders, which stay on site at customers’ facilities. Think of the cylinder as the “razor” and the gas as the “blade.” Every month a customer pays “rent” on the cylinder and buys gas consumables as needed. Even in downturns, it is rare for a customer to “put” the cylinder back to Airgas — given its relatively low cost and the potential loss of sales should business turn around. Thus, even though a customer may be buying less gas in the current environment, the cylinder rental stream provides Airgas with a source of stable cash flow. Beyond cylinder rent, we believe Airgas possesses several organic growth drivers that should sustain a double-digit rate of expansion for several years to come. These include: 1) Growth in bulk gasses as Airgas begins to produce its own supply and offer its larger customers a means to expand with them; 2) Further expansion into complementary products such as safety supplies, welding and construction equipment, refrigerants and dry ice; 3) Growth from increased regulation requiring companies to comply with environmental and homeland security initiatives that drive demand for gasses that treat pollutants and reduce harmful power-plant emissions; 4) Growth in defensive gasses used in less cyclical fields, such as medical and research applications; and 5) Finally, growth in domestic infrastructure spending where, for example, the race to build nuclear reactors in the U.S. will require a significant amount of welding gasses.Business at Airgas softened beginning late last year providing what we believe were advantageous prices to build a position in the company. While industrial, manufacturing and construction sectors are weak as customers curb their gas consumption, other sectors are still growing for Airgas, including medical and specialty gasses, food and beverage and government accounts. We expect 2009 earnings to be down only slightly. Looking out over the next five years, we believe Airgas — as the industry leader — can achieve over $5 billion in sales and $5.00 per share in earnings power, nearly double the current depressed run-rate. As such, we expect the shares w	31/03/2009	Baron Funds
Materials_Fertilizers & Agricultural Che	INTREPID POTASH INC	IPI US	USD	New York	€ 1,464,768,537.35	Intrepid Potash is a small player in the global potash fertilizer market (supplying just 1.5% of worldwide demand), but it is the largest domestic producer of potash fertilizer. The U.S. imports 85% of its potash needs and the majority of those imports come from Canada. Therefore, Intrepid is a niche domestic supplier with three key competitive advantages. First, well-situated potash reserves in the Southwestern U.S. allow the company to sell into its own backyard where demand is 5 times what Intrepid produces. As such, Intrepid has a transportation advantage over its Canadian peers that allows it to garner higher net selling prices. Second, Intrepid pays lower royalty rates as a U.S. company than its peers must pay to the government in Canada. Third, Intrepid is able to utilize solar evaporation solution mining in some of its potash mines. Solar evaporation solution mining is the lowestcost method of mining potash and, due to climate restrictions, is only used in two places around the world — the Southwestern U.S. and the Dead Sea. Intrepid Potash fits nicely into our secular theme of investing in increasing global agriculture needs. Demand for grains is rising due to global population growth, improving diets in the emerging markets, and increasing biofuel mandates in the U.S. and abroad. Given limited arable land and shrinking arable land per capita, one of the most important ways to increase global grain stocks is to improve agricultural productivity through increased fertilizer usage. Of the three essential fertilizers — nitrogen, phosphate, and potassium — we believe potash (the main source of potassium) is the most attractive of the three fertilizer businesses because it has high barriers to entry. There are roughly 25 known potash reserves in the world and they are concentrated in the hands of just 13 producers. It also takes at least seven years and $2.5 billion to bring new greenfield potash capacity online. Over the long-term, we believe Intrepid Potash will benefit from this secular trend of rising fertilizer needs. Currently, Intrepid owns four operating potash mines and two idled potash mines. The reserve lives of its operating mines range from 28-130 years, but we estimate that the market is only giving Intrepid credit for 11 years of reserves. The key to unlocking value for the company will be to accelerate development of its reserves through mine re-openings and to further grow volumes and profits through de-bottlenecking. Over the next 2-3 years, we foresee Intrepid increasing its production capacity of potash by 20% and its production capacity of langbeinite (another potassium source) by 50%. Not only do we expect Intrepid to benefit from rising potash prices and capacity expansions, but also we expect margins to expand because, although the majority of its current potash volumes are high-cost underground mining tons, the incremental tons that the company is bringing online will be low-cost solution mining tons. (Catherine Chen)	31/12/2010	Baron Funds
Materials_Fertilizers & Agricultural Che	MONSANTO CO	MON US	USD	New York	€ 31,063,909,699.95	Within agriculture, Monsanto’s shares increased in value 4.1% but underperformed the overall market. In early September, the company lowered guidance for FY 2010 and this was unexpected. The earnings revision was driven almost entirely by the decline in the commodity crop protection business due to greater generic competition entering the market. While clearly disappointing, we believe the new guidance should set a floor for expectations and now give greater clarity to its declining Roundup business. Second, and more importantly, the fundamental prospects for its seeds and traits division is still intact and the company continues to believe in the enormous long-term potential for this business, which currently accounts for 60% of revenue and 70% of gross profit. Monsanto is the world leader in developing seeds and biotechnology traits for agriculture with a global market share of 90% of acreage planted with herbicide tolerance and insect protection traits. As we have said previously, the world’s population is growing nearly six times faster than that of farm acreage. Furthermore, growth in per capita income is driving increased consumption of meat, which requires increased production of soy and corn as feed, and there is a long-term agricultural need to be more productive with existing acreage, and we view this as an opportunity for Monsanto.	30/09/2009	Baron Funds
Materials_Fertilizers & Agricultural Che	MOSAIC CO/THE	MOS US	USD	New York	€ 18,703,381,997.80	Mosaic (MOS) is one of the biggest producers of fertilizer in the world. It is the largest producer of phosphate fertilizers worldwide (16% global market share), and is #2 in potash fertilizers (15%), second only to fellow Magic Formula stock, Potash Corporation of Saskatchewan (POT). The company is vertically integrated, controlling the supply chain from the mining of phosphates and potash, through processing, through production and sale of the fertilizer end product. Phosphates account for about half of Mosaic's sales, while potash accounts for about a quarter, with the other quarter coming mainly from offshore distribution and resale. The company was formed through a merger of IMC Global and Cargill's fertilizer business, and Cargill maintains majority ownership.Fertilizer is basically a commodity product, distinguished by end users only by price. But to really understand Mosaic's competitive position, we must understand the basic dynamics of the fertilizer industry. There are 3 types of fertilizers: nitrogen based, phosphate based, and potash based. Weekend gardeners might recognize these 3 numbers from the side of a fertilizer bag (nitrogen-phosphorous-potassium, or N-P-K). The different fertilizer producers generally skew towards one of the three types, and this greatly affects competitive position as the underlying dynamics are quite different.Nitrogen fertilizer producers, like Terra Industries (TRA), have virtually no moat because nitrogen fertilizers are created by combining the extracted hydrogen from natural gas with the nitrogen in the atmosphere. Since both input components are readily available, producing nitrogen fertilizers is a business with low barriers to entry, creating lots of competition and severe pricing wars.Phosphate fertilizer producers like Mosaic rely on mined phosphate rock as a key input component. Phosphate rock is not really a scarce commodity. It is usually found in marine deposits and is not especially difficult or expensive to find or mine. Mosaic's competitive advantages in phosphates are accentuated by it's vertical integration. Non-integrated competition is at the mercy of input costs for phosphate rock, and when these rise, the costs are passed on to customers. Mosaic benefits from these price increases without suffering from the rise in input costs. However, a large number of state-owned operations compete with Mosaic in the phosphates market, which can be difficult because profit is not always their main motivation for pricing. Historically this industry has been one of wild price swings, in both the pricing for fertilizer and in input costs such as sulfur and natural gas. This makes both revenue trends and gross margin wildly variable. Consider that Mosaic is currently running gross margins over 35%, but just two years ago the figure was 12%!Potash fertilizer is a much more attractive business. Potash deposits are rare and very difficult to mine, requiring an initial capital outlay of over $2 billion dollars, creating very high barriers to entry and creating a unique asset moat for those that already operate them. Over 70% of the world's supply is owned by a consortium of which Mosaic is a member. The nature of this segment limits competition, which in turn limits pricing volatility. Mosaic benefits from a competitive advantage here.Growth potential is so-so. Worldwide population growth continues to outstrip the growth in arable land, forcing farmers to become more productive with current lands. Emerging economies lead to more food consumption, increasing fertilizer demand. However, many believe that the ethanol boom is partly to blame for higher crop prices. Ethanol demand faces a weak outlook, as oil prices drop and more momentum gains behind the anti-ethanol movement.Financial health is pretty good. The huge windfalls of the past 2 years have allowed Mosaic to pay off much of it's debt. Net cash is a positive $1.4 billion. The balance sheet is in solid enough shape to	30/06/2009	Magic Diligence
Materials_Construction Materials	TITAN CEMENT CO. S.A.	TITK GA	EUR	Athens	€ 1,140,473,266.60	Headquartered in Athens, Titan Cement Co. S.A. (“Titan”) is the second largest cement producer operating in an oligopolistic Greek cement market. In addition, Titan’s non-Greek business exposure has historically been disproportionately derived from a large-scale Southeastern United States business with a particular focus on South Florida, a market which was exceptionally profitable during the boom times but has become considerably less so in recent years, reflecting muted construction activity. Perceptions notwithstanding, the Greek operations remain decidedly profitable, and the company’s management has done an exceptional job managing its U.S. operations under extremely challenging circumstances. Offsetting the difficulties in these two markets somewhat, Titan has undergone an evolution over the last number of years which saw the development and expansion of its Southeastern European business, as well as a more recent and rapid expansion of its Eastern Mediterranean business. While a considerable amount of capital has been spent to expand those operations, the heavy spending period is coming to a close and, with a decline in capital expenditure, these businesses are beginning to produce meaningful amounts of free cash flow. In total, Titan is a package of extremely attractive assets which are currently generating a meaningful amount of free cash flow (albeit some at reduced levels), resulting in a strong and improving balance sheet. Should an eventual recovery take hold in Greece and/or U.S. construction markets, Titan will in all likelihood produce greatly improved operating performance. Given the geographic range of its activities, even in the absence of recovery in these two markets, Titan Common is inexpensive on an “as-is” basis.	31/01/2011	Third Avenue
Information Technology_Technology Distributors	INGRAM MICRO INC-CL A	IM US	USD	New York	€ 2,247,351,604.17	Fund Management had been familiar with Ingram Common, having previously owned it in the Fund. Ingram is the world’s largest distributor of Information Technology (“IT”) products and services and lies squarely in the heart of the technology “food chain.” We view the company’s shares as a conservative and technology-agnostic means of participating in the cyclicallytinged growth that generally characterizes the technology sector. Subsequent to our sale of the shares a little more than two years ago, we kept tabs on the company as part of our inventory. In the intervening period since our ownership, a number of things have happened. For one, the balance sheet has improved with regard to overall quality and strength. Specifically, two years ago all the goodwill was written off, there is no more off-balance sheet financing, and the company enjoys a net cash position of more than $540 million (representing 20% of the company’s market capitalization). Importantly, it appears industry competitive conditions have moderated. Despite operating on razor thin margins (think of it like a grocery store with different product shelf lives) the company has generally prospered, remaining nicely profitable in eight of the last 10 years (The company’s most recent loss, as reported under GAAP, occurred in 2008 when it wrote off for accounting purposes $743 million of goodwill on the balance sheet. By our estimation, on an adjusted “cash” basis, Ingram remained highly profitable and generated more than $550 million of cash from operations that same year, resulting in approximately $470 million of free cash flow). Tangible book value per share has compounded at roughly 10% annually during the past five years. The Fund’s cost basis represents a modest discount to tangible book value (a very crude proxy for business value) and equates to approximately nine times to 10 times current earnings and six and one-half times 10-year average EBIT. At these undemanding valuations, the share price would appear to have limited downside, and with ample financial flexibility, management has an excellent opportunity to return a fair amount of capital to shareholders on economically attractive terms in the form of share repurchases. Were the valuation to revert within the next year or two to its historic premium to GAAP book value, the Fund would realize a low-to-midteens type of return.	30/07/2010	Third Avenue
Information Technology_Systems Software	FORTINET INC	FTNT US	USD	NASDAQ GS	€ 3,015,974,984.67	Traditionally, enterprises have employed a variety of point solutions, such as firewalls and virtual private networks, to combat network security threats. With the increasing complexity of threats and importance of network performance, however, the need for a more integrated, easy-to-manage solution has given rise to the market for unified threat management (UTM) systems, which incorporate multiple security features (firewall, intrusion prevention, antivirus) into a single box.Fortinet (FTNT) was founded by the same duo that started NetScreen Technologies, which was acquired by Juniper (JNPR) in 2004 for $4 billion. Fortinet has used a proprietary solution to secure a leading 15% share in the UTM market, a segment of IT security spending that is expected to reach $3.5 billion by 2012 (22% CAGR). The company plans to offer 12.5 million shares, including 6.7 million from insiders, at a price range $9-$11. Morgan Stanley, J.P. Morgan and Deutsche Bank are acting as lead managers and the deal is expected to price Tuesday, November 17 and list on the NASDAQ the following day under the ticker FTNT’Impressive TechnologyFortinet’s flagship FortiGate appliance integrates several core security functions, such as firewall, VPN, antivirus, intrusion prevention and web filtering, onto a single proprietary platform, that incorporates a proprietary operating system (FortiOS), hardware architecture, and high-performance application-specific integrated circuits (FortiASICS). This product has allowed the company to rapidly gain share in a large and growing market, and Fortinet has shipped more than 475,000 appliances to over 75,000 end customers, including the majority of the Fortune Global 100. Nearly all product sales (45% of sales) are indirect through over 5,000 channel partners and pricing ranges from $300-$3,000 for SMBs and $46,000-$1.1M for enterprises.Cash is KingUnder annual contracts, the company offers subscription services/support (50% of sales) for its appliances that provide updates to the majority of security functions on a daily basis and offers 24/7 support through a team of over 100 threat research professionals. As contracts are paid up-front, this allows for strong recurring revenue and substantial free cash flow, and the company’s margins should continue to improve with scale. Year-to-date, EBITDA margins grew nearly 4x and the company generated $41.5 million in free cash flow (23% of sales).Security Breach?The biggest risk to the long-term story is competition from networking giants, such as Juniper and Cisco (CSCO), which command a 9% and 6% share of the UTM market, respectively. Additionally, the economic downturn has pressured year-to-date product sales, which are up only 1%, and the overall market for IT spending remains challenging. Typical to the industry, the firm’s quarterly results can be lumpy (strong 4Q) and product sales are usually back end loaded.Priced AttractivelyThe IPO market recovery has been led for the most part by larger PE-backed companies, whose financial sponsors are searching for liquidity. Most of these deals were priced with full valuations as these firms seek to maximize returns; however, this has caused performance to decline with investors becoming more price sensitive. Fortinet represents one of the few venture-backed growth stories to come to market this year and the deal is being priced at an attractive discount relative to other security software and network system providers on both multiples to revenue and cash flow.Additionally, its close peer SonicWALL beat estimates in late October and Cisco provided a more bullish outlook on IT spending trends on its latest earnings call. These factors should combine to drive significant interest in the deal and make for a solid debut.	30/11/2009	Renaissance Capital
Information Technology_Systems Software	MICROS SYSTEMS INC	MCRS US	USD	NASDAQ GS	€ 3,087,161,299.05	The Fund’s largest new investment was made in Micros Systems,the leading provider of technology systems to the hotel, restaurantand retail markets. Micros’ key offering to hotels is the OPERAproperty management system (PMS), which is used to managereservations, rates, customer profiles, front desk functions, rooms,cashiering, and labor scheduling.Micros’ restaurant offerings includesoftware and hardware for point of sale (POS) transactions, kitchendisplays, inventory management, labor management, onlineordering and reservations, and website design, marketing andsyndication.We believe that Micros is the dominant player in a largeaddressable market. We believe that there are approximately430,000 hotels globally, including 55,000 chain hotels and375,000 independent hotels. Micros has approximately 28,000hotels on its platform, implying market penetration of just 6.5%,and Micros is approximately eight times larger than its nearestcompetitor. This scale gives Micros significant advantages inresearch and development, marketing, and the largest trained userbase. This increases barriers to entry, and it encourages newcustomers to consider using Micros.Within hotel chains, there aresignificant benefits to having a standard PMS system across theenterprise. As a result, Chief Technology Officers often select asingle PMS vendor and gradually introduce the system acrosshotels, giving Micros an embedded growth path to 100% marketshare within many chains. Marriott, Hilton and Starwood continueto use internally developed software to run their North Americanoperations, and we believe all three represent large potentialrevenue opportunities if and when they elect to modernize theirPMS systems.Micros is similarly well positioned in the restaurant market. Webelieve that there are between 1.5 to 2 million restaurants globallyin Micros’ addressable market. Micros currently has approximately200,000 restaurant customers, implying penetration of just10-13%, and Micros’ installed base is already two-times larger thanthat of its nearest competitor. The restaurant market is highlyfragmented, and includes products from many sub-scale vendorsthat have underinvested in their products during the recentrecession.We believe Micros is well positioned to gain share fromthese vendors as existing POS systems continue to age and come upfor replacement.We believe that Micros’s competitive position hasbeen enhanced by the recent launch of its next generationrestaurant system, branded Simphony, which takes advantage ofrecent improvements in technology to offer clients enhancedfunctionality with lower operating costs.The company’s software and hardware offerings provide clients withcore front and back office functionality that are used in almost everyguest interaction. This has resulted in renewal rates well in excess of90%, modest pricing power, and high barriers to entry. It also facilitatesthe cross-sale of new and innovative products to Micros’ loyal installedcustomer base. Exciting new products include a partnership withGoogle to allow customers to book hotel rooms directly through theGoogle search engine, new pay at the table capabilities for restaurants,online ordering and reservations for restaurants, and growing socialmedia design and monitoring capabilities. These add-on products,which generate high margin recurring revenue for Micros, createsignificant value for customers and frequently pay for themselveswithin the first several months after purchase.We believe that Micros’s operating margin is quite scalable. Thecompany’s margins have climbed almost 10% during the past sevenyears, and we continue to see a long runway for margin expansionahead. The company also generates significant free cash flow giventhe low capital intensity of its business. Micros has over $800million of cash on its balance sheet (approximately $10 per share),which we expect it to use to make strategic acquisitions, repurchasestock, and potentially pay a dividend. (Neal Rosenberg)	30/06/2011	Baron Funds
Information Technology_Systems Software	PERVASIVE SOFTWARE INC	PVSW US	USD	NASDAQ GM	€ 72,487,221.18	Pervasive Software Inc. (PVSW) Based in Austin, Texas, Pervasive is a software company focused on both in-house and cloud-based data innovation. We believe its small size and the fact that the company has two related but separate businesses has led investors to ignore the deep value opportunity we see in Pervasive stock. Management, led by CEO John Farr and CTO Mike Hoskins, is talented and motivated by significant ownership. The company has produced more than 40 consecutive profitable quarters and has more than 40% of its $95 million market capitalization in cash with no debt. It trades at very low multiples of both asset value and revenues despite significant growth potential and an extremely attractive profile in a rapidly consolidating industry. “…the risk/reward tradeoff for the Fund’s portfolio is extraordinarily attractive.”Pervasive’s legacy database business, which currently accounts for about 60% of sales, is a consistent cash flow generator. Customers who embed this product in their software should continue to use Pervasive due to the cost of switching and their long-standing relationships. These cash flows are available for both R&D and share repurchase. CEO John Farr has proven to be an outstanding capital allocator, buying stock opportunistically when market conditions or other short-term factors lead to share price declines. While the balance sheet and this cash-generating business should provide some downside protection, the significant upside potential in Pervasive stock comes from its newer growth businesses which are focused on data analytics. These include Data Integrator, DataRush, DataSolutions and DataCloud. The rapid growth of these businesses is hidden by the larger legacy business, but the company has been recognized as an innovator by Gartner and IDC and has Intuit as a significant customer for its Data Integrator product. There have been several acquisitions of early-stage data integration and related companies at 6x to 10x times sales. “…the significant upside potential in Pervasive stock comes from its newer growth businesses which are focused on data analytics.”From a valuation standpoint, Pervasive currently trades at 1.2x book value, 2.4x tangible book value, and 2.4x cash. These are extremely low multiples for a growing software company, but an even more compelling case appears when we examine revenuebased multiples. On an EV/sales basis, the stock trades at 1.1x our estimate of 2011 sales. This would be modest even for the legacy business. The data analytics and other innovative lines deserve a much higher multiple. Even using the low end of the 6x to 10x times range mentioned above and conservatively valuing the legacy business at 1x sales, it would lead to a valuation of more than double the current share price.	30/09/2011	Ariel Funds
Information Technology_Systems Software	SYMANTEC CORP	SYMC US	USD	NASDAQ GS	€ 9,745,140,206.58	Symantec, headquartered in the Silicon Valley town of Cupertino, CA, is a leading provider of storage and security solutions for corporate and personal computer networks. The company meets two of our five valuation criteria (price-to-cash flow and price-to-earnings). Our primary catalyst is new product oriented. While Symantec had stumbled in product development over the past couple of years (with a resulting loss of market share in their key markets), the company is rolling out a new enterprise security platform with significantly enhanced features and functionality. “Symantec Endpoint Protection 11.0” incorporates all of the company’s existing security technologies into a single, easy to manage interface for technology managers and restores Symantec’s competitive position in the marketplace. The company has also recently released many new technologies that it was late to bring to market. With its product offering at least on par with, and in most cases superior to, its peers, we believe Symantec can reverse the recent trends of market share losses and decelerating revenue and return to meaningful growth in profits and cash flows.	30/04/2010	TCW
Information Technology_Systems Software	VMWARE INC-CLASS A	VMW US	USD	New York	€ 31,372,140,972.33	Virtualization: VMWare and Citrix Systems. During the quarter, we also established new positions in VMWare and Citrix Systems, two of the market leaders in virtualization software. We believe virtualization is one of the most exciting areas of software, as it is one of the major drivers of the evolution from a decentralized client-server based computing architecture to a more centralized data-center centric model, sometimes referred to generally as “cloud computing.” At its infancy, computing architecture was based on large mainframe computers that performed most of the data processing and then distributed the compiled information to an end user’s computer terminal. The development of the personal computer ushered in a shift, whereby the end user’s personal terminal (i.e., the PC) conducted the processing and stored its own applications. While this structure offloaded workloads from the centralized mainframe server, it added to the complexity of the network and led to an increase in capital spending and IT management costs. We believe that the distributed computing paradigm is now morphing back to a more centralized structure, driven partly by the power of virtualization software and robust, high-speed ethernet networks. Virtualization is actually a broad term that encompasses many different aspects, including: hardware or server virtualization, application virtualization, storage virtualization, network virtualization, memory virtualization, desktop virtualization and several others. Virtualization is a methodology of dividing the resources of a computer into multiple execution environments. In server virtualization, the software parses the server into smaller, more efficient components — called virtual machines — that can each execute programs like a distinct server. This type of virtualization improves the efficiency, availability and utilization of hardware resources, as now several virtual machines, each with their own operating system and application, can run on a single server as opposed to the old “one server, one application” model. Virtual machines can be quickly and easily configured to the customers’ needs. Another flavor of virtualization, application virtualization, stores an application (like email or a customer relationship management program) on a central server and then streams it to an end user’s authorized device when the user needs to access the program. From the end user’s perspective, it appears as if the application actually resides on that person’s computer. This type of virtualization improves the portability, manageability, security and compatibility of applications by encapsulating them from the underlying operating system and computer on which they are being executed. Citrix and VMWare are two of the leaders and pioneers in virtualization. Citrix is the leader in application virtualization, and has greater than 65% share of that market. Citrix’s customer list includes 99% of the Global 500 and hundreds of thousands of small-and-medium sized enterprises. VMWare is the pioneer in server virtualization and possesses over 40% share of that market. VMWare has around 130,000 customers and boasts 100% of the Fortune 100 and 95% of the Fortune 1000. Even with these impressive customer lists, we believe that we are still only in the early stages of the adoption of virtualization software, as only 15% of workloads are currently virtualized. Indeed, Gartner predicts that the server virtualization market will grow from a $2.5 billion market this year to over $8 billion in 4 years. And IDC predicts that the application virtualization market will grow to almost $3 billion in 4 years from $2 billion today. While both companies are leaders in their respective segments, we also think that the emerging desktop virtualization segment will provide another layer of growth to each, with Citrix possessing the early lead, in our view. Desktop virtualization gives IT managers the ability to host and centrally m	30/06/2009	Baron Funds
Information Technology_Semiconductor Equipment	AIXTRON SE	AIXA GR	EUR	Xetra	€ 1,299,852,294.92	Aixtron AG (AIXA) is a German designer and manufacturer of metal organic chemical vapor deposition (MOCVD) equipment, which is used to manufacture light emitting diode (LED) wafers. LEDs are an environmentally friendly and highly energy efficient lighting source which have penetrated the cellphone and computer screen backlighting markets and are now increasingly being deployed in ultra-thin flat screen television backlight units. Aixtron is one of only two companies currently capable of making these complex machines, and it currently dominates the market with an estimated 65-70% world share. After the credit crisis sparked a severe decline last year, orders have picked up significantly since the first quarter as Aixtron’s customers have nearly reached 100 percent utilization of existing equipment. We expect this trend to continue for the next couple of years as LED backlit televisions still have low penetration, though we suspect a rapid adoption curve as customers prefer LED TVs. Given Aixtron’s 79% appreciation during the quarter, the market appears to be recognizing this company’s potential. We believe the use of LED lighting will continue to spread to more applications, such as traffic lights and general industrial and consumer lighting in future years.	30/09/2009	Baron Funds
Information Technology_IT Consulting & Other Services	BOOZ ALLEN HAMILTON HOLDINGS	BAH US	USD	New York	€ 1,990,938,569.37	Booz Allen (BAH) came public in the fourth quarter. The company we own represents the government IT practice of the storied consulting firm. The commercial strategic consulting operations were previously spun out, and BAH is subject to a non-compete agreement in that space until July of this year. BAH is one of the premier government IT services enterprises with extremely high quality management and a valuable base of consultants of which nearly 75% possess high level security clearances. Unlike many other firms in the space, BAH’s consultants are managed and compensated as an overall team, which leads to a firm culture of cooperation rather than internal competition. Their work covers many fronts including strategy, analytics, technology and operations consulting for the armed forces, intelligence agencies, the FBI, the IRS and the Department of Homeland Security. The firm has name recognition and customer goodwill, which has led to high rates of wins on contract recompetes.We believe BAH is a good organic revenue grower and will also benefit from debt deleveraging. This will be facilitated by the high free cash flow we anticipate BAH will generate (an industry hallmark, as the business requires minimal CAPEX). Like other investments we previously held in this industry (including Anteon and Stanley Associates, which were purchased by larger competitors), we believe our investment will grow as BAH grows its revenues via new contract wins. We also believe BAH has a big opportunity to expand its high-end cybersecurity services to commercial markets when its non-compete expires. (Randy Gwirtzman)	31/12/2010	Baron Funds
Information Technology_IT Consulting & Other Services	INTL BUSINESS MACHINES CORP	IBM US	USD	New York	€ 170,988,806,318.07	The International Business Machines Corp. (IBM) is a global information technology company operating in three primary segments: services, software, and hardware. The business has evolved from a hardware manufacturer to a company where 80% of its profitability comes from services and software. The shift in the company’s core business has improved the consistency of its revenue streams and allowed it to side-step the commoditization of the company’s legacy mainframe and PC businesses. IBM has grown into an organization that provides customized enterprise solutions across consulting, outsourcing, software, hardware, and financing operations. Company Strengths IBM differentiates itself from its competition by using its global scale and blue chip client list. Its competitive advantages result from superior product scale and scope, industry-leading research and development capabilities, and a deep, high-quality management team. Clients need more vendor accountability, so entire projects consolidate to one single service provider. This means fewer competitors can meet customer needs. Therefore, a key competitive advantage is the ability to offer a broad range of services with end-to-end solutions deployable around the globe. The company’s world-class R&D effort is at the forefront of technological innovation. In 2009, the company spent a staggering $6 billion on research and development to maintain its innovation edge. Also, 2009 marked the 17th consecutive year whereby IBM was awarded more patents than any other company in the U.S. The company currently earns $1 billion annually in intellectual property and custom development income. Last year, the company received over 4,900 patents, more than Microsoft and Hewlett-Packard combined. IBM’s management has distinguished itself in their ability to take a rational look at its market positioning and industry outlook and make tough decisions. Company leadership exited nearly $15 billion of annual revenue in commodity-like legacy businesses including hard disk drives in 2002, PCs in 2005, and printers in 2007, shifting its focus to better areas. Finally, IBM remains one of the most disciplined capital allocators in the industry. It has grown through a targeted, value-creating acquisition strategy to strengthen its branded middleware and business analytics efforts. Management has served as an excellent steward of shareholder capital, returning much of the company’s prodigious free cash flow through share buybacks and dividends while maintaining a solid balance sheet and strong financial profile. Recent Results & Opportunities Over the last ten years, IBM has doubled its EPS, growing at an 8% compounded annual growth rate, but is trading at the same share price it did in 2000. The primary knock on IBM centers on its ability to keep growing given its large size. We believe with the company’s improved market positioning, massive global presence and efficient capital allocation, IBM offers moderate but sustained growth. Plus, the investment community has under-appreciated the franchise’s consistency and stability in what remains a cyclical growth industry. IBM had a great 2009, gaining share from its major competitors in a tough recessionary environment. Despite the brutal operating conditions, the company had strong margin improvement on weak revenue trends through major cost actions. IBM is on track to realize $3.5 billion of cost and expense savings in 2009 yet still sees a multi-year opportunity to push margins up further. IBM also has new market opportunities such as business analytics, green computing, and cloud computing initiatives that will help top-line growth for years to come. IBM has beaten estimates for ten straight quarters while raising guidance repeatedly. Yet the stock remains very cheap. As of December 31, 2009, shares traded at $130.90, a 7% discount to our private market value of $141.00.	31/12/2009	Ariel Funds
Information Technology_IT Consulting & Other Services	MAXIMUS INC	MMS US	USD	New York	€ 1,081,980,039.84	Founded in 1975 and taken public in 1997, $1.4 billion market cap MAXIMUS is a leading provider of government health and human services program management and consulting. We expect MAXIMUS to generate significant earnings growth over the next several years, as the trend towards the privatization of government service delivery accelerates. In the U.S., MAXIMUS is the largest outsourced provider of enrollment services for government sponsored benefits programs, including Medicaid and SCHIP, running programs in 13 of the 29 states that outsource, representing about 65% share of enrolled lives. MAXIMUS touches around 15 million people, or half the U.S. Medicaid managed care population, with core services that include beneficiary outreach, education, verification and enrollment. MAXIMUS’ lower costs and higher productivity enable it to deliver its services at a substantial discount to the cost of unionized government employees. We expect MAXIMUS to be a direct beneficiary of Medicaid expansion and the build out of health insurance exchanges under Health Care Reform, which calls for the doubling of the number of Americans in Medicaid by 2019. In the interim, states are aggressively turning to Medicaid managed care to save costs and improve outcomes: in the words of one hospital executive we know, fee for service Medicaid, which still covers about 30% of the Medicaid population, could be eliminated by the middle of the decade. Outsourcing public services is controversial and failure has dire political consequences. MAXIMUS’ expertise and reputation for reliability has allowed it to dominate the limited competition while incumbency provides yet another barrier to entry. Around 27% of MAXIMUS’ revenues are international. In the U.K. and Australia, MAXIMUS provides welfare to work services. Its U.K. business is set to double with recent contract wins. MAXIMUS has proven itself a savvy acquirer; revenues of the Australian welfare to work provider it bought in 2002 have grown nine-fold and facilitated entry into the U.K. We expect the same route to be used to enter Continental Europe. MAXIMUS financials are quite strong with more than 20% Return On Invested Capital, $10 per share in cash, no debt, and a FY 2011 expected cash flow of $75-$95 million, which supports an active share repurchase program. About 97% of FY 2011 revenue was in backlog as of the start of the fiscal year with a robust $1.6 billion pipeline. (Susan Robbins)	31/03/2011	Baron Funds
Information Technology_Internet Software & Services	AOL INC	AOL US	USD	New York	€ 1,338,954,893.10	AOL was created in 1988 as an online dial-up service enabling customers to connect computers to the internet using telephones. AOL quickly became the #1 online access provider and at one point had more than 25m paying subscribers. The company went public in 1992, acquired Time Warner in a 2000 reverse merger and was eventually spun out in December 2009 as the benefits of the merger never panned out. New CEO Tim Armstrong is currently trying to turn the company’s declining cash flow business, tied to the access business, into a stable cash flow stream to provide a solid base from which to expand into differentiated content. Tim is a seasoned veteran, having led Google’s domestic sales team from 2000-2009. He was offered several high-profile jobs including, we believe, the CEO position at Yahoo! After joining AOL, he converted all his Google stock into that of AOL, aligning his interests with ours. Our sum of the parts valuation of all company assets values the stock at $39, well above the current $25 share price.If you can’t remember the last time investing in AOL sounded attractive, you’re not alone. Spun off from Time Warner in November, AOL’s old-line subscription business, though profitable, is in steep decline. Enter Tim Armstrong, the company’s new CEO, formerly senior vice president at Google.We’ve met with Armstrong and his CFO at AOL (2.2% of the portfolio as of 2/28/10) on several occasions. What emerges is a picture of what we think is a highly innovative organization. We believe two initiatives, in particular, have significant growth potential.Seed.com relies on crowdsourcing to generate content for its network of Web sites. Story and photo ideas, gleaned from queries made on AOL’s search engine, are posted at Seed.com. Writers and photographers then submit articles and photos matching the posted criteria and are paid on acceptance. The content is then made available through AOL’s network, matched with relevant advertising. Participating sites that place the content and ads share in the revenue stream. Patch.com is most easily envisioned as your local town newspaper online. Local news, sports and municipal information is combined with restaurant reviews and listings for local stores and services. We think it will be attractive to local advertisers.	29/01/2010	Baron Funds
Information Technology_Internet Software & Services	EQUINIX INC	EQIX US	USD	NASDAQ GS	€ 4,829,031,631.13	Equinix shares continued their rebound in the second quarter, following their sell off last November, as the company reported better-than-expected first quarter results and raised its guidance for the full year. Last week, the company reported another solid quarter and once again raised its guidance. On the conference call, management declared that the company was experiencing record bookings, backlog and pipeline. The company also successfully raised capital through a convertible-debt offering and announced several new expansion projects to invest that capital at high incremental returns. In our view, not only are the company’s prospects already strong on its current asset base, but the potential for incremental returns that meaningfully exceed the cost of capital should further add to the appreciation potential of the shares. Equinix continues to be the Fund’s largest position. (Richard Rosenstein)	30/06/2009	Baron Funds
Information Technology_Internet Software & Services	JIAYUAN.COM INTERNATIONA-ADR	DATE US	USD	NASDAQ GS	€ 162,990,125.60	Another wave of Chinese IPOs will test investor appetite this week, including Jiayuan.com (DATE), the leading online dating site in China with 44% market share (in terms of user spend) and over 40 million registered users. The company plans to raise $78 million by offering 7.1 million ADSs (6% insider) at a price range of $10 to $12. BofA Merrill Lynch, Citi, CICC and Oppenheimer & Co. are the lead managers on the deal, which is one of 10 scheduled to price on this week's US IPO calendar. Jiayuan.com expects to price on Tuesday after the market close and list on the NASDAQ on Wednesday under the ticker symbol DATE.BackgroundJiayuan.com, which is designed to let China's rapidly growing population of urban singles to meet, interact and form long-term relationships, was created by CEO Haiyan Gong in her college dorm room in 2003. With backing from current Chairman and New Oriental Education & Technology Group co-founder Yongqiang Qian (23% post-IPO stake) and Shanghai-based venture firm Qiming Venture Partners (17%), the company has quickly expanded its user base and is now the leading market player in terms of user spend, number of unique monthly visits, average page views per visit and average time spent on dating sites. The popular site reported 40.2 million registered users, 4.7 million average monthly active users and 0.9 million average monthly paying users as of the end of the 1Q11.FinancialsJiayuan.com provides registration and full search access free-of-charge, generating revenue by charging fees for advanced online services (80% of 2010 revenue) such as sending/receiving online messages and virtual gifts. The company also generates offline revenue (16%) by organizing live social events and operating a personalized matchmaking business for its VIP clients. Jiayuan.com has more than doubled its top line in each of the past two years to reach $25 million in 2010, and expects further growth to be driven by expansion into second and third-tier Chinese cities, mobile applications, planned development of niche sites for target demographics (e.g. college students) and recently launched wedding planning site Xique.com.RisksThough Jiayuan.com's early results are impressive, execution risk is high for the young company, which only began charging messaging fees (67% of 2010 revenue) in late 2008. Jiayuan.com also operates in a market with relatively low barriers to entry and faces intense competition from roughly 50 online dating sites, as well as numerous Chinese Internet portals such as Sina.com, Sohu.com and Renren.com (RENN). These risks are heightened by the fact that most of the company's key executives are new, having only been added to the management team in late 2010.OutlookUnprecedented urbanization, gender imbalance and Internet adoption in China is fueling growth in the country's online dating market, which is forecasted to reach nearly $300 million by 2015 (31% CAGR). With a strong presence (10,000+ active users) in 94 cities across China, market leader Jiayuan.com appears well-positioned to capitalize on these trends . Though the company's short track record is a source of concern, early results bode well for Jiayuan.com and may be enough to win over IPO investors, especially in light of positive momentum in the Chinese Internet space.	29/04/2011	Renaissance Capital
Information Technology_Internet Software & Services	QIHOO 360 TECHNOLOGY CO-ADR	QIHU US	USD	New York	€ 1,630,980,115.89	Qihoo 360 Technology. Founded by former executives of Yahoo! China, this young company offers Internet security products free of charge to a massive user base, which has more than doubled in two years to over 300 million. Qihoo’s key product is a safe web browser in China that is rapidly gaining popularity as Internet users search for protection against increasingly pervasive and complex security threats. Qihoo plans to raise $139 million by offering 12.1 million ADSs at a range of $10.50 to $12.50. UBS Investment Bank and Citi are the lead managers on the deal, which is on the IPO calendar for the week of March 28.BusinessOriginally a reseller of third-party anti-virus software, this young company now offers a suite of proprietary Internet security products under the “360” brand. Qihoo’s strategy is to attract users by offering free security products and monetize them by driving traffic to its secure web browser, which is second only to Microsoft’s Internet Explorer in usage. 360 Safe Browser, which was launched in late 2009, is based on an “open” platform and therefore able to host applications from third-party game developers and e-commerce firms. It generates revenue from online advertising (paid links, automatic search referral fees; 67% of 2010 sales) and additional Internet value-added services (web games, technical support; 26%). Qihoo’s top-line jumped 79% to $58 million last year, driven by a 179% increase in online advertising to $39 million and a boost in Internet value-added services to $15 million (from $2 million). Adjusted operating margins improved modestly to 23% as a favorable mix shift from the discontinuation of its lower-margin reselling business was offset by heavy R&D investments.Key IssuesQihoo carries execution risk as a young company that only recently transitioned from a traditional software reseller model. Continued growth hinges on its ability to monetize a higher percentage of its 328 million security product users; only half (172 million) employ 360 Safe Browser, its only revenue-generating product. Other concerns include the company’s increasing dependence on Google (21% of 2010 revenues vs. 11% in 2009) and current involvement in several lawsuits mostly related to unfair competitive practices with other Chinese Internet companies (e.g. Tencent, Baidu).OutlookGoing forward, Qihoo targets aggressive growth by adding further capabilities to its browser, expanding security product offerings, growing its mobile segment and entering new geographies. Though Qihoo is still a small player in a competitive industry, its unique method of leveraging its dominance in security to segue into fast-growing Internet services has proven highly effective thus far. The company is also led by experienced executives, and its reputable venture backers (e.g. Highland Capital Partners, Sequoia Capital, CDH Venture Partners) plan to invest another $50 million in a concurrent private placement. Coupled with a valuation that appears reasonable for a high-growth company (49x 2011 earnings), Qihoo 360 has the potential to follow in the footsteps of recent Chinese Internet IPOs Youku.com (YOKU; +302%) and E-Commerce China Dangdang (DANG; +30%).	28/03/2011	Renaissance Capital
Information Technology_Internet Software & Services	YAHOO! INC	YHOO US	USD	NASDAQ GS	€ 13,674,190,019.86	The Partnerships established a new position in Yahoo! (YHOO) at an average cost of $16.93 per share. The company developed an extraordinary anti-shareholder reputation in recent years, beginning with its ill-advised decision in early 2008 to turn down Microsoft’s equally ill-advised (and ill-timed) bid to buy the company for $31 per share. Now, under new management, YHOO has taken some increasingly shareholder-friendly steps. It has given up competing with Google in the web search business, a move which is improving free cash flow by reducing capex and operating expenses. It is using the improved cash flow to step up share repurchases (the company bought back more than 7% of its outstanding shares in 2010). YHOO is also taking steps to unlock value from some of its Asian assets in a tax efficient manner, including its 35% stake in publicly-traded Yahoo Japan. YHOO currently has $3 per share of net cash on its balance sheet and has approximately another $8 per share of value in its two minority equity stakes of publicly traded companies in Asia (Yahoo Japan and Alibaba.com). Assigning a conservative valuation (5x current year EBITDA) implies $18 per share for just the core businesses and the publicly traded securities and cash. We believe that Yahoo’s most valuable asset is its 40% stake in Alibaba Group’s still-private holdings, which are separate and distinct from its ownership in the publicly-traded Alibaba.com, which we are essentially getting for free. Among Alibaba Group’s privately held Chinese internet assets is a company called Taobao, which is the leading eCommerce website in China. More merchandise was sold on Taobao last year than on eBay, and Taobao’s merchandise sales are growing 100% annually. We would not be surprised if YHOO’s 40% stake in Alibaba Group alone was ultimately worth YHOO’s entire current market value. YHOO stock ended the quarter at $16.68 per share.	31/03/2011	Greenlight
Information Technology_Home Entertainment Software	NINTENDO CO LTD	7974 JP	JPY	Osaka	€ 16,373,786,218.29	Nintendo (Japan) is the world leader in console and handheld based video game devices and software, with the popular Wii console and DS handheld products. Early in the year, video game market observers were surprised at how unit demand for consoles, handhelds and software had remained strong — particularly for Nintendo products — in the face of the global economic slowdown. The stock then underperformed in the second quarter as signs of the inevitable slowdown began to emerge and intensified as retail inventories were drawn down. We believe Nintendo has shown that an emphasis on research and development and innovative, new product leadership can create large rewards for long-term shareholders, though we will keep a watch on competitive responses. The company’s software release schedule is heavily weighted toward the second half of 2009, which we believe should help earnings and sentiment for the stock. The poor performance year-to-date leaves Nintendo’s valuation at roughly 10 times estimated earnings, which we find a great value for a global franchise leader with one of the highest rates of return on capital in Japan. Such returns have resulted in substantial cash accumulation, evidenced by the fact that currently cash on the balance sheet approximates one-third of Nintendo’s market value. (Michael Kass)	30/06/2009	Baron Funds
Information Technology_Home Entertainment Software	ROSETTA STONE INC	RST US	USD	New York	€ 141,991,170.40	Founded in 1992, Rosetta Stone is the world’s leading provider of language learning software. Offering tools for over 30 languages, the company has educated millions in more than 150 countries. Since a successful IPO in 2009, the company’s results have been pressured by a challenging global economy and a difficult transition to internet-based delivery. Yet, with a rock solid balance sheet and the most cost-effective, proven brand in the market, we view the current stock price as an exciting opportunity to benefit from the untapped global growth prospects for language learning. Finding Your Inner-Child The Rosetta Stone mantra is simple: learning a language should be fun, easy and effective. Not only are traditional classroom-based solutions inconvenient and expensive, they also revolve around methods with questionable efficacy, including rote memorization and complex verb conjugation. Rosetta Stone throws grammar tables out the window, using proprietary software to leverage the innate learning ability used by children. Based on total language immersion and adaptive recall, this method has proven to be so effective, efficient and accessible that Rosetta Stone is the most recognized language learning brand in the United States. Translating Growth The global growth opportunities for Rosetta Stone are numerous. Domestically, the business is shifting to internet-based delivery, which not only has the potential to reduce selling costs, but also increase reach and open doors to longer term subscription based relationships. Additionally, the current customer base is largely consumer, so new institutional customers such as schools, governments and corporations still present a tremendous opportunity. Internationally, the company is just getting its feet wet. Over 80% of the company’s sales come from the United States, yet over 90% of the $80 billion global market for consumer language learning is generated abroad. And, because the methodology does not rely on native language translation, it is highly scalable to new languages and customers. Everybody Understands Cash The current management team is in transition, but with nearly 40% of the company owned by two private equity firms, we have confidence that incentives are properly aligned to fully take advantage of these growth opportunities. Moreover, outgoing CEO Tom Adams has not only built a great company since taking over in 2003, but the solid free cash flow1 generation over that time has left a fortress balance sheet for the next leadership team. With no debt, the nearly $5 per share in free cash represents over 60% of the current stock price. Asymmetrical Upside We view this period of transition for Rosetta Stone as a tremendous buying opportunity. With the current stock price largely represented by freely available cash, we see an attractive margin of safety2. We are buying a world-class brand, a proven product and untapped growth potential at a fire sale price. As of December 31st, 2011, shares traded at $7.63, a 34% discount to our private market value of $11.56.	31/12/2011	Ariel Funds
Information Technology_Electronic Equipment & Instrum	FEI COMPANY	FEIC US	USD	NASDAQ GS	€ 1,262,387,869.41	FEI Corp. (FEIC) is a specialty manufacturing company that makes high end electron microscopes. It sells its equipment into three different end markets including life sciences, research and industry, and electronics. All of these markets are gaining levels of sophistication that require the ability to analyze nanoscale materials (at the atomic or even sub-atomic level). We believe that the company is a strong competitor in an oligopolistic industry, and that it has the ability to increase its revenues dramatically over the next few years. Specifically, FEIC is tapping new opportunities in each of its segments to double its available markets. In life sciences, FEIC is helping scientists and companies create breakthroughs in the markets for structural biology (protein and virus structures and processes) and cell biology (function and dynamics of cells and tissues). In research and industry, FEIC has created a sophisticated software driven product that will help speed up soil and mineral analysis work for oil and gas drilling customers. And in electronics, the company has developed analysis equipment that will help the largest chip manufacturers to design and test chips with extremely small circuit widths and three dimensional form factors. (Randy Gwirtzman)	30/09/2011	Baron Funds
Information Technology_Electronic Equipment & Instrum	FLIR SYSTEMS INC	FLIR US	USD	NASDAQ GS	€ 3,006,727,653.14	FLIR Systems has been a long-time, successful investment for Baron Small Cap Fund. The stock fell significantly during the quarter, and we used this opportunity to establish a position for Baron Asset Fund. FLIR manufactures infrared cameras for both military and industrial use. These cameras allow precise temperature measurement (thermography) and the ability to see at night, in fog or in foul weather (imaging). FLIR’s strategy is to scale its production of infrared sensors to make it the lowest cost producer, in order to stimulate increased demand with lower prices, and to maintain margins at or above those of its competitors. We believe that the company’s share price dropped in the first quarter due to a number of factors. First, investors were concerned about the Obama administration’s possible plans to restructure the defense industry, given that more than half of FLIR’s sales are to the federal government. Second, there was concern about the growth of FLIR’s commercial business, which sells to the automotive, aircraft and security markets, given the current economic downturn. Despite these challenges, we believe that FLIR can grow its revenues near double-digits in 2009, and can maintain this double-digit growth into 2010.While we can’t ignore the state of the economy, we believe that FLIR has a number of growth drivers that will help its commercial thermography division, which represents about one-third of sales. We believe that FLIR can retain close to flat growth in this segment, a result similar to its performance in 2002, when the economy was also in recession. Key factors supporting our belief include new distribution for FLIR’s lower-priced thermography cameras in industrial product catalogs, the release of new innovative products and increased foreign sales. An example of a key new product gaining traction is the GasFindIR, an innovative camera that can “see” gas leaks from afar. Competitors’ cameras have to be placed on top of a suspected leak. This allows companies, particularly in the petrochemical industries, to save money on manpower, while simultaneously increasing safety and lower emissions. We believe that the government segment should grow in the low-double digit range, given FLIR’s large current backlog of orders and its positioning for key administration priorities including border security and surveillance. FLIR’s cameras are used for base protection in Iraq and Afghanistan, and they are on board numerous unmanned aerial vehicle (UAV) platforms, which are increasingly important to the Department of Defense. We think that FLIR also has the opportunity to gain increased penetration into the military vehicle market, using its commercial experience to drive low-cost high-quality solutions to the needs of the military. Another important opportunity we see is border security. Here, FLIR is a key supplier to the prime contractor on the U.S. border security program covering the border with Mexico, and it also sells these infrared systems for installations outside of the U.S. (Randy Gwirtzman).	31/03/2009	Baron Funds
Information Technology_Electronic Components	ROGERS CORP	ROG US	USD	New York	€ 477,752,844.90	Rogers Corp., founded in 1832, is one of the oldest publicly traded industrial companies in the U.S. Rogers is a global technology leader in specialty materials and components that are designed into a variety of consumer, technology and telecom products. We believe that sales will grow rapidly because it is well positioned in key market segments with significant new products that are in early roll-out phases. Examples of such products are high frequency laminates used inside of wireless base stations, foams used in cell phones and tablet computers, power solutions devices for electric vehicles and wind turbines; and foams and dampeners used in high speed rail trains. In addition to this organic growth, Rogers has made timely accretive acquisitions to enhance its market position. We think that Rogers is now an exciting growth company, with earnings that will double over the next three years. And we believe that this is presently lost on the market and the stock will rise from both earnings growth and from multiple expansion.	31/03/2011	Baron Funds
Information Technology_Electronic Components	VISHAY INTERTECHNOLOGY INC	VSH US	USD	New York	€ 1,459,716,997.20	VPG is a manufacturer of resistive sensors, weighing modules and control systems based on resistive foil technology.Its products and systems are used by a diverse set of customers in various end markets for precise measurement offorce, weight, pressure and electric currents. On a pro forma basis, VPG had revenues of $172 million and generated$4.7 million of operating profit in 2009. The business is well capitalized with roughly $15 million of total debt and$73 million of cash, which will likely be used to pursue strategic acquisitions. VPG has demonstrated that it is capableof showing better than a 50% incremental gross margin, and we estimate that pro forma operating margins will benearly 8% in 2010 on a macro driven 20% rebound in revenues. Though VPG’s prospects seem reasonably good, wedecided to sell these shares and will concentrate our attention on Vishay, the parent.Following the distribution, Vishay is now a pure-play discrete electronic components company with about $1.9 billionin pro forma 2009 revenue. The company remains the “one-stop shop” for a broad line of products, including diodes,rectifiers, transistors, ICs, capacitors, inductors and transducers. Vishay is currently capacity constrained, with orderrates through the first quarter of 2010 outpacing supply. Management remains wary that some customers are orderingin excess of their own demand, and the company has been slow to add capacity as a result. This will offer someprotection against double ordering in the supply chain, but has also resulted in lost sales in recent quarters. Thebusiness continues to generate impressive free cash flow, which will likely be used for strategic acquisitions and/orshare repurchase. Pro forma earnings per share should be about $0.90 this year. At 2.4x EBITDA, we believe thevaluation remains very compelling.	30/06/2010	The Delafield Fund
Information Technology_Data Processing & Outsourced S	BROADRIDGE FINANCIAL SOLUTIO	BR US	USD	New York	€ 2,288,999,925.99	Broadridge Financial is a leading global provider of investor communications services and technology-based securities processing solutions. Broadridge had been added to Fund Management’s “inventory” of ideas following its spinoff in 2007 from Automatic Data Processing. Modest overvaluation and a significant debt load post spinoff deterred us from adding it to the Fund at that point. Two recent developments, however, caught our attention and compelled us to take a fresh look at the company. In addition to a considerable decline in its share price this year, the company announced its intention to exit a capital-intensive and money losing securities clearing business. In our view, disposal of the clearing business introduces a number of positive elements as it i) liberates a large chunk of previously committed capital; ii) further improves the balance sheet; iii) reduces overall business risk; and iv) under terms of the deal with the buyer, adds heft to a revenue stream in an area that management intends to grow. In addition we noticed a number of other positive developments since our original review, including a markedly improved balance sheet (i.e., debt reduction) and implementation of a shareholder friendly share repurchase program. Lastly, the business evidenced a fair degree of resilience, having held up reasonably well during the financial crisis. During the quarter, management closed the clearing business transaction, emboldening us to initiate our position. All along we have been attracted to the company’s cash generating capabilities, relatively stable margins and dominate market shares in areas such as shareholder proxy communications and securities-related outsourcing services to the world’s largest financial institutions—characteristics that might even be attractive to a financial or strategic buyer.On a pro forma basis, giving effect to the transaction, the company will have excess capital that ought to augment management’s ability, given time, to grow the value of the business at above average rates, either through organic growth initiatives, acquisitions or, for example, continued share repurchases. Implying a 3% dividend yield, the Fund’s cost basis equates roughly to the following metrics: an 8% to 9% free cash flow yield and 12 times to 13 times trailing earnings (as reported on a GAAP basis, or 11 times on an adjusted “cash” basis).	30/07/2010	Third Avenue
Information Technology_Data Processing & Outsourced S	CSG SYSTEMS INTL INC	CSGS US	USD	NASDAQ GS	€ 414,651,662.72	CSG SYSTEMS - INTEC ACQUISITION A TRANSFORMATIONAL MOVEDate: Oct 27, 2010, Growth: C, Competitive Moat: B+, Management: C, Financial Health: C, Opinion: Big changes coming. Conservative buy.CSG Systems (CSGS) is a provider of outsourced billing and account management, focused largely on the cable and direct broadcast satellite (DBS) market in North America. CSG's Advanced Convergent Platform (ACP) allows its clients to handle pretty much the entire lifecycle of a customer, from account setup, order processing, invoice production, billing, cancellation, etc. Over 45 million subscribers are processed through the company's systems. CSG's four largest customers account for nearly 65% of sales: Comcast (CMCSA; 24%), DISH Network (DISH; 18%), Time Warner (TWC; 13%), and Charter (CHTR; 9%).I really like CSG's business model, and am keeping an eye on this as a future potential Top Buy pick. Let me tick off the many attractive points here:* Stable, recurring revenues. All of the company's main contracts run through at least 2012, and some farther out than that. High visibility and reliability allow the company to be more aggressive when making investments.* Very high switching costs. A client spends months to years and millions of dollars migrating onto CSG's platforms, and the cost in both time and potential business interruption makes it difficult to move off the system, unless there are very significant economic reasons for doing so.* Cash cow business. CSG has produced stable free cash flow margins right around 25% of sales over the past 5 years. Free cash flow has exceeded operating earnings in each of the past 5 years, a real rarity, and a sign of high quality earnings. Free cash yield at $20 is about 16% - compare that to a bond yield!Revenue growth has been stable at right about 5-7% a year, as the firm added subscribers onto their platform and enjoyed escalation clauses in its long term contracts. The biggest risk in the stock has always been the heavy customer concentration, which in 2008 allowed Comcast to re-negotiate its contract at lower payment rates. The threat of losing one of its "big 4" customers has always kept the valuation relatively low. Additionally, a data center migration from First Data to Infocrossing has created some non-recurring costs that have held down earnings per share in 2010.However, CSG is about to change dramatically...In late September, CSG announced a transformational move with its $372 million bid to acquire U.K. billing provider Intec. Intec is a similar business to CSG, but focuses on the telecommunications market, servicing such multi-national telecoms as Vodafone (VOD), China Mobile (CHL), and AT&T (T). Intec brought in about $266 million in 2009 at operating margins around 16% - very similar to CSG.There are positives and negatives to the deal. It's a big deal for a smaller company like CSG. They will be committing $130 million in cash (61% of reserves), and another $250 million or so in new debt facilities. The balance sheet will be ugly once the deal closes, with an estimated $400 million in total debt and a debt-to-equity ratio nearing 200%. This is by far the biggest deal CSG has attempted - integration risk is a huge concern. Competitors like Amdocs (DOX) will be watching closely for opportunities to win business.On the positive side, the deal accomplishes a few things for CSG. Most importantly, it lessens customer concentration; the "big 4" clients will account for about 42% of sales after the deal. Furthermore, it gives CSG a solid foothold in a new vertical market (telecom), and expands the company to a global presence.Ultimately, I believe the Intec deal is a good one. The business models are similar. The combined company should do about $800 million in revenue at similar 16-18% operating margins. Estimated free cash flow of about $160 million annually should easily allow CSG to pay down the debt. And all of this is without accounting for potential cost sav	29/10/2010	Magic Diligence
Information Technology_Computer Hardware	DELL INC	DELL US	USD	NASDAQ GS	€ 23,317,368,097.77	Based in Austin, Dell has transformed its business by offering a combination of servers, services, storage, and software to provide enterprise solutions which now dominate and complement the desktop and laptop computing segment. As the world becomes “unplugged,” demand for solutions to manage hardware, software, and security will grow. With Dell’s product mix change, the company has delivered substantially higher margins and earnings. Michael Dell, founder and CEO, is a multi-billion dollar owner and has been a major insider purchaser over the last year. The market continues to focus on the “dying” PC business even though it is only 35% of our appraisal value, and analysts persist in evaluating the company against the consumer market which represents only about 10% of revenues. In assigning a multiple to the earnings, most analysts also disregard the large net cash that generates virtually no earnings and equals over a quarter of the share price. As long as the market ignores the growing free cash flow coupon, Dell should continue to use much of it to repurchase shares and build value even faster. Using expected 2012 FCF, the company’s FCF yield is 16.2%, but adjusted for the net cash, is over 20%.	31/12/2011	LongLeaf
Information Technology_Computer Hardware	NCR CORPORATION	NCR US	USD	New York	€ 2,519,621,031.69	NCR Corp. (NCR) is a leading manufacturer of ATMs and cash registers and recently entered the entertainment kiosk business, rolling out Blockbuster branded DVD self service rental machines. This is the old National Cash Register, founded in 1884, and as such, does not fit the typical profile for a Baron Small Cap stock. We view NCR as a special situation. NCR’s stock fell by 75% from its peak, both because business was cyclically weak, and because of an accounting rule, a non-cash charge on an underfunded pension liability running through the income statement and wiping out all the reported earnings. We believe the appropriate way to look at this liability is as debt, not a hit on earnings, so we strip it out and account for it differently. We purchased the stock at what we believe was less than 10 times depressed earnings and 5 times cash flow. We think that the earnings will grow at a rapid rate nearterm, as the business snaps back and the DVD kiosk business swings to profitability, and the stock should trade at a mid-cycle earnings multiple, which sets up for great upside in the stock.	31/03/2010	Baron Funds
Information Technology_Communications Equipment	POLYCOM INC	PLCM US	USD	NASDAQ GS	€ 2,824,953,247.96	Polycom is a leader in video conferencing (VC) and unified communications (UC) at a time when both are beginning to have mass appeal. Enterprises and small-to-medium sized businesses (SMBs) around the world are adopting VC and UC solutions due to their tangible return on investment (reducing travel costs and improving efficiencies by enabling multinational organizations to collaborate). Increasing environmental and carbon footprint awareness also drive decision makers to reduce travel budgets. We believe Polycom is well positioned to capitalize on this IT spending wave due to its superior technology, strategic partnership network and new strategic plan set forth by the new management team, led by CEO Andrew Miller.The development of everyday communication in the last two decades has been transformational. From letters to email to texting to instant messaging, we have continually sought faster, more efficient and effective, and less expensive ways of communicating. We believe video is the next branch of the communication evolutionary tree. Skype (which is a free application enabling online video chats) is adding millions of users per week, and new smart phones are designed to enable video calls, like Apple iPhone’s Face Time application. However, business users demand a far more reliable, secure and stable experience than the one provided by these applications. We believe Polycom invested years of research and millions of dollars to develop an interoperable open infrastructure and software that we believe will meet these needs and allow businesses to communicate more effectively with other businesses and customers alike.Polycom’s solutions offer a high definition (HD) video experience at half the bandwidth of its competitors (70% of video conferencing costs derives from bandwidth usage). We have tested the technology and can say the experience is so real that it is hard to believe that the person in front of you is not at the other end of the table. Tech giant Cisco recently acquired Tandberg, Polycom’s main competitor in video conferencing solutions. Cisco recognized the potential in video conferencing and acquired Tandberg for a premium valuation. This acquisition was a blessing in disguise for Polycom, as it has allowed Polycom to create a network of strategic alliances with companies who had a multiple vendor strategy but compete with Cisco in other areas of their business. The partnerships include distribution and technology collaboration alliances with tech giants such as IBM, Hewlett-Packard, Microsoft and Juniper, which have enabled Polycom to gain market share over the last year. Indeed, Microsoft recently announced that it will be the first to adopt Polycom’s open-standard technology in order to improve the ease-of-use of video conferencing for its large base of Microsoft Exchange users, and Polycom has introduced the first high-end conference room solution that is interoperable with Microsoft’s new communication server. Andy Miller (CEO) joined Polycom twenty months ago and became CEO during the second half of 2010. Mr. Miller was the CEO who took Tandberg from $50 million to $400 million in revenues and a global leading position. He also brings with him prior experience at Cisco and has been joined by a team of six new talented and experienced executives. We believe Polycom now has the right leadership at the right time. We think Polycom has the potential to more than double its profits in the next three years and maintain it market leading position in this fast growing market. Moreover, we would not be surprised if Polycom becomes of an acquisition candidate for one of the large tech vendors. (Gilad Shany).	31/12/2010	Baron Funds
Information Technology_Application Software	ADVENT SOFTWARE INC	ADVS US	USD	NASDAQ GS	€ 1,003,048,370.51	Advent Software sells work flow software to investment management companies like Baron (and yes, we are a user). It is a new investment for the Fund. Advent reported results for its March quarter, which were significantly above expectations and led to a 67% rise in its stock price. Sales grew 14% organically and cash flow margins improved 900 basis points even in a terrible environment for selling product to our industry. The stellar results confirm our thesis that this is a well-run company that sells an integral product that is taking market share.	31/03/2009	Baron Funds
Information Technology_Application Software	ANSYS INC	ANSS US	USD	NASDAQ GS	€ 4,365,662,704.67	(31/03/2009) ANSYS is the leader in simulation-driven product development also known as computer-aided engineering (“CAE”). The company’s simulation software is used by mechanical and electrical engineers to test the effects of real-world conditions on a design, eliminating the need to create a physical model. We think CAE is a vital part of the R&D process. Because it eliminates the need to iteratively build a physical model, both development costs and time to market are reduced, thus increasing the efficiency of the productdevelopment cycle. ANSYS is a business that we have looked at for some time, but declined to buy until the market decline resulted in prices that we believed were attractive.We see several trends that we think will help ANSYS grow revenues at a rate in the high teens over the long term. While simulation has historically required the use of mainframe computers, advances in computing power are making CAE capabilities available on smaller computers, thus reducing costs and making the systems accessible to more engineers involved in the productdevelopment process. Increased computing power is also facilitating parametric simulation, enabling a single engineer to use multiple ANSYS systems simultaneously to reduce processing time, test more configurations or both. Similarly, ANSYS’ new graphicallyoriented interface is improving ease of use and is enabling less sophisticated users to take advantage of the system. ANSYS has been steadily increasing the number of analyses it can perform — at this point, an ANSYS seat can be configured in almost 1,400 unique ways.We think that ANSYS can penetrate businesses that have not previously been considered a market for CAE systems. Recent examples of non-traditional uses include predicting cerebral aneurysms, designing the Speedo LZR Racer bathing suit, and optimizing the design of nuclear power plants. Each of these new uses demonstrates the benefits of simulation for product development or enhancement. ANSYS has an enviable business model to compliment its robust revenue growth opportunity. Roughly two-thirds of ANSYS’ revenue is recurring. Since ANSYS’ simulation products are integrated into an engineer’s workflow, the company has been enjoying retention rates above 90%. (Neal Rosenberg). (30/06/2009) The Fund initiated a position in ANSYS, the market leader in computer aided engineering (CAE), also known as simulation-driven product development. ANSYS makes software used by mechanical and electrical engineers to simulate the effects that “real-world forces,” such as wind and heat, would have on the design of a new object, such as a car or cellular telephone. This software allows engineers to measure the effects that these real world forces would exert on an object during its design phase, reducing the need to create expensive physical prototypes. We believe that CAE is an increasingly important component of the research and development process for many companies because CAE cuts development costs and reduces the time needed to bring a product to market. The Fund has historically limited its investments in software companies because we believe that the risk of a new entrant developing a “leapfrogging” technology often makes it difficult for an incumbent to establish a sustainable competitive advantage. However, we believe that ANSYS is an exception to this rule. We believe that CAE software is extremely complex; unlike the old saying, this actually is rocket science, since ANSYS’s history can be traced back to early NASA work on a nuclear-powered rocket engine. Thanks to almost forty years of focusing exclusively on CAE, we believe that ANSYS has a suite of solutions that is several generations ahead of competitive offerings. As a result, we believe that any new competitor would require a large staff of PhDs and a billion dollar R&D budget just to get to where ANSYS is currently. However, ANSYS continues to invest in its own solutions, boasting a product developm	31/03/2011	Baron Funds
Information Technology_Application Software	CITRIX SYSTEMS INC	CTXS US	USD	NASDAQ GS	€ 10,213,254,996.60	Virtualization: VMWare and Citrix Systems. During the quarter, we also established new positions in VMWare and Citrix Systems, two of the market leaders in virtualization software. We believe virtualization is one of the most exciting areas of software, as it is one of the major drivers of the evolution from a decentralized client-server based computing architecture to a more centralized data-center centric model, sometimes referred to generally as “cloud computing.” At its infancy, computing architecture was based on large mainframe computers that performed most of the data processing and then distributed the compiled information to an end user’s computer terminal. The development of the personal computer ushered in a shift, whereby the end user’s personal terminal (i.e., the PC) conducted the processing and stored its own applications. While this structure offloaded workloads from the centralized mainframe server, it added to the complexity of the network and led to an increase in capital spending and IT management costs. We believe that the distributed computing paradigm is now morphing back to a more centralized structure, driven partly by the power of virtualization software and robust, high-speed ethernet networks. Virtualization is actually a broad term that encompasses many different aspects, including: hardware or server virtualization, application virtualization, storage virtualization, network virtualization, memory virtualization, desktop virtualization and several others. Virtualization is a methodology of dividing the resources of a computer into multiple execution environments. In server virtualization, the software parses the server into smaller, more efficient components — called virtual machines — that can each execute programs like a distinct server. This type of virtualization improves the efficiency, availability and utilization of hardware resources, as now several virtual machines, each with their own operating system and application, can run on a single server as opposed to the old “one server, one application” model. Virtual machines can be quickly and easily configured to the customers’ needs. Another flavor of virtualization, application virtualization, stores an application (like email or a customer relationship management program) on a central server and then streams it to an end user’s authorized device when the user needs to access the program. From the end user’s perspective, it appears as if the application actually resides on that person’s computer. This type of virtualization improves the portability, manageability, security and compatibility of applications by encapsulating them from the underlying operating system and computer on which they are being executed. Citrix and VMWare are two of the leaders and pioneers in virtualization. Citrix is the leader in application virtualization, and has greater than 65% share of that market. Citrix’s customer list includes 99% of the Global 500 and hundreds of thousands of small-and-medium sized enterprises. VMWare is the pioneer in server virtualization and possesses over 40% share of that market. VMWare has around 130,000 customers and boasts 100% of the Fortune 100 and 95% of the Fortune 1000. Even with these impressive customer lists, we believe that we are still only in the early stages of the adoption of virtualization software, as only 15% of workloads are currently virtualized. Indeed, Gartner predicts that the server virtualization market will grow from a $2.5 billion market this year to over $8 billion in 4 years. And IDC predicts that the application virtualization market will grow to almost $3 billion in 4 years from $2 billion today. While both companies are leaders in their respective segments, we also think that the emerging desktop virtualization segment will provide another layer of growth to each, with Citrix possessing the early lead, in our view. Desktop virtualization gives IT managers the ability to host and centrally m	30/06/2009	Baron Funds
Information Technology_Application Software	CONCUR TECHNOLOGIES INC	CNQR US	USD	NASDAQ GS	€ 2,397,775,446.57	Concur Technologies is a leading provider of integrated travel booking and expense reporting software solutions. Most companies today manage their travel booking and expense reporting through manual, paper-based processes that are time-consuming, inefficient, costly and error prone. Concur’s automated solutions provide customers with the ability to reduce costs, streamline processes and improve internal controls.We think Concur’s software-as-a-service business model is attractive. Concur provides its applications to customers on a hosted basis over the Internet. This compares favorably with the traditional licensed software model that requires each customer to install, configure, manage and maintain hardware, software and network services in-house. Concur’s approach enables all users to benefit from access to the latest release of the application, automated upgrades and the economies of a shared infrastructure. Concur provides its software on a subscription basis rather than selling a perpetual license, which translates into lower up-front costs, lower ongoing maintenance and support costs for the customer and more predictable, recurring revenue for Concur. This allows Concur to profitably market its applications to businesses of all sizes, including small businesses, which vastly expands Concur’s total addressable market. We believe Concur can more than triple its existing customer base and crosssell new solutions to its existing customers, providing the company with a multi-billion dollar recurring revenue opportunity. Since all Concur customers are running on the same platform, the model is scalable, which we think should allow Concur to drive margins substantially higher over time. In July 2008, Concur entered into a strategic partnership with American Express (“Amex”) in which Amex will exclusively promote Concur’s expense reporting solution to its corporate clients and Concur will exclusively promote Amex cards. Amex also invested $250 million in Concur stock. Amex recognizes that Concur’s system leads to increased use of the Amex corporate, generating higher revenue for Amex. In turn, we think the partnership may generate new customers for Concur. (Neal Kaufman).	31/03/2009	Baron Funds
Information Technology_Application Software	SOLARWINDS INC	SWI US	USD	New York	€ 2,137,342,996.78	During the quarter, we invested in the IPO of one of the leading network management software companies, SolarWinds. Network management software addresses the operation, administration, maintenance and provisioning of networked systems. SolarWinds has been able to carve out a unique position for itself, focusing on the middle market, while still expanding into the Fortune Global 2000. Based on our research, we believe that no other company in the space offers a similar combination of functionality, affordability and ease of use. The company’s average price per customer is around $6,000, while the heavy platforms of its much larger competitors can cost over $100,000. SolarWinds offers its suite of products in modules that can be added onto as its customers grow or need additional functionality. This allows SolarWinds’ presence at their accounts to scale with the customer’s growth and is a major competitive advantage versus its smaller competitors whose products lack similar scale. Moreover, since the company prices its products based on the number of devices being monitored, a client isn’t forced into paying for more software than he needs until the exact time he needs it. SolarWinds also has a unique go-to-market approach, in which it markets and distributes its products on the Internet. While most software companies focus their sales efforts on the CIO’s of potential clients, SolarWinds targets the actual end user — the network engineer — and attempts to address his or her immediate needs. We think this approach creates instant value for the client and helps SolarWinds build a loyal and passionate client base. This approach, in our view, underpins the company’s low-cost, viral marketing strategy, as its local customers utilize SolarWinds’ websites and chat rooms to spread the word about the company’s products. We believe SolarWinds has a potential market opportunity as large as $30 billion. Interestingly, the Global 2000 only comprise 20% of this market, leaving, in our view, significant fertile ground in Solar Winds’ mid-market sweet spot. Even so, SolarWinds has been making progress among Global 2000 customers as well. The company’s Trojan horse in that market is the fact that it doesn’t look to displace incumbent competitors, like a Computer Associates or IBM, but rather aims to get implemented along with those platforms. Over time, the company believes it can gain more wallet share within these clients by selling additional modules and expanding across additional divisions of a large enterprise. Given its large addressable market and strong value proposition, SolarWinds has delivered sold financial results. The company grew revenues in 2008 by more than 50%, and we think the company should deliver 20%-plus growth over the next several years. The company has a solid balance sheet with over $80 million of net cash. This provides the company with a lot of flexibility to make targeted acquisitions or other investments. (Bob Peck)	30/06/2009	Baron Funds
Information Technology_Application Software	SOLERA HOLDINGS INC	SLH US	USD	New York	€ 2,610,699,361.82	During the second quarter, the Fund initiated a position in Solera Holdings, the leading global provider of software solutions for auto insurance processing. Solera is another investment that fits with our information services theme. These are companies that start with highly valuable proprietary information/data assets and then build robust analytical tools that help end users extract, manipulate and apply the underlying data to everyday business problems. The proprietary information and accompanying analytical tools eventually become a critical part of the end users’ day-to-day workflow, creating a very sticky business model with high levels of recurring revenue. Since much of the required investment is in collecting the underlying data and creating the analytical tools, these businesses tend to have high operating leverage, with sales of new subscriptions carrying high incremental margins. Solera’s software provides customers with access to its four proprietary databases, which include detailed cost data on the parts and labor required to repair 98% of vehicle models on the road globally and 180 million transaction comps for determining the fair market value of totaled cars. The company has invested $200 million over the past 10 years to expand its databases, which are used by auto insurance companies, body shops, independent assessors and aftermarket parts dealers to manage auto insurance claims, estimate the cost to repair a vehicle and calculate the pre-collision fair market value. As a result of its continued investments in its products, Solera has amassed dominant global market share, which varies from about 33% in the U.S. to over 80% in international markets. We believe that Solera has several paths along which it can grow its revenue base. First, auto insurance claims are growing at a rapid rate in most of Solera’s markets because of an increasing number of cars on the road and the growing prevalence of auto insurance. While the U.S. and Western Europe are relatively mature markets with low-single-digit claims growth, evolving markets like Mexico, Central Europe and South Africa are seeing 4-5% claims growth, while BRIC countries are enjoying 10-15% annual claims growth. Additionally, we believe that there is a secular trend towards using electronic processing solutions from traditional paper-based processes. We believe this transition is a compelling financial decision for customers, as Solera’s automation software reduces the cost to process a claim by 10-15% by reducing turnaround time, standardizing the workflow, lowering labor costs and reducing insurance fraud by the repair shop or vehicle owner. Additionally, the company has continued to introduce new and compelling analytical applications, enabling it to cross-sell into its existing base, raise prices and take market share from competitors that are failing to invest in their own solutions. Finally, the company has continued to enter new geographies either by partnering with a global insurance company or acquiring a sub-scale local player. Just like our other information services investments, we think Solera has an extremely scalable financial model that will enable it to grow its earnings well in excess of its revenue growth. (Neal Rosenberg)	30/06/2009	Baron Funds
Industrials_Research and Consulting Servic	MISTRAS GROUP INC	MG US	USD	New York	€ 478,941,405.08	Mistras Group (MG) is a leading supplier of technology enabled products and services that monitor infrastructure assets. In a bizarre and unfortunate incident, the company’s CFO inadvertently emailed the investment community his financial budget for the upcoming quarter . . . and it was disappointing at that. The stock got crushed on concerns about corporate controls and the pace of the business. Though we felt sideswiped, we substantially increased our position with the conviction that the company is well managed, provides unique and desirable services, can grow to be substantially bigger and, with the stock in the penalty box, offers great upside over the long term.	31/03/2010	Baron Funds
Industrials_Research and Consulting Servic	VERISK ANALYTICS INC-CLASS A	VRSK US	USD	NASDAQ GS	€ 5,132,774,547.66	Key to Verisk’s business model is the idea is that any one insurer has only a limited set of historic insurance loss data from which to draw future underwriting conclusions; however, when aggregated, the collective set of industry data can serve as a powerful tool because “the law of large numbers” kicks in, and statistically-significant trends emerge. During Verisk’s initial history as an insurerowned collective, the company became the welcomed sole provider to the insurance industry of a substantial amount of the important data and analytics that companies required to accurately underwrite their policies. Verisk also writes the majority of policy forms that insurers use to bind their insurance contracts in each of the fifty states. As a result, we believe that the company’s data and analytics are deeply embedded in their customers’ underwriting processes, making it hard to displace Verisk. We believe that Verisk has a near-insurmountable lead in accumulating a huge amount of current and historic claims-related data —estimated to include 15 billion records —that would be quite difficult for any competitor to replicate. In addition, the fees that the large insurance companies pay to Verisk are quite small relative to many other costs in their businesses, and relative to the value we believe Verisk provides. This has enabled the company to continually increase the price of services that it sells to these insurers, which, in turn, has led to attractive incremental margins in their business.Verisk has expanded beyond its roots in the insurance industry, leveraging its expertise in data compilation and analysis into the healthcare and mortgage markets, which now represent the fastest-growing part of their business. As health care costs continue their ceaseless march upward, and the government and HMO’s focus increasingly on cost-containment, we believe that Verisk’s services will become more important. Verisk’s products help reduce healthcare fraud by identifying suspicious spending patterns across groups of claims. They are also used by employers and HMO’s to more accurately estimate expected claims levels within an insured population. In the mortgage market, Verisk’s products are used by originators and insurers to identify fraudulent mortgage applications, an area in highdemand after the industry scandals of recent years. (Rob Susman)	31/03/2010	Baron Funds
Industrials_Industrial Machinery	MIDDLEBY CORP	MIDD US	USD	NASDAQ GS	€ 1,394,465,926.08	We recently initiated a position in Middleby Corp., a manufacturer of commercial restaurant and food processing equipment. The company was founded in 1888 as a manufacturer of baking ovens and has expanded organically and through acquisitions to include products such as fryers, griddles, steamers, pizza ovens, and ranges. Middleby has leading brands in the industry and supplies many chain restaurants, including Papa John’s, Pizza Hut, Dunkin’ Donuts, KFC, amongst others.Restaurants use Middleby’s cooking equipment because of the premier performance of the products. Middleby’s technology allows restaurants to serve customers faster and deliver more consistently prepared food. In addition, Middleby’s products save its customers money. Selim Bassoul became CEO in 2001 and has made energy efficiency a top priority. Middleby’s goal is to deliver customers a payback in less than 24 months for every new product introduced since 2009. Middleby is also a leader in ventless technology, which allows customers to save the cost of installing and cleaning a hood, as well as to sell food in locations where installing a hood is not possible.With the improving economy, we think that Middleby’s sales are ready to rebound as restaurants invest in their businesses again. We are excited about Middleby’s entrance into the casual dining segment, as owners are increasingly looking to upgrade to labor saving and energy efficient equipment. About 20% of Middleby’s sales come from overseas, and we expect international growth to exceed domestic growth due to rapid new chain store openings in these underpenetrated markets. We think emerging markets offer an unusually favorable opportunity. Middleby had $719 million of revenue in 2010 with a 19.4% ebitda margin. Selim thinks that, over the long-term, he can double Middleby’s revenue and increase ebitda margins to the mid-20s. Given the company’s long-term track record of execution and integration, we expect Middleby’s stock price to keep on cooking. (Rebecca Ellin)	31/03/2011	Baron Funds
Industrials_Industrial Conglomerates	3M CO	MMM US	USD	New York	€ 45,539,607,964.72	3M is a diversified manufacturer that produces and markets more than 50,000 global products including Post-it Notes, Scotch tape, Nexcare bandages, Thinsulate insulation products and drug delivery systems. Sales are across multiple sectors: Industrial & Transportation (30% of total sales), Healthcare (18%), Consumer & Office (15%), Display & Graphics (14%), Safety, Security & Protection Services (13%) and Electro & Communications (10%). Competitive advantages include leading brands, global distribution plus dominant positions in niche markets. The company spends more on R&D than its peers and has a culture of innovation. It generates industry-leading margins and 20%+ returns on invested capital. 3M has a very strong balance sheet and substantial free cash flow opening the door for share repurchases, dividends and acquisitions.	29/01/2010	Baron Funds
Industrials_Industrial Conglomerates	KONINKLIJKE PHILIPS ELECTRON	PHIA NA	EUR	EN Amsterdam	€ 16,007,395,507.81	Based in Amsterdam, Philips is one of the three leading medical diagnostic and treatment device companies in the world and the leader in lighting. The company’s consumer health products such as Norelco dry shavers and Sonicare toothbrushes are also dominant brands. Nearly 40% of revenues come from burgeoning emerging markets. When the new CEO and CFO, Frans van Houten and Ron Wirahadiraksa, took over in the second quarter of 2011, they immediately began to address bloated costs, set achievable 2013 targets for each segment, and announced a share buyback of ¤2bn, equal to 15% of the company. They also disposed of the challenged television division. The stock trades at 60% of our appraisal. Philips’ profit misses under previous management have made analysts skeptical that the improvements implemented by our current partners will deliver results by 2013. These dominant worldwide businesses are growing, and the substantial repurchases at discounted prices are augmenting value-per-share accretion. The current free cash flow yield is 8.6% based on expected 2012 FCF which includes a number of one-time charges. Adjusting for those, the yield is 10.1%.	31/12/2011	LongLeaf
Industrials_Industrial Conglomerates	STANDEX INTERNATIONAL CORP	SXI US	USD	New York	€ 391,221,192.28	Standex International is a diversified manufacturing company that produces a variety of products and services globally. The firm does everything from manufacturing food service equipment and hydraulic lifts to engraving plastics and creating electrical components for airplanes. Standex has a market cap of only $380 million, with little analyst coverage, allowing it to fly under the radar of most on the street. The firm is trading at a forward P/E of 11 times 2012 estimates, and has traded close to 15 times over the past five years. The firm generates solid free cash flow, and has made impressive steps towards lowering its balance sheet risk by aggressively paying down debt. In fact, net debt to capital has come down from 33% in 2009 to 24% in 2010. Standex pays a modest dividend, which yields roughly 1%, and has paid it for over 44 years. The company's revenue base is fairly diversified, and relatively insulated from the gyrations of the macroeconomic environment, but is susceptible to weaknesses in several of its end markets (housing in the air distribution business for instance). However, other business lines, like the Electronics division, are rebounding strongly as demand from China increases, and as the unit grows its market share. The company has cut roughly $40 million in costs over the past 18 months, which should position it nicely to benefit from favorable operating leverage, as many of its end user markets stabilize and sales gradually increase. Assuming only modest single digit top-line and earnings growth still provides a nice upside due to the newly rationalized cost structure and fairly low reinvestment needs.	30/11/2010	Morningstar
Industrials_Human Resource & Employment Se	TOWERS WATSON & CO-CL A	TW US	USD	New York	€ 3,485,639,738.04	We also bought stock in Watson Wyatt, a large benefits consultant, which primarily provides retirement plan consulting and also pension administration, recruiting services and investment consulting. Business trends held firm in late 2008 and early 2009 as corporate pension plans were wrecked by declining equity prices, which increased demand for Watson Wyatt’s services to address these issues. However, as we have seen with other business services companies, corporations began to defer work this spring, which led to missed earnings projections. Organic growth slowed from 6% to 3% (not so bad), the stock declined about 40%, and we began to establish our position. Shortly thereafter, the company announced a merger of equals with TowersPerrin. We think the two companies complement each other nicely and Watson Wyatt has successfully grown through meaningful mergers in the past. But since the deal is modestly dilutive, complicates reported financials and adds integration risk to softening business trends, the stock sold off further on the news. We like the company and management and believe we are buying a good company at a great price; 6 times trough cash flow and 4 times our projections of cash flow with synergies and stabilization. We think the company can conservatively earn over $4.00 per share in 2011 and trade at a mid teens multiple, offering substantial upside from our purchase price.	30/06/2009	Baron Funds
Industrials_Environmental & Facilities Ser	COVANTA HOLDING CORP	CVA US	USD	New York	€ 1,683,930,913.92	Covanta makes money by charging municipalities a fee per ton for taking residential waste, and then burning that waste to produce electricity, which it then sells to a local utility. While this waste-to-energy company is operating well, the downturn in the broader economy has hurt wholesale electricity prices. Generally, this would not have a large effect on Covanta. However, due to the way some of its long term contracts are maturing, up to 50% of its 2010 capacity could be subject to market pricing. This has worried investors. We believe that by the time much of the contract pricing resets come due (starting late in 2009 and continuing through late 2010), the economy will have started to improve, normalizing electricity market pricing. Assuming that this occurs, Covanta should be able to lock in longer term electricity rates that imply better normalized long-term cash flow for the company than the market is expecting. We believe that while the company’s cash flow may fluctuate a bit over the next couple of years, its “normalized” cash flow is quite stable, and that the company is now “cheap,” trading at a high-single digit multiple of its true free cash flow.Moreover, we believe that the market has not properly accounted for Covanta’s long term growth prospects. Over the next five years, we believe that Covanta has lined up new waste-to-energy projects that we think could add up to an additional 40% to cash flow at high returns on capital. (Randy Gwirtzman).	31/03/2009	Baron Funds
Industrials_Environmental & Facilities Ser	TETRA TECH INC	TTEK US	USD	NASDAQ GS	€ 1,179,340,629.46	Tetra Tech is a company ‘riding a wave’ of water-related infrastructure spending that we expect will propel the business to new heights. As a leading engineering and consulting firm specializing in environmental projects, Tetra Tech is well positioned to capitalize on federal funding to upgrade the country’s ailing sewer systems, water treatment plants, levees and dams. We believe the company fits well into our megatrend view that domestic water infrastructure is on the verge of a massive overhaul that will be driven by both federal and private-sector dollars and result in a multi-year boom for environmental engineers.What gives us this confidence? In its 2008 report card, the American Society of Civil Engineers gave U.S. water infrastructure a poor grade of D. Water systems in this country are aging and the EPA estimates that as much as $23 billion a year will need to be invested over the next 20 years to keep pace. Urbanization of our cities puts a strain on safe drinking reserves and climate change makes some regions more prone to drought — making clean water an increasingly scarce resource. Stung by criticism over natural disaster preparedness and high profile floods, federal and local agencies are shifting their attention to more preventive infrastructure — such as levee fortification and earlier modeling studies — as a longer-term alternative to chronic clean-up and remediation efforts. Addressing these complex, scientific issues requires extensive research and investment in clean water, desalination plants, and upgraded sewer and drainage systems. Tetra Tech’s 10,000 employees include highly skilled engineers, scientists, geologists, oceanographers, and Ph.D’s at the forefront of solutions that confront these key problems.Like AECOM, another of Baron Growth’s engineering and infrastructure holdings, Tetra Tech, is primarily focused on the design phase of a project, which has a higher technical barrier to entry, higher margins, and lower risk than downstream, construction work. The project cycle starts with research and development and continues through science, engineering, and project management, where the company will typically subcontract out building related work. As a result of this front-end, technical focus, the company’s highly skilled labor bills at higher rates. Leading customers for the company include the Departments of Energy, Defense (Navy), U.S. Army Corps of Engineers and the EPA — agencies where we expect funding to remain in an uptrend during the current administration. Exposure to $20 billion of water-specific stimulus funds and increasing environmental regulation bodes well for earnings growth. On the private sector front, the company is applying the same research and design focus to alternative energy projects — such as permitting work and environmental impact assessments for wind farm development, solar fields, and hydroelectric power plants.Recent results confirm our thesis is playing out, with the company on track to deliver in excess of 20% earnings growth in 2009, an impressive feat in a challenging environment. The company’s approximately $2 billion backlog provides good visibility into future projects as well. We foresee accelerating sales and profit growth over the next five years, as the fundamental backdrop remains favorable and stimulus money kicks in. (Matt Weiss)	30/06/2009	Baron Funds
Industrials_Environmental & Facilities Ser	WASTE CONNECTIONS INC	WCN US	USD	New York	€ 2,643,575,302.69	We purchased a position in Waste Connections, a leading, differentiated, solid waste service company that uniquely targets secondary and suburban markets that have strong demographic growth trends and significant barriers to entry such that the company is the exclusive garbage collector for over half its business and is a market leader in most others. The company has grown dramatically over time through organic growth, acquisitions of haulers which are modernized and the purchase of landfills that integrate into existing routes. Though typically a stable business, Waste Connections has recently experienced softness in waste volumes from its industrial customers, and lower proceeds from the sale of recycled commodities, so results have been depressed. The company also sold equity in the fall to take advantage of potential acquisition opportunities, which also diluted this year’s numbers.Waste Connections recently announced that it spent the money it raised to acquire assets that are terrific fits, at what we believe are bargain prices. We expect that as volumes recover, and the recent acquisitions are integrated, cash flow will grow over 20%, and the stock will trade back towards its historic EBITDA multiple. When combined with debt paydowns using free cash flow, we believe the stock can appreciate over 50%.	31/03/2009	Baron Funds
Industrials_Electrical Components & Equipm	GENERAC HOLDINGS INC	GNRC US	USD	New York	€ 1,368,605,340.40	If you have a standby generator in your home, it is likely that it is made by Generac. Generac was founded in 1959 by an engineer in Wisconsin to make affordable, portable generators. Over the years, the company has expanded its product offering to include portable and standby generators for the residential, commercial, and industrial markets. Generac introduced the first line of affordable home standby generators to the market in 1989 and the company currently enjoys sizeable first mover advantage, with an estimated 70% market share. Generac has been able to grow rapidly, increasing sales from $354 million in sales in 2004 to $575 million in 2008, by driving adoption of its products through increasing product awareness, growing its dealer network, and making the products more affordable. The retail price of an entry level standby residential generator has fallen by 50% over the last 10 years to approximately $2,000 (excluding installation). As experienced recently by several Baron Capital employees in the severe East Coast storms, there is a natural marketing awareness for the product during a power outage, and Generac has been taking advantage of this by doing targeted marketing to drive future sales. We became investors in Generac when the company undertook an initial public offering in February. We were intrigued by the company’s dominant market share in a largely unpenetrated market, high margins, and significant free cash flow. A standby power system (which turns on automatically when the electricity goes out) had traditionally only been used in facilities like hospitals, data centers, and industrial facilities, but these systems are starting to be installed in homes and small businesses as well. With only 2% of U.S. single-family, detached homes currently having a standby generator and every additional 1% of U.S. household penetration representing an approximately $2 billion market opportunity, we think that that there is a lot of room for Generac to continue to grow in the future. (Rebecca Ellin)	31/03/2010	Baron Funds
Industrials_Electrical Components & Equipm	SENSATA TECHNOLOGIES HOLDING	ST US	USD	New York	€ 4,261,978,880.14	Sensata Technologies (ST).With roots dating back to 1916, this former division of Texas Instruments was LBO’d by Bain Capital in 2006 for $3 billion. Sensata Technologies is a leading global manufacturer of customized sensors (60% of sales) and controls (40%) that are used to improve safety and energy efficiency in mission critical applications, from braking systems in cars to heating, ventilation and air conditioning in commercial and residential markets. The company plans to offer 31.6 million shares, including 5.3 million from insiders, at a price range of $18-$20. Morgan Stanley, Barclays, Goldman Sachs, BofA Merrill Lynch and J.P. Morgan are acting as joint bookrunners on the deal. If successful, Sensata will be the largest IPO of 2010, easily eclipsing the $315 million IPO from insurer Symetra (SYA) in late January.Solid fundamental story with organic growth driversSensata’s sensors translate physical phenomena into electronic signals that can be used by computers, while its controls are embedded within systems to protect against excessive heat or current. Products are customized for clients in various end markets, including automotive, commercial and industrial, and typically have long lead times (3-5 years) and are sold under multi-year contracts (3+ years). This affords the company with strong barriers to entry and solid visibility, and Sensata has longstanding relationships with key industrial OEMs and suppliers, such as Ford, GM, Honda, Volkswagen and Whirlpool. Margins and free cash flow have improved thanks to cost cutting efforts, and the company expects to drive double digit organic growth as a result of a continued rebound in auto/industrial sectors, increased demand for safety and efficiency in its verticals as well as its strategic presence in emerging markets.Key IssuesDespite using the majority of proceeds to de-lever its balance sheet, Sensata will remain highly leveraged following the IPO with $1.7 billion in net debt, over 5x operating cash flow. Further, although growth rebounded in 4Q09 (+26% y/y), net revenue declined 20% overall in 2009 as the financial crisis caused order volume from customers to fall significantly, particularly within the battered auto sector (50% of sales).Valuation at a premiumIndustrial stocks have outperformed year-to-date on hopes of a cyclical rebound and Sensata’s growth will likely outpace the majority of its peers; however, the deal is being priced at a premium to other electrical component providers on both sales and cash flow. Given the pricing headwinds faced by recent prospective IPOs and the firm’s significant leverage, we would not be surprised to see investors push for a lower price despite Sensata’s solid fundamental story.	26/02/2010	Renaissance Capital
Industrials_Diversified Support Services	COPART INC	CPRT US	USD	NASDAQ GS	€ 2,258,367,434.59	Copart’s relatively resilient business model caused its shares to hold up well in the face of volatile markets. The company helps its customers, primarily auto insurers, to cost effectively dispose of heavily damaged vehicles through physical and Internet based auctions. Buyers include vehicle dismantlers, rebuilders and exporters. During the quarter, the company reached an agreement with Auto Auction Services to gain access to its Auto IMS system, which will allow commercial vehicle sellers, such as banks and fleet operators, to more easily sell their vehicles at Copart’s auctions. We believe this agreement could meaningfully increase the company’s auction volumes. In addition, we are optimistic about the company’s longer term opportunity to replicate its profitable operating model in the U.K. and then more broadly throughout Europe.	31/03/2009	Baron Funds
Industrials_Diversified Support Services	ENERNOC INC	ENOC US	USD	NASDAQ GS	€ 194,655,345.41	EnerNOC’s solutions enable businesses to reduce electricity consumption on demand during periods of peak energy usage. Grid operators pay EnerNOC for this service —the reduction of energy use — just like they would pay a power plant for the production of energy. EnerNOC then shares the bulk of these payments with the businesses in their network — that’s right, EnerNOC pays its customers. EnerNOC’s solutions are clean and green, reliable, and cost-effective. The Federal Energy commissioner has described these services as “the ‘killer application’ of the smart grid.”	30/09/2009	Baron Funds
Industrials_Diversified Support Services	RITCHIE BROS AUCTIONEERS	RBA CN	CAD	Toronto	€ 2,037,220,283.24	Ritchie Brothers Auctioneers, (market capitalization: $2.5 billion) Ritchie Brothers is the world’s largest auctioneer of used industrial, agricultural, and transportation equipment. The company annually conducts over 300 unreserved auctions at 37 different locations in 13 different countries and over the Internet. In 2007, it registered Gross Auction Proceeds (GAP, or the total volume of equipment sold at Ritchie Brothers’ auctions) of $3.2 billion. We believe that the company is revolutionizing the way that used heavy equipment changes hands by creating a liquid global marketplace where only local markets previously existed.We estimate the global installed base of used equipment to be about $1 trillion, of which about 10% changes hands annually. Of this $100 billion annual aftermarket, more than 90% is transacted on a local basis, either via local dealerships or in independently negotiated deals. Due to relatively low shipping costs for equipment, Ritchie Brothers’ unreserved auctions create a global marketplace, where equipment can flow to the area of highest demand. For example, at a recent auction that we attended in Orlando, just 25% of the lots (by value) were sold to buyers in Florida, with almost 20% sold to overseas buyers and the rest being purchased by other North American customers. Due to its ability to match local supply with global demand, Ritchie Brothers’ auction model serves to increase liquidity and raises the average net price that consigners receive for their equipment.We believe that Ritchie Brothers’ model is best in class, offering its customers sales prices that are verifiably higher than almost all other alternatives. As the company broadens its marketing reach, we expect to see a virtual cycle of deeper market penetration and price increases. Given the size of the global market, Ritchie Brothers’ GAP of $3.2 billion represents just over 3% of the total addressable market, implying significant runway for deeper penetration. On the pricing side, Ritchie Brothers’ net commission rate has grown from 8.6% in 2000 to 9.5-10% currently. Much of the increase has come from the implementation of fees, including for small lot sizes, Internet bidding, and item handling, while the remainder has come from improved performance from at-risk contracts. As Ritchie Brothers’ consigner base expands, we believe the barriers to entry will continue to grow due to network benefits, giving the company increased pricing power which we expect to fall almost directly to bottom line. (Neal Rosenberg).	31/12/2007	Baron Funds
Industrials_Construction & Farm Machinery	ACCURIDE CORP	ACW US	USD	New York	€ 307,931,878.68	Accuride is a leading manufacturer of wheels and related components to the truck and trailer industries. Accuride filed for bankruptcy in 2009 because it couldn’t meet its debt obligations and reorganized and emerged from bankruptcy in 2010. Pre-existing equity interests were wiped out and much of the debt was exchanged for new ownership shares. The company hired a new CEO in February 2011 of whom we think very highly and believe is capable of leading a major turnaround. We believe that Accuride can triple its present cash flow, as its end markets recover, costs are taken out of operations and unprofitable divisions are closed. We’re currently seeing huge demand for trucks as purchases are made to make up for massive underinvestment during the economic downturn. The company trades at under four times our projected cash flow, which makes for a more interesting special situation. We also believe that management’s plans are ambitious as they seek to grow the business internationally and into complimentary markets, which would offer additional upside if successful.	31/03/2011	Baron Funds
Industrials_Construction & Farm Machinery	WABTEC CORP	WAB US	USD	New York	€ 2,688,061,308.54	We also bought a significant position in Wabtec in the quarter. Wabtec (the old Westinghouse Air Brake Technologies Corp.,) is a leading provider of highly engineered equipment and services to the global rail industry, both freight and passenger transit. The company has been around for 140 years, is the established leader in braking equipment and has leveraged its position to supply parts and assemblies for the entire train. Aftermarket services (which we favor) have grown to represent over half of the company’s business. We purchased our position as the stock fell when OEM shipments to the rail industry sharply contracted. We are cautious about the recovery in locomotive and freight car shipments, but are excited to have the opportunity to invest in this leading, well-run business at a depressed price. The transit side of the business is still strong, has a large backlog, and will be buttressed by government stimulus spending on high speed rail programs. Wabtec is the leading provider of Electronic Train Management Systems which are now mandated for rail safety, and this will be an important source of future profits. The company has been a good strategic acquirer in the past and we expect more opportunities in this environment. Additionally, its joint ventures in China should lead to new avenues of growth. All in all, we believe we are paying a modest multiple for depressed earnings. We expect earnings to be relatively stable in the near-term and to grow rapidly in the future when the rail cycle turns and growth initiatives kick in.	31/03/2009	Baron Funds
Industrials_Construction & Engineering	ACS ACTIVIDADES CONS Y SERV	ACS SM	EUR	Continuous	€ 7,199,525,878.91	Headquartered in Madrid, ACS is one of the world’s largest global infrastructure engineering firms providing construction and management of utility networks, transportation systems, airports, waste facilities, and similar large projects. Through its own business and its stakes in Hochtief and Leighton, the company’s unique capabilities and experience provide an advantage in pursuing large civil works projects. CEO Florentino Perez owns 13%, and other board members hold an additional 40%. The company sells for approximately half of our valuation because the market oversimplifies this as a Spanish business with optically high leverage. In addition, many question ACS’ strategy around its 19% ownership of Iberdrola, Spain’s #1 utility and the largest owner of renewable assets in the world. In fact, less than half of ACS’ direct operating exposure is to Spain, and most is outside of Europe when looking through their 50% ownership of Hochtief. The debt, which financed the stakes in Iberdrola and Hochtief, is extended through 2015, and, importantly, is non-recourse to ACS. A recent court victory gives ACS increased rights at Iberdrola, making it easier to pursue a significant and profitable investment outcome. Over the next few years without any Spanish or European economic recovery, ACS should generate a stable earnings coupon from its long-dated concession contracts, build construction projects around the world, and monetize assets when buyers are willing to pay fair prices for high-yielding infrastructure as they did in 2011 with some of ACS’ wind, solar, and toll road assets. Although strapped municipalities have made the market bearish on infrastructure spending, projects that physically must be done will have to be private-public partnerships, aided by today’s low interest rates. ACS is a world leader in privatized infrastructure projects. The company’s current free cash flow yield based on expected 2012 FCF is 16.8%, and if adjusted for sold assets and assets held for sale, is over 30%.	31/12/2011	LongLeaf
Industrials_Construction & Engineering	AECOM TECHNOLOGY CORP	ACM US	USD	New York	€ 2,101,970,930.62	Following the tragic bridge collapse in Minnesota and steam pipe explosion in Manhattan earlier this year, we believe there will be a renewed focus on safer, more modern infrastructure in this country. One company at the forefront of designing and planning for these sustainable needs is AECOM. With $3.5 billion in revenue, AECOM— the “AE” signifying Architects & Engineers — is the largest pure design & engineering firm in the world. The company is a leader in providing technical and architectural planning and support services for a broad range of clients, from blue chip corporations to state and local governments. In simple terms, before any new bridge, highway, subway tunnel or airport terminal can be constructed and made operational, it needs to be designed, planned, and engineered. That’s what AECOM’s team of 30,000 engineers do everyday around the world. The company’s strengths lie, we think, in its end market focus, specifically transportation infrastructure and environmental facilities, sectors which have been seeing rapid growth, its geographic diversity with operations in 60 countries that allow for sharing of best practices, and a prestigious client roster, for whom it works on some of the most complex and notable projects. Our investment thesis on the company is four-fold: 1) AECOM has leading market share in its respective niches: transportation and environmental engineering projects. We believe these end markets are well positioned to grow, as global growth, especially among developing nations in Asia, India, and the Middle East, have fueled tremendous infrastructure and capacity needs. In addition, the increased urbanization of cities and focus on sustainable environmental buildings has generated demand to design greener, more energy efficient facilities. Healthy state and local budgets and the nearly $300 billion of earmarked federal funding for transportation projects will also in our opinion, help sustain growth for years. 2) AECOM’s global diversity is, we think, unique among its peer group and it is seen as the acquirer of choice in a fragmented industry. The company enjoys significant cross-selling synergies from having offices spread across sixty countries, where it has been able to leverage the expertise from past projects in certain locales toward winning contracts in new geographies. 3) Unlike most engineering firms which tend to have construction arms, AECOM is singularly focused on front-end design work, a lower risk strategy in our view with less exposure to fixed-price contracts and cost overruns. The result is a debt-free business model with healthy free cash generation. 4) The company’s size and leading reputation has led to work on many iconic and high-profile projects. Over the next decade, the company has exclusive contracts for the master planning services for the London 2012 Summer Olympics, program management services for the Second Avenue New York City Subway, renovation of the Pentagon, design of the World Trade Center Path Terminal, and development of Hong Kong’s elevated roadways. The fact that AECOM tends to work on technically interesting and sought after projects, we think, helps it recruit and retain the best employees, a key advantage in the tight labor market for skilled engineers.Although the company recently came public, it has a long operating history and experienced management team. Current CEO John Dionisio started out as a field engineer at one of the predecessor companies over twenty years ago. In fact, the ten most senior members of the executive team have an average of twenty years experience at the firm. With a proven track record of growth— 20% compounded revenue over ten years and 24% net income over five — combined with the visibility of a $3 billion backlog, we believe AECOM offers a unique way to capitalize on the growth in global infrastructure over the next several decades. Analyst: Matt Weiss.	30/06/2007	Baron Funds
Industrials_Construction & Engineering	QUANTA SERVICES INC	PWR US	USD	New York	€ 3,280,244,414.34	Quanta Services (Market Cap = 3.454 bln $ at 03/05/09) is a leading provider of specialized contracting services to the electric power, gas, telecommunications, and cable television industries. The company provides a broad range of In addition to the electric power industry, Quanta’s other customers include natural gas, telecommunications, and broadband cable companies. Quanta benefits as each of these customers increases capital investment to maintain and enhance their infrastructure and corresponding service offering. John Colson, the CEO, has been with Quanta since its inception in 1997 and has grown the company organically and through acquisitions from approximately 1,000 to 17,000 current employees. We believe that Quanta’s operational strength, diverse end-markets, and healthy balance sheet should allow the company to continue to grow and benefit from the burgeoning trend of utility infrastructure investment. (Rebecca Ellin).Constructing high-voltage transmission lines is a highly specialized skill. We believe that Quanta is one of just a few companies that has both the technical expertise and geographic reach to build large-scale, long-distance transmission projects. We believe that these projects are needed to improve the reliability of the country’s existing electric grid and to connect the grid to increasing amounts of wind generation capacity. After years of underinvestment in the country’s transmission infrastructure, the aging electric grid is receiving significant national attention. The Energy Policy Act of 2005 has spurred utilities to invest in the grid by establishing enforceable reliability standards, authorizing incentive rate treatment to allow more favorable returns on equity, and removing siting and permitting bottlenecks for inter-state transmission projects. In addition, in its 2008 Long-Term Reliability Assessment, the North American Reliability Council (NERC) concluded that significantly more transmission will be needed to maintain system reliability and integrate new generation (particularly renewable energy) into the grid as one of its key findings. In addition, the Obama administration appears likely to take additional measures to improve the country’s power infrastructure, and has stated that electric grid is an important priority.Quanta Services has been actively building its workforce in anticipation of these upcoming projects, as it takes about four years for a lineman to become fully trained in the mechanics of grid installation. With the volume of work set to increase and a potential scarcity of skilled workers, we believe that Quanta is well-positioned to increase its prices and improve its margins as these electrical infrastructure projects come to fruition.	31/12/2008	Baron Funds
Industrials_Building Products	BUILDERS FIRSTSOURCE INC	BLDR US	USD	NASDAQ GS	€ 215,911,068.49	One business that we think meets those parameters today is Builders FirstSource (BLDR). It is a supplier/distributor to the homebuilding industry. As you might imagine, the company has been losing money consistently since 2007. In 2005-2006 it generated $2.3 billion in revenue; last year sales fell below $700 million. It has lost money over the last couple of years, but that’s been mitigated somewhat because working capital has come down dramatically, since they need to hold a whole lot less inventory as they sell to homebuilders. In addition, they received a sizeable tax refund last year which was the result of being able to carry back losses for five years. The stock trades at about $2.00 per share and there are 96 million shares outstanding. It’s got $100 million in cash, and $160 million in debt, so plenty of cash on the balance sheet. That being said, they burned through another $35 million in cash over the past twelve months, net of a tax refund, which is concerning. Still, I think the company as it exists today can generate $1.5 $2.3 billion in revenues, when you build 1 million to 1.5 million homes in America. In that case it can generate $100 - 200 million in EBITDA compared to an enterprise value today of roughly $250 million. Of course we don’t know when homebuilding is going to go back to 1 million to 1.5 million homes, but at some point it will do that on a normalized basis. In the meantime, there is enough cash to get the company through these tough times. In addition, the long-term trend in the industry is for continued consolidation. Builders FirstSource has grown through acquisition, and the industry is still very fragmented, which shows that when things eventually stabilize, they have the ability to go out and make more acquisitions to augment the cyclical rebound we would anticipate in this business. As I mentioned, with its current footprint, the business can probably generate $2.3 billion in revenues, when homebuilding gets back to 1.5 million new homes, but the footprint is probably going to become larger. We think that the earnings potential of the business should imply a stock price that is significantly higher than it is today. G&D: Do you think that a company in this situation should be making acquisitions with its excess cash flow? BR: It’s difficult to execute an acquisition strategy today. This is a very regional business and there can be multiple competitors in each region. If a certain region has only a few competitors, then they are probably operating at just over breakeven. In these markets it might make sense. But if there are multiple competitors in the same regional market, then they are all probably losing money. In this environment, it would be difficult to create enough synergies through acquisition to turn operations profitable. You can’t just take two players in a region that are losing money and combine them to make a profitable business. Instead, management should try to winnow down the business to lose as little money as possible, while exiting as few markets as possible, because once you leave a market it is very difficult to get back in. It’s a difficult process, and that’s why they’re still burning cash today. A year ago, Builders could have decided to exit certain regions. They wouldn’t have lost as much money, but they would be permanently out of those markets. At the end of the day, we have to believe that management will make some adjustments to continue to minimize cash losses so that the cash they have available will give them the ability to weather the storm. G&D: Who does Builders FirstSource compete against? Is it Lowe’s and Home Depot, or is it the wholesaler? BR: Builders sells directly to homebuilders themselves, not to the do-it-yourselfers, home remodelers, or small contractors that Lowe’s and Home Depot focus on. There is one national firm, ProBuild, which is much larger than Builders and at least three other superregional firms including BMC Select, Stock Building	31/01/2011	Robotti
Industrials_Airlines	RYANAIR HOLDINGS PLC	RYA ID	EUR	Dublin	€ 6,035,522,460.94	Ryanair, (Ireland) the “category killer” of European air transportation is a core holding of the BIGF. Management has shown over the years how their opportunistic, low-cost and volume driven model has led to sustainable cost advantages and rapid market share gains. Ryanair boasts industry-leading service metrics while average fares are often a fraction of that of competitive carriers. The company’s ability to attract huge volumes of passengers to regional or secondary airports results in the negotiating leverage to keep airport and handling unit costs well below that of the major carriers operating out of higher cost airports. Such costs often represent the largest cost component after fuel and labor, which have been the more obvious sources of cost advantage for Ryanair over the years. Like Wal-Mart, Ryanair has continued to out-execute the competition until the weakest shutter capacity, resulting in further share consolidation for Ryanair. While earnings in the air transportation business are inherently volatile, Ryanair has continually added to its long-term earnings power while gaining scale and advantage. Ryanair stock performed well in the quarter as the company detailed opportunities to further cut operating costs while hedging/locking in low fuel costs. While passenger yield guidance was viewed as overly conservative, passenger growth and load factor expectations have remained robust. (Michael Kass)	30/06/2009	Baron Funds
Industrials_Air Freight & Logistics	EXPEDITORS INTL WASH INC	EXPD US	USD	NASDAQ GS	€ 6,932,163,799.09	An important holding for us remains Expeditors International. As of July 31, 2009, Expeditors International had an approximate weighting of 2.08% in the portfolio. Expeditors International provides logistic services worldwide. The company’s last reported quarter was disappointing. Gross revenues declined 38% year-over-year which was 10% below consensus and EPS (earnings-per-share) coming inline with expectations. Solid yield expansion could not offset unprecedented declines in airfreight and ocean freight volumes during the quarter. Operating cost reductions could not catch up with the significant drop-off in revenues. Management decided not to conduct employee layoffs during the downturn - in order to maintain service levels and the company’s culture.This policy should position the company well for a pick-up in demand, but will hurt margins in the short-term. We feel the company’s difficulty is temporary and there is no change to our thesis. We feel Expeditors International is unique because of its global network of relationships with customers and shippers, especially in the key Asian trade lanes, allowing the company to offer international freight forwarding services more efficiently and cost effectively than its competitors or an internal transportation solution. We continue to own the stock.	31/07/2009	Dennis Lynch, head of Equity Growth team, Morgan Stanley
Industrials_Aerospace & Defense	BOMBARDIER INC-B	BBD/B CN	CAD	Toronto	€ 6,402,821,679.01	One higher-beta example we own today is Bombardier [BBD/B:CN], which builds rail-transportation systems as well as private and regional jets. We see several tailwinds: It’s a big supplier to subway and high-speed rail systems that are ramping up across the developing world. It also benefits from the aircraft replacement super-cycle we believe is underway, as airlines in developed nations retool their fleets for a higher fuel-cost environment and those in emerging markets add capacity to meet growing demand. The biggest option on the upside is the company’s jumbo regional jet, called the C-series. It’s a single-aisle plane that looks like a scaled-down Boeing 737, with capacity for 100 to 130 passengers. It utilizes the newest fuel-saving technology, resulting in what should be 20% better fuel efficiency per seat mile than other single-aisle planes flying today. The wildcard is whether it can gain commercial acceptance versus the incumbent duopoly of the Boeing 737, a 40-year-old design, and the Airbus A320, a 25-year-old design. We think it has a once-in-a-generation opportunity to do so, as high fuel costs prompt airlines to be more aggressive about fuel efficiency, and as Boeing and Airbus are fully occupied in development elsewhere, with the wide-body 787 and A350, respectively. Only moderate success in cracking the single-aisle market which in total is worth perhaps $500 billion in orders over the next 10 years –would be a colossal home run for a company of Bombardier’s size. With all that potential, the stock today [at a recent C$6.30] trades at only 0.5x revenue and 13x forward earnings. We believe that valuation prices in little if any upside from the C-series aircraft or any material order growth in the rail business. Even if neither of those happened, we wouldn’t expect much downside in the share price. I’d add here that after a two-year bull market we’re not finding as many companies in the low end of their valuation ranges. That puts a greater premium on finding businesses that we believe can sustain higher multiples than today’s levels, which will happen if the market comes to view those businesses not just as beneficiaries of the near-term business cycle, but as also having secular tailwinds.	31/03/2011	Cambiar
Industrials_Aerospace & Defense	KEYW HOLDING CORP/THE	KEYW US	USD	NASDAQ GS	€ 141,407,817.08	We established two new positions in the cyber security industry this quarter. According to President Obama, the growing number of attacks of our cyber networks, both government and commercial, is one of the most serious economic and national security threats to the nation. Government agencies, such as the Department of Homeland Security and the National Security Agency have made cyber security a high priority, and it is a rapidly growing area of spending, even in the context of the shrinking of the defense budget.KEYW Holdings is a leading pure-play provider of mission-critical services to defense, intelligence and security agencies. It is highly focused on assisting its customers in achieving “cyber-superiority,” to defend existing networks but also to play offense by monitoring cyberspace and attacking the bad guys proactively. KEYW was founded in 2008 by a management team that had built a successful predecessor company that was sold to Northrop. The company’s goal is to build a new “total solutions company” that is more agile and focused than the Goliaths it competes against. So far so good, as KEYW is up to a runrate of $200 million in revenues from a standing start, building its business through acquisition and organic growth (which was over 25% in the past year). We think this is a special undertaking with a terrific, proven management team that can grow into a substantial company in time. Even though the stock is expensive on near-term earnings, we believe the company will in time be worth significantly more than its present $300 million market value.	31/12/2010	Baron Funds
Industrials_Aerospace & Defense	PRECISION CASTPARTS CORP	PCP US	USD	New York	€ 18,094,960,104.15	Precision Castparts Corp. is a leading manufacturer of high-quality and complex metal components and products for critical use in aerospace and industrial gas turbine applications. The company uses technically advanced processes that create high barriers to entry for its industry and has undertaken several initiatives to become one of the industry’s lowest-cost producers.The weakening economy has raised questions about the future of the aerospace cycle given that production peaked in 2008. Production cuts at both Boeing and Airbus, two of the company’s largest customers, have also given rise to concerns. In turn, Precision Castpart’s stock declined from nearly $160 in October 2007 to below $50 in October 2008. Although we had never previously invested in Precision Castparts, we have followed it along with other aerospace suppliers. The significant decline in its stock price gave us reason to take a closer look. This included several meetings with company’s management as well as research field trips to two of its manufacturing facilities in Ohio and Oregon. We believe the company has managed its business well through these challenging times. Operating margins have held up well in the current environment — the result of operating improvements, organic growth and, in our view, a sound acquisition strategy. We concluded that Precision Castparts was trading at a depressed price and took the opportunity to invest for the long term in the company in both Baron Partners Fund and Baron Asset Fund in the March quarter.Notwithstanding the challenging economic environment, we believe that PCP has significant opportunities for growth over the next several years. The company will benefit from Boeing’s highly-anticipated 787 program, the maiden flight of which is scheduled in the second quarter. Precision Castparts will earn nearly five times as much for each 787 as it does for each 737 narrow-body aircraft. This is Boeing’s most eagerly awaited airplane for delivery with between 800 to 1,000 planes on order, an estimated $100 billion backlog. To the extent that there are future production cuts, we believe they will be to the 737 program and not the 787. Precision Castparts has also diversified into other attractive end-markets since the last aerospace cyclical downturn. The company now generates nearly 30% of its revenues from power generation and has continued to grow in these markets through acquisition and market-share gains. The company is well-capitalized — it has no net debt — and we estimate it will generate about $1.0 billion of free cash flow annually over the next two years, which positions it well for future growth. We foresee deployment of free cash flow in either strategic acquisitions (most likely), stock buybacks (less likely), or increasing the current dividend. (Anthony Gerstein).	31/03/2009	Baron Funds
Industrials_Aerospace & Defense	TEXTRON INC	TXT US	USD	New York	€ 5,782,043,262.48	Textron is a multi-industry company with two very attractive segments that make up about three-quarters of its business: Bell, which primarily makes helicopters, and Cessna, which makes business jets.Bell’s prospects are tied to defense spending, which Spencer mentioned earlier is something we expect to hold up well, and to the fact that commercial helicopter fleets are aging. The average commercial helicopter is 25 years old and there have been huge improvements over that time in things like noise levels, fuel efficiency, safety and comfort – all of which argues for a long and robust replacement cycle.Cessna’s order backlog is extraordinary and it should continue to benefit from the increasing deficiencies in airport infrastructure and the air-travel system in general. I’m always shocked when I fly into JFK Airport in New York and think that for many foreigners this is their first impression of the U.S. Given the increasing difficulty of air travel and the rampant delays, private corporate travel is becoming more and more about business efficiency, not just luxury.What made the shares cheap when you first bought in last year?The company had won five significant military programs in the previous couple of years and they were having some trouble ramping up production on all five programs at once. That hurt margins as they had to spend extra money to get things on track, which hurt the stock price. Our feeling was that problems stemming from too much business, especially on very long-term projects like these, are fairly good problems to have. Everything isn’t fixed yet, but they’ve made significant progress on resolving the issues and margins are improving. Are the industrial and finance subsidiaries areas of concern?JS: The biggest industrial division is called Kautex, which supplies a range of advanced products to the auto-manufacturing industry. Even though they’re gaining share and have all the premier customers, car builds are down and so that business is down.The good news on the finance side is that the business is primarily focused on financing customers for the products Textron manufactures. Those loans should be money good – in case of default, they can repossess the collateral and fix it up and sell it in the secondary market. But like every other finance operation with cheap capital over the past five years, they also got into areas they shouldn’t have. They’ve had an issue, for example, with a golf course they financed. The portfolio obviously has other bad credits, but we don’t at all consider it a source of potential impairment of the entire company.	30/06/2008	Investor Insight, Spencer Davidson
Industrials_Aerospace & Defense	TRANSDIGM GROUP INC	TDG US	USD	New York	€ 4,423,669,686.73	One such example is a new addition to the portfolio over the quarter, Transdigm. This US company is a leading global designer, producer and supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service today. The company’s thousands of different components are designed into and sold as original aircraft equipment, and the company then generates recurring aftermarket revenue over the lives of theaircraft, which average about 30 years. Approximately 60% of revenues are generated from aftermarket sales, which are made at extremely high margins. Such high margins are a result of more than 95% of sales coming from proprietary products for which Transdigmowns the design and around 80% of sales coming from products for which Transdigmis the sole source supplier. Stringent and costly regulation and certification requirements and the vast number of proprietary products produced by Transdigmcreate substantial barriers to entry. In addition Transdigm’sexcellence in engineering together with its high levels of customer service have led to the company gaining a greater shipsetvalue in new aircraft platforms such as the Airbus A380 and Boeing 787. This will lead to future profit growth as the componentssupplied are purchased in the aftermarket. Transdigmtypically increase prices by between 4% and 7% annually as a result of their exceptionally strong position in the niche component markets in which they operate.	30/06/2010	Veritas
Health Care_Pharmaceuticals	IMPAX LABORATORIES INC	IPXL US	USD	NASDAQ GS	€ 1,159,532,021.43	IMPAX (IPXL) - GENERIC DRUG MANUFACTURER COULD BE A TAKEOVER TARGET.Impax Labratories (IPXL) is a generic drug maker. The company focuses on controlled-release generic substitutes for brand-name drugs that have gone off-patent, or have insufficient patent protections. Currently, the company has 57 approved generic drugs, including substitutes for Claritin, Wellbutrin, Prilosec, and Flomax. The bulk of Impax’s sales are directly to wholesalers like Cardinal Health (CAH) or McKesson (MCK), although the firm also has joint ventures with several larger generics companies to sell their drugs, including a fairly large one with generic powerhouse Teva (TEVA). Impax is also developing a couple of branded drugs, although this is not really material to results yet.Generics are a much different business than branded pharmaceuticals. In branded drugs, companies like Pfizer (PFE) spend billions on large R&D pipelines to develop proprietary drugs. The success rate is low, but the winners are incredibly lucrative, with a decade of patent protection and huge profit margins.Success in generics is much different. There are two keys here. One is consistently getting short (180-day) exclusivity periods on generic compounds by being the first to file applications (ANDAs) with the FDA. Impax’s recent success and, in fact, its appearance in MFI is solely due to the company winning this period for generic Flomax in Q1. Impax’s exclusivity was even shorter, just 8 weeks, due to a complex web involving competitor Ranbaxy. Having this uncontested period allowed Impax to book $176 million of incremental revenue over Q1 of 2009. That gain alone triples the total of $59 million booked last Q1! This higher revenue of course led to much higher profits - operating income was up 4,726%! As a result, the Magic Formula earnings yield is measured against a one-time revenue event and is unsustainably high at 29%.While generic Flomax will continue to produce very good results for the first month of Q2, exclusivity ended at the end of April. For the remainder of the year, it will be a modest contributor to revenue. If we look out to 2011 expectations, earnings yield is around 10.8%. That is still pretty cheap but not exceptional.The other key to success in generics is scale. Price is the competitive advantage, and being the low cost producer is paramount. Unfortunately for Impax, it pales in size to the big generics makers like Teva and Sandoz, the generics division of Novartis (NVS). Due to this fact, Impax’s success will be lumpy and largely dependent on how well they invest their windfalls like Flomax.MagicDiligence believes that generic drugs is a good industry to be in right now, and Impax has a lot of interesting qualities. For one, the company is very sound financially. The balance sheet has over $130 million in cash and no debt. Second, management has a pretty strong record of getting ANDAs passed and winning exclusivity. In addition to Flomax, Impax has been early to market with versions of OxyContin and Wellbutrin. Finally, there is a landslide of big-name drugs coming off patent in the 2011-2015 period, presenting a massive opportunity for generics makers. Impax has 32 generic drug applications pending with the FDA, and another 50+ in development.Also intriguing is Impax’s history with Teva. The two companies have had agreements for a decade, and Teva has even invested in Impax in the past. Currently, Teva distributes several of Impax’s products, including generic Prilosec and Claritin. Teva has been very aggressive about expanding their already dominant scale, swallowing large competitor Barr in 2008. Impax could be a very attractive acquisition to further this cause.And Teva isn’t the only potential acquirer. As mentioned, scale is key in generics. A lot of traditional drug makers, including Pfizer, have been looking to expand their generics business. Impax also has alliance agreements with Wyeth, now a part of... Pfizer. While the poten	30/04/2010	Magic Diligence
Health Care_Life Sciences Tools & Services	GERRESHEIMER AG	GXI GR	EUR	Xetra	€ 1,047,817,993.16	Over the quarter, we built an investment position in Gerresheimer, a leading manufacturer of glass and plastic packaging solutions for the pharmaceutical industry with a €1bn market capitalization. Trading at a free cash flow yield of 10% and with a track record of growing revenues by +11.5% per annum since 2006, Gerresheimer fit all of our investment criteria: strong management team, dominant market position, visible cash flow generation and strong growth potential irrespective of the macro-economic environment. Such a company trades at a deep discount to its fair value, highlighting once again the unique set of investment opportunities currently available in Europe. Gerresheimer is active in two main business segments: glass and plastics. In glass, the company is one of the only two fully vertically integrated manufacturers for the pharmaceutical industry (Schott being the other). Gerresheimer offers a large range of products such as tubes, vials, ampoules, syringes and bottles, the quality of which adheres to the highest standards required by the pharmaceutical industry. More importantly, 85% of Gerresheimer’s products are FDA approved, together with the drugs they contain, and most manufacturing is located in close proximity to clients, who critically depend on Gerresheimer’s efficient highquality clean-room-environment manufacturing. This obviously creates tremendous entry barriers for potential competitors. Gerresheimer was successful in building scale in niche markets and has become a low-cost producer for high-specification products. The company is running at productivity levels much higher than typical glass manufacturers with capacity utilization rates above 90% thanks to the stability offered by output volumes of pharmaceutical products. EBITDA margin in glass have been very stable over the years systematically ranging between 21-23% and the company generates cash return on equity in excess of 20%. But far from being satisfied with running best-in-class operations in a highly cash-generative business, management has succeeded in growing glass manufacturing significantly over the past 5 years by entering new, fast-growing product categories such as ready-to-fill syringes (RTF syringes). Gerresheimer only started producing RTF syringes in 2005. Now with 20% market share globally, they account for an estimated €170m in sales. Management expects this segment to grow by +10% per annum and the company is also completing a new production line which will increase its output capacity by +25% in 2013. In plastics, Gerresheimer offers containers and seals for pharmaceutical products as well as drug delivery systems such as inhalers for asthma and insulin pens. Packaging accounts for about 1/3 of the division’s sales with a strong presence in emerging markets, particularly in Brazil where the company enjoys a leading market position. The rest of the sales come from manufacturing contracts for medical devices. As with glass, most plastic products are also FDA approved and benefit from strong entry barriers. In fact, product development and manufacturing is even more integrated in plastic devices. Pharmaceutical companies will bear most of the new product development costs and will cover most product specific capital expenditures. When a new product is launched, Gerresheimer generally receives an exclusive manufacturing contract valid for the entire life of the product. Plastic products are also highly profitable (24% EBITDA margin) and offer high growth opportunities (the division reported sales growth of +24% in the first nine months of FY11). Gerresheimer has about 30% market share globally although it is only marginally present in the US. The company has built a pipeline of new products that should hit the market over the next 2-3 years creating significant growth opportunities. The most recent of these products are insulin pens, which were launched in 2009. The insulin pen market is growing +7-8% per annum and now totals abo	30/09/2011	Alatus
Health Care_Life Sciences Tools & Services	LIFE TECHNOLOGIES CORP	LIFE US	USD	NASDAQ GS	€ 6,320,785,119.54	During the quarter we initiated a position in Life Technologies, the company formed through the merger of Invitrogen and Applied Biosystems in November 2008. The majority of the company’s sales are derived from high-margin consumable products, such as molecular biology reagents and antibodies, used by research scientists for basic biomedical research and drug discovery applications. The company also sells products used by biopharmaceutical companies for the manufacture of biologic drugs. The company’s instrumentation platforms, which include PCR systems and DNA sequencers, are used extensively throughout the life sciences and applied markets, in areas that include forensics, diagnostics and food safety. Life’s customers include government and academic research institutions, biopharmaceutical companies, forensics labs, food safety labs and diagnostic companies.There are several elements of Life’s core consumables business that we consider attractive. The company’s average order size is small (approximately $400), its sales volume is high, and its customers are generally focused on ensuring high-quality consumables. We believe that Life enjoys pricing power because its consumables are integrated into various scientific processes, implying high switching costs, particularly given the low cost of a typical consumable. In addition, the company benefits from economies of scale, selling 50,000 products to 75,000 customers in 160 countries around the world. Life retains a highly-skilled, direct scientific sales force (numbering approximately 1,200 employees), a large research and development staff (numbering approximately 1,400 employees), and it holds 3,600 patents and exclusive licenses. We believe that the company’s end markets are stable, given that 55% of revenues come from academic and government end markets, which have been benefiting from government stimulus spending and annual NIH budget increases after a long period of flat NIH budgets under the Bush administration.As a result of its merger with Applied Biosystems, the company also has a presence in the fast-growing DNA sequencing market. The Human Genome Project, which was undertaken to sequence the first human genome, took thirteen years and cost almost $3 billion. Today, whole human genomes can be sequenced for thousands of dollars in a matter of days or weeks. We believe this market could grow rapidly as the cost of sequencing has continued to decline and the technology transitions from a research tool into a clinical tool used to identify cancers, cardiovascular disease and neurological disorders. We believe the field of genomics has the potential to revolutionize the practice of medicine, leading to a new age of personalized medicine where diagnosis and treatment will be based on each individual’s unique genetic profile. Life Technologies sells instruments and consumables that are used for whole human genome sequencing.In the near-term, we believe the company should benefit from its exposure to stable academic end-markets, as well as ongoing meaningful cost saving stemming from the 2008 merger. In the longer-term, we believe the company should benefit from its presence in fast-growing markets, including DNA sequencing, molecular diagnostics, regenerative medicine, animal health, food testing, forensics and synthetic biology. Given what we believe is a low valuation for the stock, we think the market is not giving the company enough credit for its attractive base business combined with its future growth potential. (Neal Kaufman)	31/03/2010	Baron Funds
Health Care_Life Sciences Tools & Services	METTLER-TOLEDO INTERNATIONAL	MTD US	USD	New York	€ 4,252,522,847.16	We initiated a position in Mettler-Toledo in the December quarter and added to the position in the past quarter. Mettler is the world’s leading provider of weighing instruments for use in laboratory, industrial and food retailing applications. The company has a track record of generating consistent growth. Since going public in 1997, the company’s earnings have increased at a compound annual growth rate of approximately twenty percent. The business has attractive financial characteristics, including high returns on invested capital and strong free cash flow, which the company has historically used to repurchase its own stock. Concerns about the company’s exposure to the weak economy led to a decline in the stock price from a peak of $110 in July 2008 to the $60’s in the December 2008 quarter and the $40’s in the March 2009 quarter. In our view, the correction in the stock price provided us with an opportunity to acquire a great business at an attractive price.We believe that Mettler’s business should be able to weather the tough economic conditions, and that once economic conditions improve, Mettler will return to its strong track record of consistent earnings growth. Mettler’s largest end markets are pharmaceutical companies, food manufacturers and food retailers, which tend to be more stable in economic downturns. Mettler also has a large installed base of 100,000 instruments which require regular servicing through annual contracts. Service revenue accounts for roughly 23% of total revenue, and disposable revenue adds another 10% to the revenue base, resulting in roughly one-third of total revenue coming from recurring sources. Mettler’s large installed base provides both a replacement and an up-sell opportunity. Mettler services only 50% of its installed base, providing an opportunity to increase its service penetration rate. Emerging markets, which represent 25% of Mettler’s sales, are a key growth driver for the company, as multinational customers increase investment in China and Chinese companies seek to benefit from the rapidly expanding export market. Another key growth driver includes the company’s market-leading product inspection business, which consists of metal detectors and x-ray visioning equipment. Growth in this business is being driven by increasing food safety and consumer protection requirements. Mettler also recently introduced a new product to automate the dosing process in the laboratory. This new product is an example of the company’s strategy of “hitting singles” and we believe this should enhance the growth rate and the margin profile of the company’s laboratory instruments business since the product includes a high margin, consumable stream of revenue. (Neal Kaufman).	31/03/2009	Baron Funds
Health Care_Life Sciences Tools & Services	TECHNE CORP	TECH US	USD	NASDAQ GS	€ 1,952,563,545.77	Techne is the leading supplier of specialized proteins called cytokines, which control the growth, development and functioning of cells. The company’s products are used by scientific researchers in academic institutions, biopharmaceutical companies and government-funded research entities to investigate possible therapies for diseases such as cancer and autoimmune disorders. The company has a reputation for selling high quality products and a loyal following among its customer base.Techne has a portfolio of over 12,000 consumable biotech products with long product lives lasting in many cases up to 20 years. In addition, the company has introduced over 1,000 new biotech products each year. This long product life cycle combined with continuous new product development has resulted in a compounding effect on revenues as new product sales was added to the existing revenue base.The financial characteristics of the business, in our opinion, are exceptional. The company consistently has generated above-market organic revenue growth, has generated mid-50% operating margins, and has required minimal capital investment, allowing the company to generate strong free cash flow. The balance sheet is pristine, with $230 million in cash and no debt, providing management with flexibility to make acquisitions or return cash to shareholders. We think the company will benefit from increased government funding for academic research. In addition to a congressionally approved 3% increase in the National Institutes of Health (“NIH”) budget, the administration has also proposed an additional 3% increase in the NIH budget, including $6 billion in funding for cancer research. The administration has expressed a goal of doubling cancer research over the next five years. In addition, the economic stimulus package recently signed into law contains over $10 billion in new funding for NIH to be spent over the next few years. All of this 24 March 31, 2009 Baron Growth Fund increased funding for academic research should translate into increased sales of Techne’s biotech products. We estimate 25%-30% of Techne’s revenue comes from academia. In addition, Techne’s stem cell research products should see increased sales as a result of the lifting of the ban on federal funding for embryonic stem cell research. (Neal Kaufman).	31/03/2009	Baron Funds
Health Care_Health Care Technology	CERNER CORP	CERN US	USD	NASDAQ GS	€ 9,258,776,241.75	We also initiated a position in Cerner, the largest stand-alone healthcare information technology company in the world in terms of revenue. Cerner was founded in 1979 and has a long track record of success selling clinical healthcare information technology software and systems, primarily to hospitals. Today, the company’s solutions are licensed by more than 8,500 facilities around the world, including 2,300 hospitals. We believe the company’s large footprint provides a competitive advantage because the market is highly reference-based, and customers rarely switch vendors after making an investment in a vendor’s software and systems. We also think Cerner’s business would be difficult to replicate because the company has invested over $2 billion cumulatively in research and development and has 2,000 people engaged in research and development, 900 clinicians on staff, and 2,000 people dedicated to providing professional services.We think Cerner has attractive growth prospects, particularly in light of the $36 billion in federal government funding that is being injected into the market to stimulate adoption of electronic health record technology. Hospitals and physicians that become meaningful users of certified electronic health record technology can receive increased Medicare and Medicaid reimbursement starting in 2011, and non-compliant hospitals and physicians will be subject to reimbursement penalties starting in 2015. We believe that these financial incentives and penalties are likely to accelerate adoption of Cerner’s products over the next several years. Cerner management estimates that the federal stimulus creates a $2 billion revenue opportunity in the company’s installed base alone, as existing customers seek to purchase additional products in order to meet the meaningful use requirements. In addition, Cerner management sees a $8-10 billion addressable revenue opportunity from new customers.Cerner has also introduced new services targeted at capturing a larger percentage of clients’ existing information technology spending. The company has made a substantial investment in data centers where Cerner can provide remote hosting, application management and disaster recovery services. The company calls this service offering CernerWorks. We believe that CernerWorks creates a competitive advantage because customers are able to receive better service at lower cost by leveraging Cerner’s IT expertise. Cerner has also introduced Cerner ITWorks, whereby Cerner assumes responsibility for running a client’s internal IT department, and Cerner RevWorks, whereby Cerner assumes responsibility for running a client’s revenue cycle management and patient accounting. Management believes these “Works” offerings have the potential to contribute over $2 billion in annual revenue in 2020, up from $250 million in 2009.Cerner also has growth prospects outside the U.S. Cerner has a presence in 25 countries and is the market share leader in the U.K., U.A.E., Canada and Australia, with a growing presence in France, Spain, Ireland, Germany, Saudi Arabia and South America. U.S. stimulus has accelerated interest in healthcare IT around the globe, providing a global climate that we believe will offer opportunity for Cerner in the next several years.For the next several years, we think Cerner should be able to generate double-digit revenue growth and strong margin expansion. At the same time, we expect the company’s capital expenditure requirements to diminish, resulting in a rapidly growing cash balance that we expect the company to return to shareholders over time. (Neal Kaufman)	31/12/2010	Baron Funds
Health Care_Health Care Services	HMS HOLDINGS CORP	HMSY US	USD	NASDAQ GS	€ 2,112,711,309.30	HMS Holdings is a database company that helps governments and private businesses lower their costs of providing insurance. The company’s core business is providing so-called coordination of benefit (COB) services to 41 states. COB services help states optimize their Medicaid expenditures by ensuring that the states look to other insurers to pay claims if the patient has alternative coverage. In 2009, it recovered over $1 billion in erroneously made payments for its clients under its COB offering. HMS has created massive barriers to entry in its business, the most important of which are its access to eligibility records for the insurers that service the 41 states in which it has contracts. No other company has this breadth of access, as it is only granted by the insurance companies at the behest of their state client for use by the states’ contractors.Moreover, HMS does its job extremely well. It has lost only one contract in the last few years, and it turned out that the new contractor was so inept that it collected almost nothing for its state client vs. the $140 million it had been collecting under its contract. Recently, HMS recaptured loss by becoming the subcontractor on the contract at the state’s behest. We believe that the COB business can grow by double digits over the next few years, driven by increased penetration within HMS’ existing state clients (much of the work is done less efficiently and more expensively by state employees), and by the increase in eligible Medicaid patients under the recent healthcare reform legislation.The company is also growing a new segment of its business called program integrity (PI). Program integrity addresses fraud, waste and abuse issues that arise for payors of all stripes (federal, state and commercial). We believe that PI will grow at a 20-30% rate for HMS over the next few years, and that this segment will eventually comprise 50% of HMS’s revenue base (from about 20% in 2010). The growth is both organic, as well as a result of a smart tuck in acquisitions which have added critical capabilities to HMS’s offering. These acquisitions have added claims editing software, pharmacy benefit analysis capabilities, employer plan review services and audit platforms. Between the COB and PI services that HMS offers, we believe that the company will drive high teens revenue growth and nearly 20% growth in EPS and cash flow on a sustainable basis. (Randy Gwirtzman)	30/09/2010	Baron Funds
Health Care_Health Care Facilities	BROOKDALE SENIOR LIVING INC	BKD US	USD	New York	€ 1,711,851,925.56	Brookdale Senior Living (4.1% of the Fund) is the largest owner and operator of senior housing communities in the U.S., operating 565 facilities in 35 states, with a capacity of 52,000 residents. Strong senior housing demographics (the senior population is growing at three times the rate of the overall population growth), and the shortage of available construction financing is setting the stage for a favorable demand/supply outlook which we think may lead to strong occupancy and rental rate growth in the next few years. We expect the company to benefit from an eventual improvement in the broader housing market. We believe the company has several growth opportunities. They include: (i) increasing occupancy (currently 87.5%) and rents; (ii) upgrading several of its residences — the company is planning to upgrade 1,000 units per year for the next few years; (iii) acquisitions —the senior housing industry is fragmented and ripe for consolidation with Brookdale controlling only 3% of the industry and the top 10 operators controlling a total of only 13%; and (iv) growth of its ancillary businesses. We believe Brookdale is attractively valued. It trades at a valuation discount to healthcare REITs, despite our view of a superior growth outlook. We believe the stock could generate 15-20% annual returns in the next few years. The senior housing industry, with its fragmented structure, is beginning to consolidate at premium valuations relative to where the senior housing stocks are valued in the public markets.	31/03/2011	Baron Funds
Health Care_Health Care Facilities	CAPITAL SENIOR LIVING CORP	CSU US	USD	New York	€ 182,957,490.59	Capital Senior Living (5.2% of the Fund) is a small capitalization operator of 77 senior living communities with a capacity of 11,000 residents. We believe the company has an attractive opportunity to grow organically by increasing occupancy (currently 85%) and by acquiring other senior housing companies at attractive valuations relative to the company’s cost of capital. Strong senior housing demographics (the senior population is growing at three times the rate of the overall population growth), and the shortage of available construction financing are setting the stage for a favorable demand/supply outlook, which we expect will lead to strong occupancy and rental rate growth in the next few years. We expect Capital Senior Living to benefit from an eventual improvement in the broader housing market. For example, if people were able to sell their existing home, in our view, they would be better equipped to move into a senior housing facility. The company’s share price does not reflect its total real estate value. The company owns 40% of its real estate, and we believe this alone is worth approximately $10 per share. At its current share price of approximately $9 per share, we think investors receive the operating company, representing 60% of the cash flow, for free. The stock trades at a significant discount to most healthcare REITs despite, in our view, stronger growth prospects. The senior housing industry is fragmented (the largest operator, Brookdale Senior Living, controls only 3% of the industry) and beginning to consolidate at premium valuations relative to where the senior housing stocks are valued in the public markets. We believe the company could be an attractive takeover target.	31/03/2011	Baron Funds
Health Care_Health Care Facilities	HCA HOLDINGS INC	HCA US	USD	New York	€ 8,510,145,585.47	General HospitalHCA is the largest non-governmental hospital operator in the US, providing about 4% of all US hospital services. The company was previously publicly traded before it was bought out for $33 billion in 2006 by Bain, KKR and Merrill Lynch. Now it is returning to the public markets in an estimated $3.5 billion offering, which would eclipse Kinder Morgan’s recent $2.8 billion deal to become the largest-ever private equity-backed IPO on a US exchange. HCA plans to sell 124 million shares (29% from selling shareholders) at a price between $27 and $30; BofA Merrill, Citi and JPMorgan are the bookrunners on the offering. At the midpoint of the range, the company will have a $16 billion market cap. HCA is on the IPO calendar for the week of March 7th.BusinessHCA operates 158 general acute care hospitals and 106 freestanding surgery centers in 20 US states, mostly in the South and Southwest, and the UK. Texas and Florida together account for just over half of revenue. The company’s hospitals, which have just over 40,000 beds, admitted 1.6 million patients in 2010, resulting in revenue of $31 billion and adjusted net income of $1.3 billion. Revenue is generated from managed care and other private insurers (53%), Medicare (31%), Medicaid (10%) and the uninsured (6%).Evolving industryThe impact of healthcare reform on the industry is uncertain. On the one hand, it is expected to insure at least 30 million currently uninsured Americans, which should improve hospital admissions, and it should reduce bad debt expense for hospitals given wider coverage. On the other hand, Medicare reimbursements will be negatively impacted by the new rules and overall pricing could fall if there is a shift away from employer-sponsored insurance. Additionally, budgetary concerns have led several states, including Texas, to consider Medicaid cuts. Despite the current uncertainty, HCA believes that its better-than-average quality of care scores (CMS composite score of 98.4% vs. the 95.3% national average) and margins (21% adjusted EBITDA margin compared to 12-18% for other publicly traded peers) position it well to weather the new regulations and other industry changes.Debt levelBain, KKR and Merrill are each selling about 11% of their stake and will collectively own about 55% of the company following the IPO. In addition, they received over $4 billion in dividends in 2010, which required the company to take on additional debt. Following the IPO, the company expects to have $26 billion in outstanding debt (4.4x adjusted EBITDA). While investors may take a negative view on the debt level, particularly since some of it was used to fund insider dividends, we note that adjusted EBITDA was 2.8x interest expense in 2010, which gives the company a reasonable buffer. Going forward, the company’s strong cash flow ($1.8 billion in 2010 free cash flow) should help it either delever or grow through further acquisitions.OutlookHCA will be the third multibillion private equity-backed IPO this year, following Nielsen (NLSN), which raised $1.6 billion, and Kinder Morgan (KMI), which raised $2.9 billion. Both of those deals priced above their proposed range and traded up, as investors were attracted to their industry-leading positions, stable business models and strong cash flow. While the evolving healthcare industry may make investors a little more wary of HCA’s outlook, the company’s large size, attractive cash flow and experienced management team should still support investor interest in this blockbuster IPO.	28/02/2011	Renaissance Capital
Health Care_Health Care Equipment	BAXTER INTERNATIONAL INC	BAX US	USD	New York	€ 23,653,582,118.08	Baxter International develops and manufactures a diversified line of healthcare products. Founded in 1931, the company produced the first commercially prepared intravenous (IV) solutions. Since then, the company has expanded into biotechnology with products that save and sustain the lives of people with chronic and acute medical conditions. Through the company’s BioScience and Medical Products business units, Baxter uses its expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide. Consistent Patient Base Baxter maintains strong customer relationships because many of its products are needed by patients for the rest of their lives. Switching is rare because of the comfort level often established and the complications that can occur when therapies are changed. In addition, Baxter offers superior customer service by focusing on a set patient population and addressing their specific needs through education and support networks. Highly Innovative Organization Baxter pioneered several key healthcare products including the first dialysis machine, the first IV solutions in glass and the first plastic container for administering IV solutions. Currently, the company is in clinical trials for several market-changing products ranging from the treatment of Alzheimer’s disease to home renal dialysis care. Since highly innovative medical products can take several years to commercialize, we believe the company is arriving at the point where its past research efforts should come to fruition — saving lives and driving returns. Compelling Valuation Although the company continues to grow earnings by focusing on costs, share repurchases and commercializing new products, investors remain concerned with the company’s BioScience division (namely pricing pressures and supply/demand stability). Although the short term supply and pricing for blood products and derivatives can be volatile, pricing among manufacturers remains rational due to the market’s long term growth prospects. We believe demand will increase with patient population growth, approval of therapies for chronic conditions and the expansion of the company’s global reach. Secondly, like many companies in the healthcare sector, Baxter continues to suffer from concerns around escalating healthcare costs. We believe the healthcare market will continue to face pricing pressures as the population ages and uses more healthcare dollars. However, companies like Baxter that provide life-saving products, focus on unmet medical needs and offer innovative products that lower overall healthcare costs should be rewarded. As of December 31, 2011, shares traded at $49.48, a 33% discount to our private market value of $74.04.	31/12/2011	Ariel Funds
Health Care_Health Care Equipment	IDEXX LABORATORIES INC	IDXX US	USD	NASDAQ GS	€ 3,617,977,943.06	IDEXX Laboratories’ shares performed well during the second quarter, helped by better-than-expected first quarter earnings, intact 2009 earnings guidance, and some indications that foot traffic trends in veterinary clinics may have bottomed. Although the recession has dampened its growth, the company’s revenue has continued to accelerate, helped by expanded market share for its veterinary machines, increased pet ownership, and new product launches like the CatalystDX, the company’s next-generation blood chemistry analyzer. We believe that the CatalystDX represents a substantial improvement in technology over existing products, and we believe that it should contribute meaningfully to the company’s future profitability. In its laboratory testing unit, IDEXX recently launched its proprietary Cardiopet proBNP test, designed to detect cardiac disease in dogs and cats by testing for a biomarker released by the heart. This represents a novel way to test for cardiac disease in pets, and we expect strong adoption by veterinarians who can provide better care to their patients by using this diagnostic test. While it is still too early to call a clear improvement in veterinary industry fundamentals, we believe that veterinary visits will be an early beneficiary of an economic recovery, as pet owners need to have their animals thoroughly examined after deferring recent visits or procedures. (Neal Rosenberg)	30/06/2009	Baron Funds
Health Care_Health Care Equipment	INTUITIVE SURGICAL INC	ISRG US	USD	NASDAQ GS	€ 14,861,579,586.57	We initiated a position in Intuitive Surgical, a company we have followed for many years at Baron Funds. Intuitive Surgical sells the da Vinci robotic surgical system, which enables surgeons to perform surgeries in a less invasive fashion than open surgical procedures and with more intuitive control, range of motion, fine tissue manipulation capability and 3-D vision characteristics than traditional laparoscopic surgery. Patients treated with the da Vinci benefit from fewer complications, less blood loss, less nerve damage, reduced pain and faster recovery than open surgery. Hospitals benefit from incremental patient volume, reduced costs due to fewer complications and shorter lengths of stay, and additional patient bed capacity.In the December quarter, the stock retreated to the mid $200s after hitting the high $300s at the beginning of 2010, as investors became concerned about a slowdown in procedure growth caused in part by a broader slowdown in healthcare utilization. We think the pullback in the stock presented a buying opportunity because we believe that over the longterm, the company will continue to demonstrate attractive procedure growth, which will translate into attractive revenue and earnings growth.Robotic surgery has become the standard of care for prostatectomy procedures and surgeons are increasingly using robotic surgery in other surgical specialties and procedures such as gynecology, cardiothoracic, head/neck, colorectal, and general surgery. The company is targeting 1.8 million annual procedures worldwide versus the roughly 275,000 procedures performed in 2010, which implies a large potential procedure opportunity.What makes the company’s business model so attractive to us is that each time a procedure is performed using the company’s robotic system, the company generates instruments and accessories revenue. As a result, we think the company has a multi-billion dollar recurring revenue opportunity. We think that as procedures continue to increase and the company generates a growing portion of its revenue from recurring, procedure-based revenue, the company’s margins will expand and earnings will grow. We think the company’s effective monopoly on robotic surgery will endure because the company has sustainable competitive advantages, which include an installed base of over 1,600 robotic systems, multiple FDA regulatory clearances which are increasingly difficult to obtain, a large patent portfolio, and over $1.6 billion in cash. (Neal Kaufman)	31/12/2010	Baron Funds
Health Care_Health Care Equipment	SONOVA HOLDING AG-REG	SOON VX	CHF	SIX Swiss Ex	€ 5,648,591,070.60	We recently initiated a position in Sonova, a Swiss company that is the leading global manufacturer of hearing aids. The global hearing aid market is roughly a $5 billion market, but we believe that eventually it will be significantly larger. Sixteen percent of the population suffers from varying degrees of hearing impairment and would benefit from a hearing aid, but in the industrialized countries less than 20% of the hearing impaired use a hearing aid. In emerging markets, this figure is much lower. We believe Sonova is the leading innovator in the hearing aid industry, focused on increasing the market penetration rate of these devices through continuous improvements in technology and increased distribution.We believe Sonova should benefit from secular tailwinds, most notably the aging of the population. Hearing in humans begins to decrease gradually from the third decade of life. More than half of all individuals over the age of 70 are hard of hearing or significantly hearing impaired. In the U.S., the largest hearing aid market, the oldest members of the baby boom population of 79 million people turned 65 years old on January 1, 2011. Today, 13% of the U.S. population is over 65 years old, and that figure is expected to rise to 18% when the last of the baby boomers turns 65 in 2030. It is estimated that roughly 10,000 people will turn 65 every day over the next 19 years. Life expectancy is also increasing, which will drive more replacement sales of hearing aids. We are also excited about the potential of Lyric, a product Sonova acquired in January 2010. Lyric is a device placed deep in the ear canal, making it totally invisible from the outside. No surgery or anesthesia is required to install the device. Once placed, the device can be used 24 hours a day, for a period of 120 days, after which it is removed and replaced by the hearing professional with a new system. Lyric can be worn during daily activities such as exercising, showering, swimming and sleeping. Lyric is offered through a subscription model, which translates into attractive economics for Sonova. We think Lyric could be a game changer and expand the hearing aid market, as individuals with mild to moderate hearing loss who are reluctant to wear a hearing aid for aesthetic reasons are attracted to the Lyric device. Sonova’s business has attractive financial characteristics: stable revenue growth with the potential for growth to accelerate from Lyric; high margins; and high returns on capital. We also like the management team, which has expanded the company’s market share through product innovation. In addition, the hearing aid market is mostly a private pay market (consumers pay out-of-pocket) versus a market dependent upon government reimbursement, which could be subject to reduction. Although private pay makes the market sensitive to economic conditions, underlying demand for the company’s products is driven by need, and we believe that consumers with hearing impairment are likely to make the purchase of hearing aids a priority spending item. (Neal Kaufman)	31/12/2010	Baron Funds
Health Care_Health Care Equipment	SYMMETRY MEDICAL INC	SMA US	USD	New York	€ 209,672,038.06	In early 2010 we bought Symmetry Medical Inc. (SMA). Symmetry is the world’s largest orthopedic supplier, serving orthopedic device-makers such as Biomet, Stryker Corp. (SYK), and another Ariel holding, Zimmer. It provides cases, trays, instruments and forging used to manufacture and install artificial hips, knees, shoulders and the like. The company works very closely with its manufacturers, who need flawless products. Symmetry’s partnerships are girded with its strong relationship with the FDA—a huge barrier to entry in this industry. In addition to general worries, an additional short-term woe for Symmetry is cutbacks on orthopedic surgeries in the Great Recession. We believe this phenomenon is temporary and growth will resume in 2010 and persist long term. Symmetry is a holding in our small cap and micro-cap accounts.	31/03/2010	Ariel Funds
Health Care_Health Care Distributors	HENRY SCHEIN INC	HSIC US	USD	NASDAQ GS	€ 4,964,233,016.00	Henry Schein, a distributor of dental, physician and veterinary supplies, rose during the quarter. We believe that the market was impressed by the relative resiliency of its business during these challenging economic times. Schein has never recorded a year of negative growth, and we believe that the company can still grow its earnings in 2009, even if the economic recovery is pushed into 2010. We believe that eleven recently completed acquisitions will mitigate weakness in organic sales, and tight expense controls should also help. The U.S. dental industry is mostly insulated from healthcare reimbursement concerns, and the socialized nature of around 40% of the global dental market provides the company another measure of protection. (Susan Robbins).	31/03/2009	Baron Funds
Health Care_Health Care Distributors	MCKESSON CORP	MCK US	USD	New York	€ 14,888,179,732.96	From ‘Graham and Doddsville’ Issue 11 Winter 2011, a thesis about the HMO industry and about McKesson Corporation (MCK) in particular.LAWRENCE M ROBBINS, Ceo - Glenview Capital Management 767 Fifth Avenue New York NY 10153Let’s talk about Heath Maintenance Organizations. We’ve owned HMOs on and off in the past. They were about 20% of our fund by the second quarter of ‘09 and then were reduced to as low as 2%. Today, they’re approximately 9% of our fund. We own three: Cigna, Aetna, and Well- Point. What do we look for? We look for businesses that have a good medium and long-term growth outlook and are cheap relative to the cash flows that they are currently generating. In general, we’re looking for low-teens or better growth. HMOs have been vilified by the press and by constituents in Washington and their business practices have come under intense scrutiny. If you look at the overall healthcare landscape, coming into 2008 the average healthcare traded at a 110% relative multiple, and coming into 2010 they traded at a 70% relative multiple. The market multiple went from 18x or 19x to 13x or 14x, and healthcare went from 10% to the right of that to 30% to the left. So, healthcare multiples got crushed. Why? People were uncertain about what healthcare reform meant, and therefore the multiples of the stocks were hurt. Despite the uncertainty, healthcare stocks did what they are supposed to do: grow regardless of the economic environment. Lots of stocks went down, but the company earnings went up and that therefore created the double-whammy for valuation. Today, Cigna trades at 8x earnings, Aetna and WellPoint at 9x, so these stocks are exceedingly cheap. There were three elements of healthcare reform that really affected HMOs. The first is that there is a profitability cap called “medical loss ratio” or “MLR” minimums that regulates the maximum gross margin that the industry is allowed to have. Any industry which has regulated profits is worth less than one without. The second thing is that there are new industry taxes, some of which may be passed onto the customers, but for the most part, it will hurt the companies. The third thing out of healthcare reform is that there are 37 million people who are now uninsured and who will be entering the market in 2014. The HMOs will get their fair share of these customers in 2014, which can only be positive for these companies. Margins may not be as great for the companies as now, but nobody is arguing that this will make the economics worse. There is some concern that some existing customers in the high profit margin bracket might slip into the lower bracket. When we do the math, we find that in spite of that mix shift, profits should still improve in 2014. So when you think about the profits of HMOs, you think about it as headwind offset by some tailwind. You should have earnings declining in 2011 and then two normal years of growth in 2012 and 2013, and an elbow upwards in 2014. So if you ignore the left side of the graph, and start with 2011, you start to think to yourself that with the accelerating tailwind in 2013 and 2014, that this is a pretty good investment. It’s probably going to move faster than the overall market. Where’s the market trading? 14x. Where are these guys trading? 9x! Not to over-think it, but there are only two things that matter in investing. What are they going to earn, and what multiple are people going to put on that. Let’s not make our business any more complicated than this. The headwinds from healthcare reform are going to be fully reflected, there are going to be many different cycles, but we should be back to the general trend of HMOs, which is a low single digit population and membership growth. The price in general is proportional to the cost trend, so if the cost trend is up 7.5%, prices will also go up by about 7.5%. Therefore, if you have 1.5% membership and 7.5% price growth, you have 9% top line growth and 9% COGS growth. Therefore,	31/12/2010	G&D
Health Care_Biotechnology	REGENERON PHARMACEUTICALS	REGN US	USD	NASDAQ GS	€ 7,134,806,709.68	Regeneron is an emerging biotechnology company that utilizes several proprietary technology platforms to develop protein-based drugs (as opposed to traditional chemical-based drugs) for an array of debilitating medical conditions. Given Regeneron’s large investment in research and development, coupled with the fact that the company just received FDA approval for Eylea, its drug for retinal diseases, the company is not currently profitable. However, we see a clear path to profitability and sustainable earnings growth within our investment horizon (by late 2013). This should be driven by the sales ramp of Eylea, which we think is a potential “pipeline-in-a-drug” with opportunity to become the best-in-class treatment for a variety of retinal diseases. We see Regeneron as a natural extension of our deep research focus over the last decade on identifying potential future leaders in the area of biotechnology.	31/12/2011	Sands
Financials_Specialized Finance	CME GROUP INC	CME US	USD	NASDAQ GS	€ 14,450,439,926.62	CME Group’s shares rose as trading activity at the company’s exchanges improved from December’s levels, when turmoil in the credit markets caused exchange trading volumes to drop precipitously. In addition, we believe that expectations brightened for the trading volumes of CME’s interest rate products going forward as a result of the U.S. government’s planned increase in Treasury issuance to support government spending. We believe that CME’s interest rate volumes could benefit from this measure, as these products can be used to hedge or speculate on changes in Treasury prices. Lastly, we believe that CME benefitted from a greater prevailing sense of confidence in the market regarding the health of various large financial firms that are important CME customers. (Katherine Harman).	31/03/2009	Baron Funds
Financials_Specialized Finance	INTERACTIVE BROKERS GRO-CL A	IBKR US	USD	NASDAQ GS	€ 545,905,794.86	We became interested in Interactive Brokers Group when it had its IPO in the summer of 2007. We were impressed by the company’s long track record of growth and high returns, as well as by management’s talent and commitment to the company; however, we believed that shares were expensive. After the IPO, we continued to track the company’s progress and in the second quarter had an opportunity to purchases shares at what we believe was a compelling entry point. The company had reported first-quarter results that fell short of expectations and its share price declined significantly. In the first quarter Timber Hill faced more intense competition than it had in recent periods, pressuring its market-making revenues. Historically the level of marketmaking competition has been cyclical. In past cycles, Timber Hill’s economies of scale and operational efficiencies have enabled it to outlast competitors. We believe this will happen once again, and that profits will improve in upcoming periods as competition eases. Also, while first quarter returns were lower than returns in recent quarters, they were solid on an absolute basis. We believe shares were inexpensive in light of these returns. In addition, we saw our downside as limited based on management’s stated intention to repurchase shares of the company should they approach book value, which at the time they were nearing. We think both of Interactive Brokers Group, Inc.’s businesses have significant growth ahead of them. The brokerage clientele has been growing at a fast clip. We believe both businesses can expand into new products as these products are introduced by exchanges and into new geographies as international exchanges embrace electronic trading and the participation of foreign firms. Asia is the geography in which management expects both businesses to grow most rapidly. Management also sees opportunity to participate in over-the-counter products as regulation mandates that these products become centrally cleared. (Katherine Harman)	30/06/2009	Baron Funds
Financials_Retail REITs	ALEXANDER'S INC	ALX US	USD	New York	€ 1,536,808,233.02	Alexander’s, owner of New York’s Bloomberg office tower, fell in the quarter, along with the REIT index and broader market. Concerns about a deterioration in New York commercial real estate fundamentals (rising vacancies and falling rents), the seizing up of the credit markets, and an expectation for industry-wide distressed real estate sales negatively impacted performance. While we expect commercial real estate to face additional headwinds, we believe a good portion of the concerns are discounted in Alexander’s share price at this stage. Alexander’s continues to operate one of the highest quality real estate portfolios with the Bloomberg Tower as its trophy asset. Further, with more than $500 million of cash on its balance sheet (more than $100/share), we believe Alexander’s has sufficient liquidity to meet all of its debt obligations for the next five years and perhaps capitalize on future distress in the commercial real estate markets. (Jeff Kolitch).	31/03/2009	Baron Funds
Financials_Reinsurance	ARCH CAPITAL GROUP LTD	ACGL US	USD	NASDAQ GS	€ 3,680,374,992.30	We believe that three factors were at work to explain the difficult first quarter for Arch Capital, as well as the broader insurance industry. First, insurers rely on investment income for a large portion of earnings (about 70% at Arch in a normal year). With limited disclosure about Arch’s individual bond holdings and fears of the government wiping out bondholders at a variety of financial institutions, we think investors likely assumed the worst and sold insurance stocks in anticipation of more realized and unrealized losses (which negatively impact book value). At Arch, in particular, there was particular concern over its sizeable commercial MBS holdings and its leveraged loan portfolio managed by a third party. Second, we believe that the market became more cautious about the possibility for Arch to take market from struggling AIG. We still believe these gains will come, but we now believe they will come a little slower than expected, as it appears AIG was discounting heavily during the quarter to retain business. Throughout the quarter, we heard tales of AIG pricing at unprofitable rates to hold on to business. Going forward, we expect this to stop as the government acts to maintain its investment. And third, we have heard anecdotally from various sources that there was a big “sector rotation” out of property and casualty insurers toward more distressed financial names, such as banks and life insurers. Additionally, there was increased chatter in Congress about closing a favorable tax advantage that Bermudian insurers get versus their American peers. While we think the effect on earnings if this were to happen would be small, it was still a negative during the first quarter. Going forward, however, we remain confident in our Arch investment. We expect the company’s unrealized investment losses to be written up, insurance rates to increase, and market share to be won. (Rob Susman).	31/03/2009	Baron Funds
Financials_Real Estate Operating Companie	PROLOGIS EUROPEAN PROPERTIES	PEPR NA	EUR	EN Amsterdam	€ 1,340,608,398.44	ProLogis European Properties (“PEPR”) is a closed-end fund that was listed by U.S.-based REIT ProLogis in 2006 (ProLogis owns 33% of PEPR Common). PEPR owns 230 industrial properties comprising more than 50 million square feet of space in Continental Europe and the UK. The portfolio is 94% leased (primarily to credit tenants) and is predominantly located in key distribution markets within France, Germany and the UK. Fund Management has monitored PEPR for several years since it represents a meaningful percentage of ProLogis’ NAV. While PEPR was known to have a high-quality collection of industrial properties in Continental Europe, it was never of much interest to Fund Management since (a) PEPR Common has historically traded in-line with NAV; (b) the assets are stabilized industrial properties with limited growth potential; and © the company distributed nearly all of its free cash flow, which limited value-creating activities. In 2009, PEPR’s portfolio was revalued downward and the company was forced to sell assets, issue dilutive capital and cancel its dividend to stabilize its financial position. PEPR’s financial position is now greatly improved and its assets continue to generate solid cash flows. With its improved financial position, the company should soon receive an investment grade credit rating, which could reduce its interest costs and enable the company to reinstate its dividend. This would likely act as a catalyst to close the 30% discount between the trading price of PEPR Common and its stated NAV. ProLogis recently increased its stake in PEPR from 25% to 33%. If the discount to NAV persists, it is not inconceivable that ProLogis would be interested in acquiring 100% ownership at a premium to the market price.	30/07/2010	Third Avenue
Financials_Real Estate Development	CHEUNG KONG HOLDINGS LTD	1 HK	HKD	Hong Kong	€ 24,728,793,036.62	Cheung Kong Holdings, whose common stock represents 12% of the Fund’s net assets, reported 2009 earnings of HK$8.59 per share, a 53% increase compared to 2008. The earnings growth was driven by a HK$3.9 billion increase in the fair value of its investment properties, primarily owing to the completion of 1881 Heritage, a high-end shopping mall that we viewed in Hong Kong adjacent to Wharf ’s Harbour City. The property is already fully leased. Additionally, the company reported a 28% increase in profit from property sales, reflecting strength in both the Hong Kong and China residential property markets, and a 20% increase in property rental income, including jointly controlled entities.Cheung Kong’s 50% owned subsidiary, Hutchison Whampoa, reported a 12% increase in earnings as declines in cyclical businesses, such as ports and energy, were more than offset by reduced losses in its 3G telecom operations and lower interest expense. The outlook for many of Hutchison Whampoa’s cyclical businesses seems to be improving, and the company should benefit from cost reduction efforts undertaken during the recession. For example, Hutchison Whampoa’s retail business generated a 120 basis point improvement in EBIT margin to 4.9%, despite a 2% decline in sales. The company is believed to be the largest health and beauty retailer in the world, with 13 different brands and 8,700 stores. Management is cautiously expanding the retail business in markets with high growth potential, such as mainland China. Cheung Kong’s stake in Hutchison Whampoa accounted for approximately 51% of its market cap as of April 30, 2010. Cheung Kong’s NAV increased by 8% to HK$105.17 per share, compared to its price as of April 30, 2010 of HK$97.05 per share. Over the last five years, Cheung Kong’s reported NAV has increased at a 9% CAGR, the lowest growth rate among our major Hong Kong holdings, owing primarily to the losses incurred by Hutchison Whampoa’s 3G telecom operations. Cheung Kong generated strong cash flow during the year, resulting in a HK$9.7 billion reduction in total borrowings and a net debt-to-capital ratio of only 8.6%, down from 13.2% a year ago. Cash flow should also be healthy in 2010, as the company’s large residential land banks in both Hong Kong (an estimated 5-6 year supply) and China (approximately 200 million square feet) position it well to benefit from the current strength in both markets. Cheung Kong should be able to take advantage of timely investment opportunities both in the property sector and other areas with HK$50 billion in available funds. Based on our recent meeting with management, we would expect any significant new investments to be by Cheung Kong as opposed to Hutchison Whampoa. Chairman Li Ka Shing appears to agree with our bullish assessment of the company’s long-term prospects and the attractiveness of its common stock. Since September 2009, he has purchased 41.1 million shares at an average price of HK$99.66 per share (versus the price of HK$97.05 per share as of April 30, 2010) for approximately US$529 million. These purchases increased Chairman Li’s ownership position to 42.0% from 40.3%.	30/04/2010	Third Avenue
Financials_Office REITs	ALEXANDRIA REAL ESTATE EQUIT	ARE US	USD	New York	€ 3,287,099,103.83	Alexandria Real Estate is a real estate investment trust (REIT) that has developed a niche-oriented strategy to build, redevelop, and lease highly specialized laboratory and biotech real estate to U.S. and international life-science firms. The company designs and improves space for lease to pharmaceutical, biotechnology, life science product and service companies, not-for-profit scientific research institutions, universities and related government agencies. Top tenants include Novartis AG, GlaxoSmithKline plc, Roche Holding Ltd, the United States Government, and Massachusetts Institute of Technology. Alexandria’s real estate portfolio consists of 155 properties comprising approximately 11.6 million square feet and more than 12 million square feet of future development. Alexandria has spent the last 10 years growing and building life science clusters across the U.S. The company has focused in the key “brain-trust” markets that have high concentrations of research activity — Northern California, Boston, North Carolina, Seattle, and San Diego. Its current portfolio of operating real estate has opportunities to grow, in our view, through gains from lease expirations (5% mark-to-market growth opportunity), contractual 3% annual rent increases, and occupancy gains (currently 94%). Alexandria has continued to pursue several additional avenues of growth. We believe the company has the potential to double in size by leasing and building out its more than 12 million square feet development pipeline and land holdings. We expect the majority of its 600,000 square foot redevelopment pipeline to be completed by the end of 2010. Alexandria has continued to make progress leasing its 1.1 million square foot ground-up development pipeline. Notably, the company recently entered into a 15-year lease with Eli Lilly and Company as the anchor tenant at the Alexandria Center for Science and Technology at East River Science Park in New York City. Alexandria also controls land that can support more than 10 million square feet of future development in attractive markets such as San Francisco and Cambridge. We recently initiated our position in Alexandria. The share price had corrected approximately 75% from its 2008 high, and we believed it no longer reflected the value in the company’s unique real estate product, its core and external growth opportunities, and the quality of Alexandria’s management team led by CEO Joel Marcus. (Jeff Kolitch)	30/06/2009	Baron Funds
Financials_Office REITs	CORPORATE OFFICE PROPERTIES	OFC US	USD	New York	€ 1,288,795,704.52	Our investment in and excitement about KEYW spurred us to find other ways to play the growth of cyber security and led us to Corporate Office Properties Trust (COPT). COPT is a specialty REIT that provides office space primarily to companies that serve U.S. government agencies in the Defense, IT and Data sectors. In other words, companies like KEYW. In fact, COPT is KEYW’s landlord. It helped fund the startup of KEYW and remains one of its largest shareholders. COPT stock, while being a huge winner over the last decade, is now a “fallen angel,” since the suburban office piece of its portfolio (about 40% of the business) has suffered occupancy declines. There is also some concern that its tenants who serve the government will be negatively affected by cuts in the defense budget. On the latter point, we see it very differently. We believe that because of the unique characteristics of COPT’s properties (co-located next to key defense agency installations) there will be significant demand for more office space by contractors that serve these agencies. COPT’s office parks are perfectly situated to double their square footage over time. COPT is presently ramping up its capital spending on new project development, which is rare in the real estate industry these days. We believe that there are multiple levers to FFO growth and a potential portfolio reshaping that would increase valuation.	31/12/2010	Baron Funds
Financials_Multi-Sector Holdings	PICO HOLDINGS INC	PICO US	USD	NASDAQ GS	€ 403,085,714.59	PICO Holdings, Inc. is a diversified holding company. PICO seeks to acquire, build, and operate businesses where significant value can be created from the development of unique assets, and to acquire businesses that the company identifies as undervalued and where management participation in operations can aid in the recognition of the businesses’ fair value, as well as create additional value. Currently PICO’s two major businesses are Vidler Water Company, a significant private sector owner of water resources and water storage operations in Nevada, Arizona, Idaho, Colorado, and New Mexico, and Union Community Partners, a developer of residential lots in selected California markets.Good Business• PICO’s competitive advantages include its industry and operational expertise, financial wherewithal, and ability to engage key decision makers.• Water is a critical asset that has no substitute, and the cost to the end user is relatively small.• The financial metric for any asset or business that PICO acquires is that it has to have a minimum internal rate of return (IRR) of 20% unleveraged.• The businesses are easy to understand.• Cash totals $96.8 million net of debt. Due to PICO’s financial structure, it is under no pressure to sell any asset at less than full value.Valuation• PICO is trading for 1.43x book value of $25.79 per share. This is a slight premium to the 5-year average multiple of 1.33. The only time the stock dropped well below 1.0x book during this 5-year stretch was during the recent market turmoil in December 2008 (0.58) and March 2009 (0.74) quarters.• The company’s water and real estate assets are carried at cost. The majority of these assets was either acquired well before the run up in asset prices or after the decline in residential real estate was well underway, and at substantial discounts to current replacement values. In addition, value has been added as a result of PICO’s development efforts for some assets. Marking the water and real estate assets to market gives us a value of $52 per share. Thus, the shares trade for 70% of adjusted book.Management• Company founder and board member Ron Langley, 65, and President and CEO John Hart, 50, are disciples of Graham and Dodd.• The management bench is deep, many of whom were groomed by Langley. Through a combination of team- oriented culture and attractive compensation, PICO has been able to retain key employees and preserve institutional knowledge.• Max Webb, 48, is CFO. Rich Sharpe, 54, is COO. Damian Georgino, 49, is Executive Vice President of Corporate Development and Chief Legal Officer.• Annual incentive awards are designed to motivate executive officers to increase PICO’s book value per share.• Executive officers and directors as a group own 4.7% of the company, so they have skin in the game.Investment Thesis As a developer of water rights in the southwest U.S., PICO is poised to benefit from the increasing scarcity of water. PICO has also taken advantage of a collapse in California residential real estate prices, by acquiring developable land and partially developed and finished lots in attractive medium-sized markets. Furthermore, the company’s water and land assets are undervalued on the balance sheet. By virtue of its ownership of these hard assets, PICO should be a beneficiary of inflationary pressures, which is a likely byproduct of the government ramping up the printing presses.	31/03/2010	Fiduciary
Financials_Multi-line Insurance	FAIRFAX FINANCIAL HLDGS LTD	FFH CN	CAD	Toronto	€ 6,317,660,405.04	Absent Prem Watsa’s speculations, Fairfax Financial Holdings’ performance would be greatly diminished. How does a value manager like you analyze an investment that is so dependent on the actions of one person?[Hawkins:] First, unlike Berkshire Hathaway, where Mr. Buffett is virtually the sole investor, Fairfax has a very deep team of exceptionally talented analysts and investors, and they are anchored like almost no other investment group that we know of in Ben Graham’s margin-of-safety disciplines.This team is housed in a company called Hamblin Watsa. It has an over-30-year record. It is led by Roger Lace, who is its president and head of equities. Brian Bradstreet oversees their fixed-income investing. Another leader is Chandran Ratnaswami who leads their international efforts. Sam Mitchell, who has had a terrific long-term record at another company, is part of the Hamblin Watsa group. Paul Rivett is their chief legal officer and also adds insight.In Fairfax’s case, there is clearly a coordinated, cooperating, and collaborating investment team. They have executed like no other. Prem is part of that team, but by no means oversees the day-to-day execution of their investing efforts. Their record is nonpareil. In the last 15 years, they have grown book value per share at 16.4%, versus a 6.8% growth rate for the S&P 500. They have the number-one record in the insurance world of growing book value per share over that 15-year period. Over the last five years, Fairfax has grown book value at 22.5%, also number one among insurance companies. That was a period when the S&P had a 2.3% return. They far and away have exceeded their peers. Turning to their long-term investment record, over the last 15 years their common stock investments have compounded at 17.2%, versus 6.8% for the S&P 500. Their bond record is equally superb. Their bonds have compounded over the last 15 years at 10.0% versus only 6.2% for the Bank of America Merrill Lynch US Corporate Index. Both bonds and stocks over the last 15 years have outperformed, and they have records in those two asset arenas unlike anyone we have studied, including those in the insurance world, hedge fund, and investment advisory world. They have a history of thinking independently, applying their appraisals, and using their discipline to say “no” unless something is exceptionally attractive from both a risk and a return standpoint.Their hedging activities are misunderstood, and, to your question, they are not “speculations;” they are enabling them to lock in their investment performance and to protect their liabilities with their assets. Fairfax is a unique company, and they have evolved into one of the leading investment groups in the world, overlying a group of muchimproved insurance companies. They have evolved with terrific management in the insurance companies that the holding company oversees. Look at the team of talents that leads each of their insurance companies: Doug Libby at Crum and Forster, Mark Ram at Northbridge, and Nick Bentley running their runoff business called River Stone. You see well disciplined managers that understand that insuring risk has to be done at reasonable cost and against reasonable potential claim exposure. Dennis Gibbs is still a consultant of theirs, and he may be one of the most sagacious insurance minds there is.Andy Bernard was just recently made president and COO of Fairfax Insurance Group. He previously ran OdysseyRe and created an exceptional company from virtually scratch. Now he oversees the various components of Fairfax’s worldwide and growing insurance group. As you probably know, they have nascent operations in many of the evolving world economies: India, China, the Middle East, and Eastern Europe. We believe that those early-day undertakings will pay great dividends as we go forward. Fairfax is a combination of a superior investment team, with a lot of individuals who are very capable of running insurance companies and who have	28/02/2011	LongLeaf
Financials_Multi-line Insurance	LOEWS CORP	L US	USD	New York	€ 11,593,621,646.79	Based in New York, Loews is a diversified holding company sagaciously stewarded by Jim Tisch and his management team. In addition to $4 billion in cash available to deploy opportunistically, the company’s primary assets are CNA, a dramatically improved property/casualty insurer led by talented Chubb alum, Tom Motamed, Diamond Offshore, an offshore drilling rig operator with substantial cash flow and a history of acquiring, leasing, and disposing of rigs successfully in a volatile industry, and Boardwalk, a natural gas pipeline and storage company with a growing cash coupon. The Tisch family owns approximately 25% of the stock and has intelligently allocated capital and delivered value growth for investors over decades. The company sells for roughly half of appraised value, in large part due to the mispricing of publicly traded CNA and the resulting conglomerate discount on Loews. Not only does insurance remain out of favor, but the results of Motamed’s turnaround have not been given credit, and earnings are highly volatile with the unpredictability of insured events. CNA shares sell for half of book value. As long as Jim Tisch is making capital allocation decisions, whether for large share repurchases at these discounts or for high-return acquisitions, we believe value will grow materially. Using consensus 2012 earnings, the company’s current FCF yield is 9.0%, but adjusted for the net cash, is 11.6%.	31/12/2011	LongLeaf
Financials_Life & Health Insurance	RESOLUTION LTD	RSL LN	GBp	London	€ 4,302,519,588.58	Switching gears, in recent letters we have discussed why we believe that Resolution Ltd. common stock represents an attractive investment opportunity. To briefly recap, Resolution is a vehicle created to acquire and consolidate U.K. life insurance companies, with the aim of creating value from operating, financial, and tax synergies, delivered by a management team with a solid track record of doing just that. While Resolution’s first investment, the acquisition of life insurance company Friends Provident, was completed at a very attractive valuation (greater than a 30% discount to run-off or liquidation value), other than cost reduction the deal by itself did not provide any opportunities to realize synergies, as Resolution did not own any other operating businesses at that point. Truly meaningful value creation had to wait for the next acquisition, and the wait proved to be longer than the impatient stock market could tolerate. Despite frequent rumors about Resolution’s interest in numerous potential targets – stoking market excitement at various points along the way – the company’s management team patiently waited for what it believed to be the right opportunity. Disappointed shortterm speculators lost interest and the stock price drifted lower and lower, allowing us to add to our position at increasingly attractive prices. The wait ended in the middle of June 2010 when Resolution announced that it would buy 90% of the U.K. life insurance subsidiary of AXA, the French-based global insurance conglomerate. After the acquisition, Resolution will become the third largest life insurance company in the U.K., with particular strength in corporate pensions. Preliminary due diligence revealed potential cost synergies of 16% of the combined company’s cost base, mostly coming from streamlining sales, customer service, operations, and IT infrastructure. Further financial and tax synergies are possible. The acquisition was priced at a 25- 30% discount to run-off value, a seemingly attractive price which does not include the value of synergies or the expected capital release of almost one-third of the acquisition price. In order to finance the acquisition, Resolution announced a rights issue that closed shortly after the end of the quarter, which raised an amount greater than the company’s market capitalization prior to the announcement. Rights issues, though not widely utilized in the U.S., are more common in Europe and can be attractive ways to raise money cheaply without diluting existing shareholders. Resolution made it clear from the very launch of the company that rights issues were the preferred method of paying for acquisitions, and the company’s large shareholders kept cash reserves available for just this eventuality. As a result of the acquisition and the rights issue, the size of the Fund’s investment in Resolution has more than doubled following the close of the rights issue. Furthermore, the company continues to look for other acquisition candidates, and indicated that another deal is likely within the next 18 months. Given the management team’s extensive and successful experience in this field, we are comfortable with the company’s pace of acquisitions and integration.	29/10/2010	Third Avenue
Financials_Diversified Real Estate Activi	HANG LUNG GROUP LTD	10 HK	HKD	Hong Kong	€ 6,958,447,421.78	As we reported last quarter, Hang Lung Properties Ltd. (“Properties”), whose common stock represents 2.0% of the Fund’s net assets, reported very strong financial results for the first half of its fiscal 2010 (June 30 year-end). Earnings per share increased to HK$4.14 from HK$0.29 a year ago, owing primarily to large increases in the fair value of investment properties in both Hong Kong and mainland China and highly profitable sales of residential units from its HarbourSide project in Hong Kong. Management indicated that fiscal 2010 earnings will exceed the record set in 2008, even without the sale of additional apartment units in Hong Kong. In Shanghai, we toured the company’s Plaza 66 shopping mall, the premier property of its kind in the mainland. This mall, along with its Grand Gateway property, which is also fully leased, drove rental income growth of 15%. Shanghai now accounts for 43% of the company’s total rental revenues.These strong results drove a 28% increase in the reported NAV of the parent company, Hang Lung Group Ltd (“Group”), whose common stock represents a 2.1% position in the Fund, to HK$35.58 per share. Group’s NAV has increased at a 21% CAGR over the last five years. This represents the highest net asset value growth rate among our major Hong Kong holdings, despite the use of virtually no leverage, and is a tribute to Chairman Ronnie Chan’s long-term vision and execution. Hang Lung is well positioned to continue its rapid net asset value growth going forward, owing to its strong financial position and attractive land sites in the rapidly growing secondary cities in the mainland. These land sites were purchased opportunistically in recent years (no land was purchased when prices were high from 2007 through May 2009). Properties has a net cash position of HK$2.2 billion, while Group’s net debt-to-capital ratio is only 3.8%. In the next several years, Properties plans to open the following projects:2010 – Palace 66, Shenyang; 1.2 million square foot (msf ) shopping mall.2011 – Parc 66, Jinan; 1.8 msf shopping mall.2012 – Forum 66, Shenyang; 9.1 msf shopping mall, office, hotel, serviced apartments (in phases).2013 – Centre 66, Wuxi; 4.1 msf, multi-complex (in phases).2013 – Riverside 66, Tianjin; 1.7 msf shopping mall.2014 – Olympia 66, Dalian; 2.4 msf shopping mall.The opening of these projects is projected to increase Properties’ rental turnover to more than HK$8 billion from HK$4.2 billion in 2009. The early results appear to be promising, with Palace 66 in Shenyang scheduled to open the last week in June and already more than 90% pre-leased.	30/04/2010	Third Avenue
Financials_Diversified Real Estate Activi	HENDERSON LAND DEVELOPMENT	12 HK	HKD	Hong Kong	€ 10,948,424,048.19	Henderson Land Development Co, whose common stock represents 11.9% of the net assets of the Fund, reported earnings for the 18 months ended December 31, 2009 of HK$ 6.67 per share (the company changed its fiscal year end to December 31 from June 30). Reported net asset value per share and adjusted net asset value per share (excludes deferred tax liability on investment properties in Hong Kong since there is no capital gains tax) each increased 10% to HK$62.01 and HK$66.08 per share, respectively. Over the last five years, Henderson’s reported net asset value has increased at a 14% cumulative annual growth rate (CAGR) including dividends. The company’s net rental income (including associates and jointly controlled entities) increased by approximately 11 11% after adjusting for the 18-month reporting period. Henderson’s major investment properties in Hong Kong (excluding properties completed after January 1, 2008) were 97% leased as of year-end. Henderson’s balance sheet remained strong with a net debt-to-capital ratio of only 16.1% (by comparison, real estate companies often have net debt-to-capital ratios of around 50%). Given this strong financial position, we were surprised when the company announced a Bonus Warrant Issue in which one warrant to purchase stock for HK$58 per share (exercisable for one year) would be issued for every five shares held. Based on our discussions with management, we believe that the Bonus Warrant Issue was driven by the company’s desire to take advantage of attractive real estate development opportunities in both Hong Kong and mainland China while keeping a very strong financial position and allowing all shareholders to participate in the company’s growth without being diluted. Additionally, we believe that the Bonus Warrant Issue indicates that management believes that the corporate value is in excess of the current common stock price (the exercise price is at a 16% premium to the price of Henderson Common as of April 30, 2010).Henderson appears to have attractive growth prospects based on its low cost land and expertise in redevelopment projects. In Hong Kong, the company is converting its huge agricultural land bank (40 million square feet) for residential projects and purchasing old buildings for redevelopment (11 buildings purchased to date totaling 1.2 million square feet, with 19 additional buildings to be purchased in 2010 covering 3 million square feet). The company has a two-pronged strategy for its mainland China real estate development business, consisting of building commercial investment properties for rental on low cost land (primarily purchased in the 1990s by Henderson China, which was privatized in 2005) in primary cities and developing its huge land base (146 million square feet purchased between 2006 and 2009) for residential use in secondary cities. We viewed the Henderson Metropolitan, a 730,000 square foot Grade A office building and shopping mall development, which is expected to be completed this June, and were impressed with the quality construction and prime location on Nanjing Road East in Shanghai.While Henderson is largely a real estate development company, its 39.9% ownership stake in Hong Kong and China Gas (“HKCG”), a publicly-listed associate, accounted for 46% of its market cap as of April 30, 2010. HKCG is the largest distributor of piped gas in Hong Kong, with a growing presence in mainland China through its 45.6% stake in Towngas China. Owing to the stability of HKCG’s Hong Kong business, the company has been a steady source of dividends for Henderson during the recession and credit crises (approximately HK$900 million per year). On March 17, 2010, Towngas China and HKGC entered into an agreement whereby Towngas China would purchase six piped gas projects in China for HK$1.7 billion, which will be satisfied by the issue of new shares to HCGC, resulting in an increase in HKCG’s ownership to 56.4%. Based on our discussion with Henderson’s management, Town	30/04/2010	Third Avenue
Financials_Diversified Real Estate Activi	WHARF HOLDINGS LTD	4 HK	HKD	Hong Kong	€ 13,475,877,323.68	Wharf Holdings, whose common stock represents 4.6% of the Fund’s net assets, reported a 179% increase in 2009 earnings to HK$6.35 per share. Even excluding the large increase in the fair value of its investment properties (HK$12.2 billion), earnings increased by 86%. Property leasing income increased by 13% owing to robust performance by the company’s core Hong Kong properties, Harbour City and Times Square, both of which had 100% retail occupancy and office occupancy in the mid 90% range. These two properties accounted for 8% of Hong Kong’s total retail sales in 2009. Based on our tour of Harbour City, and reportedly robust results during the first quarter of 2010, new retail property supply (Cheung Kong’s 1881 Heritage shopping mall) is not having a significant negative impact.Wharf ’s China investment properties generated rental income growth of 26%, driven by a full year’s contribution from the Dalian Times Square, which opened in late 2008. The company also monetized its Beijing Capital Times Square investment, resulting in a HK $1.4 billion after tax gain. Wharf also generated much improved results from its property development business in China, as operating profit increased to HK$1.0 billion from HK$0.1 billion in 2009. The outlook for this business is healthy, given the company’s large land position of more than 100 million square feet. In 2010, the company expects to more than double the 4.7 million square feet sold in 2009 and improve upon its 33% operating margin. Despite the company’s aggressive development in China, Wharf ’s financial position improved in 2009, with net debt declining by 10% excluding non-recourse debt of subsidiaries. Wharf ’s NAV increased by 16% to HK$41.83 per share. Over the last five years, Wharf ’s reported NAV has increased at a 15% CAGR, including dividends.	30/04/2010	Third Avenue
Financials_Diversified Real Estate Activi	WHEELOCK & CO LTD	20 HK	HKD	Hong Kong	€ 5,042,219,805.32	Wheelock and Company, whose common stock represents a 4.9% position in the Fund, reported that 2009 earnings increased 181% to HK $4.74 per share. The results were driven by robust earnings from 50% owned subsidiary Wharf Holdings (see below). Wheelock’s NAV increased by approximately 19% to HK$34.30 per share, compared to a stock price of HK$24.55 as of April 30, 2010. Wheelock’s reported NAV has increased by an average of 18% per year over the last five years, including dividends. On April 19, 2010, Wheelock announced a proposed privatization plan for Wheelock Properties (a holding in the Third Avenue Real Estate Value Fund), a 74% owned subsidiary focused on real estate development in Hong Kong and Singapore (through its 75% stake in Wheelock Singapore). Wheelock is offering HK$13 per share in cash, which represents a 144% premium over the last trading price before the transaction was announced, but a 3.4% discount to reported NAV as of year end. During our recent meeting with management in Hong Kong, management indicated that it was looking to make acquisitions. It appears that, at least initially, the most attractive opportunity existed within its own company.	30/04/2010	Third Avenue
Financials_Diversified Capital Markets	HFF INC-CLASS A	HF US	USD	New York	€ 414,947,277.57	HFF (2.8% of the Fund) is a leading transaction based-commercial real estate broker engaged in 2 main businesses: (i) debt placement by procuring loans for its clients; and (ii) investment sales by representing and advising clients on the sale of commercial real estate properties. The company has zero debt, $73 million in cash, and generates significant free cash flow annually. Business activity has been accelerating in its key business segments with the recent improvement in leasing activity, rental rate growth, investments in commercial real estate, debt re-financings, and new investment activity. We estimate cash flow could double in the next few years as business activity improves and the company’s market share increases. Management interests are aligned with significant insider ownership. We think the stock is attractively valued with the potential for 20% annual returns the next few years.	31/03/2011	Baron Funds
Financials_Consumer Finance	GREEN DOT CORP-CLASS A	GDOT US	USD	New York	€ 1,091,408,027.42	During the quarter, we initiated positions in two very similar recently public companies: Green Dot and NetSpend. These businesses are the leading and the second leading players, respectively, in the prepaid debit card industry. There are 60 million Americans with no or limited access to banking services. These “underbanked” people pay for things only in cash and typically turn to check cashing stores to cash paychecks. Imagine trying to buy a plane ticket today without a credit or debit card — it would be nearly impossible. Large, well-known banks tend to avoid those on the bottom rungs of society because they aren’t profitable to serve. This has left a large unmet need: providing financial services to the large population of unbanked Americans. Green Dot and NetSpend cards work just like a normal banking account. Paychecks are direct deposited into them or cash can be added to them at thousands of locations and spent at any store that takes Visa or Mastercard. Money can be withdrawn at ATMs and bills paid online. They are also FDIC insured. While only a small market a few years ago, there are now over five million cards outstanding and billions of dollars loaded onto them each year, with the market growing in the 30% range annually in our estimation. This is truly a new, growth market.Both Green Dot and NetSpend seek to capture as much of this market as possible; however, they approach it in very different ways. Green Dot sells cards at major retailers like CVS and Wal-Mart, while NetSpend sells them at alternative financial service providers like check cashing stores. Green Dot cards are typically used once and then discarded, whereas NetSpend cards have more direct deposit customers who use the cards repeatedly. Over time, we expect the two companies to converge and to look very similar, with NetSpend adding new retail partners and Green Dot signing up more direct deposit customers. The companies earn revenue from monthly fees, card reload fees and interchange fees (percentage of spend). While they are not what we would call low fee cards, they are a much better alternative than many other financial options available to the unbanked. Over time, we believe that both Green Dot and NetSpend will become significantly larger companies than they are today and could eventually be acquired by large banks who would love to serve the unbanked profitably.Additionally, as awareness of prepaid debit cards grow, we would expect both companies, but especially Green Dot, to start to offer these savings accounts to customers that traditionally use mainstream banks. In other words, we believe that prepaid debit cards have the potential to change the way banking is done as we know it today. As new regulations force banks to start charging new fees to offset the loss of revenue elsewhere, we believe that prepaid debit cards offered by Green Dot and NetSpend will benefit greatly. (Rob Sussman)	31/12/2010	Baron Funds
Financials_Consumer Finance	NETSPEND HOLDINGS INC	NTSP US	USD	NASDAQ GS	€ 556,749,027.74	During the quarter, we initiated positions in two very similar recently public companies: Green Dot and NetSpend. These businesses are the leading and the second leading players, respectively, in the prepaid debit card industry. There are 60 million Americans with no or limited access to banking services. These “underbanked” people pay for things only in cash and typically turn to check cashing stores to cash paychecks. Imagine trying to buy a plane ticket today without a credit or debit card — it would be nearly impossible. Large, well-known banks tend to avoid those on the bottom rungs of society because they aren’t profitable to serve. This has left a large unmet need: providing financial services to the large population of unbanked Americans. Green Dot and NetSpend cards work just like a normal banking account. Paychecks are direct deposited into them or cash can be added to them at thousands of locations and spent at any store that takes Visa or Mastercard. Money can be withdrawn at ATMs and bills paid online. They are also FDIC insured. While only a small market a few years ago, there are now over five million cards outstanding and billions of dollars loaded onto them each year, with the market growing in the 30% range annually in our estimation. This is truly a new, growth market.Both Green Dot and NetSpend seek to capture as much of this market as possible; however, they approach it in very different ways. Green Dot sells cards at major retailers like CVS and Wal-Mart, while NetSpend sells them at alternative financial service providers like check cashing stores. Green Dot cards are typically used once and then discarded, whereas NetSpend cards have more direct deposit customers who use the cards repeatedly. Over time, we expect the two companies to converge and to look very similar, with NetSpend adding new retail partners and Green Dot signing up more direct deposit customers. The companies earn revenue from monthly fees, card reload fees and interchange fees (percentage of spend). While they are not what we would call low fee cards, they are a much better alternative than many other financial options available to the unbanked. Over time, we believe that both Green Dot and NetSpend will become significantly larger companies than they are today and could eventually be acquired by large banks who would love to serve the unbanked profitably.Additionally, as awareness of prepaid debit cards grow, we would expect both companies, but especially Green Dot, to start to offer these savings accounts to customers that traditionally use mainstream banks. In other words, we believe that prepaid debit cards have the potential to change the way banking is done as we know it today. As new regulations force banks to start charging new fees to offset the loss of revenue elsewhere, we believe that prepaid debit cards offered by Green Dot and NetSpend will benefit greatly. (Rob Sussman)	31/12/2010	Baron Funds
Financials_Asset Management & Custody Ban	AMERIPRISE FINANCIAL INC	AMP US	USD	New York	€ 9,535,587,930.54	Ameriprise Financial (AMP; Financials). Based in Minneapolis, MN, Ameriprise Financial sells life insurance products and wealth management services through its cadre of 12,400 financial advisors. The company has a 110 year history and most recently was spun-off from American Express in September of 2005. Compared to life insurance peers, Ameriprise boasts a superior capital and liquidity position with a risk based capital ratio over 500%, $1 billion in excess capital, $5.8 billion in cash and equivalents ($4.5 billion is unencumbered), while bearing less debt ($2 billion or 22.5% debt-to-capital ratio), and trades below book value of $29.10. The investment portfolio carries less risk and lower leverage (3x invested assets to- equity versus 11x for peers). Ameriprise has over $100 billion in assets under management and $190 billion in total managed assets, yet trades at 8.5x next year’s earnings compared to 17x for other asset managers. The upside catalyst is the $350 million in targeted pre-tax savings, of which 2/3 should fall to the bottom line. In addition to priceto-book and price-to-earnings, Ameriprise also meets on price-to-sales (1.0x) and price-to-cash flow (5.3x).	30/09/2009	TCW
Financials_Asset Management & Custody Ban	STATE STREET CORP	STT US	USD	New York	€ 14,994,114,109.35	Based in Boston, MA, State Street provides foreign exchange, custody, and shareholder services under the Investment Servicing segment, as well as exchange traded funds (ETFs) and investment management. During the height of the credit crisis, it was forced to bring its Asset-Backed Commercial Paper (ABCP) onto its balance sheet at distressed marked to market prices. As a result, the company cut its dividend and raised equity. At present, its balance sheet is quite strong with a tangible common equity to assets (TCE/A) ratio of 6.2%. A great majority of the ABCPs, which have fairly short duration, are maturing at par, allowing STT to accrete the discount back into net interest income. Although it should benefit as custody fees bounce off a decade low and as foreign exchange activity normalizes, our primary catalyst is new markets as STT expands its global exposure. Currently, it has 50% of assets under management and 60% of assets under custody in international markets, the latter bolstered by its acquisition of Intesa Sanpaolo of Italy. The international markets are fragmented, which allow companies such as STT to consolidate and grow scale. The growth in excess capital can fund future acquisitions as well as share repurchases and dividend increases. State Street meets two out of five valuation criteria (price-to-earnings of 12.2x and price-to-book of 1.5x) and it may increase its dividend by the end of the 2010.	30/04/2010	TCW
Energy_Oil & Gas Storage & Transporta	SOUTHERN UNION CO	SUG US	USD	New York	€ 4,083,123,927.72	Southern Union benefitted from its stable business model and an easing of the liquidity concerns that had hurt the company’s shares in the previous quarter. We believe that the cash flows from Southern Union’s core natural gas pipelines and its LNG (liquid natural gas) import facility are quite predictable and should be largely protected from the current economic recession. These assets are all regulated by FERC, and volume on the pipelines is largely committed through contracts that average about 5-10 years depending on the pipeline. In addition, 100% of LNG capacity is under a firm contract with BG Group through 2023. We believe that Southern Union’s other regulated business, local gas distribution in Missouri and Massachusetts, is also stable. The company’s lone asset of significance that is unregulated is its “SUGS” gathering and processing business, which represents about 17% of anticipated 2009 EBITDA. Southern Union, however, uses extensive hedging to mitigate risk with approximately 60% of 2009 volumes protected at attractive prices. In addition, Standard and Poor’s affirmed its investment grade rating on Southern Union’s corporate debt while revising its outlook to stable from negative. (Geoff Jones).	31/03/2009	Baron Funds
Energy_Oil & Gas Exploration & Produc	CHESAPEAKE ENERGY CORP	CHK US	USD	New York	€ 12,284,400,117.02	Based in Oklahoma City, Chesapeake has assembled at low cost the best set of natural gas assets in the U.S. and a rapidly growing portfolio of oil reserves and production. Aubrey McClendon, co-founder and CEO, has been controversial but has consistently monetized assets at far above cost through either joint ventures like the most recent Utica transaction in late 2011 or the full sale of the Fayetteville holdings in early 2011. The stock sells for less than half of our NAV in part because the market doubts McClendon’s willingness to spend less than cash flow on additional lease acreage, but mostly because natural gas has declined to under $3/mcf due to oversupply and the current warm winter. At these prices, drilling is unprofitable, and supply will eventually decline as gas drilling commitments are met and rigs move to much more profitable oil wells. Longer term, LNG (liquefied natural gas) facilities are preparing to export gas to Asia and Europe where prices are over $10/mcf and transportation, industrial, and electricity generation demand is accelerating. Natural gas assets continue to attract large offshore buyers at substantially higher prices than Chesapeake sells for in the market. The free cash flow yield with $3/mcf gas and flat production in 2012 is 7.6%, but if adjusted for a higher gas price a year or two out as the futures curve suggests, the yield is well into the double digits. These numbers are also before backing out $10-15 per share for assets such as drilling carries, oil service company investments, and pipelines that provide little in earnings today but will probably soon be monetized at good prices.	31/12/2011	LongLeaf
Energy_Oil & Gas Exploration & Produc	CONCHO RESOURCES INC	CXO US	USD	New York	€ 8,681,513,874.38	During the second quarter, we initiated a new position in Concho Resources, an independent oil and natural gas company engaged in the acquisition, development, exploitation and exploration of oil and natural gas properties. Its core operations are focused in the Permian Basin of Southeastern New Mexico and West Texas. These core operating areas are complemented by its activities in several emerging plays such as the Bakken Shale oil play in North Dakota and Montana. The current incarnation of the company is the third of its kind that has been formed and developed by the current management team following the buildup and sale of two predecessor companies. During our due diligence on Concho, we were impressed with the depth and experience of the company’s management team, including its successful track record in past exploration and production ventures and its extensive knowledge of the core basins in which it has invested. Concho has been built to grow through a combination of strategic acquisitions and the application of modern drilling and completion techniques to fields that have not previously been exploited using such techniques. As a result of several acquisitions, the company has established a multi-year inventory of low-risk drilling locations that we think should enable it to grow production at close to 20% per annum for the next five to six years, while maintaining spending levels close to its cash flow generation. The company has consistently demonstrated that it has one of the lowest cost structures among its peer companies and as such generates higher margins per barrel of oil produced and strong returns on invested capital. We expect oil prices to remain above historic levels over the next several years which we think makes the case for the need for alternative energy, and since Concho’s production is more skewed toward oil than gas, we think this could further enhance shareholder returns. In addition to the potential value that should be created from profitably growing production in its core areas, we think the company also has some exciting opportunities in other regions in the U.S. that are developing at this time and could over the next several years become part of the “core.” Most notable among these other plays is the company’s position in the Bakken Shale of North Dakota and Montana. Concho fits very well into our investment thesis for energy companies because it has a proven management team, visible growth prospects over the next several years, low cost structure and is an efficient employer of capital. We think the combination of its strategy, its assets and our view on energy prices over the next several years will result in strong returns on our investment. (Jamie Stone)	30/06/2009	Baron Funds
Energy_Oil & Gas Equipment & Services	BRISTOW GROUP INC	BRS US	USD	New York	€ 1,316,009,661.03	The Fund’s investment in Bristow Common exemplifies our focus on competitively-entrenched, sensibly financed and well-managed companies with attractive growth profiles. Bristow is one of two global providers of helicopter and related marine aviation services to the offshore oil and gas industry.Here is how I described the investment at its inception in January 2007: “With a fleet of more than 341 aircraft and operating in more than 20 countries, Bristow Group is the largest contractor of helicopter services to the global oil and gas industry. A majority of Bristow’s work comes from offshore production activity and customer operating expenditures, a less volatile source of revenue than that derived from exploration activities. The company’s longer-term stability is further enhanced by the presence of multi-year contracts on a meaningful portion of its work. Competitive forces in the next two years or so ought to be relatively tame as demand for helicopter services seems to be outpacing supply, a supply that is constrained as helicopter manufacturers are fully booked for a number of years. Bristow Common was purchased at a modest discount to Fund Management’s conservative estimate of Net Asset Value (“NAV”), a value that is likely to grow at above-average rates should the company’s ambitious fleet expansion capitalize on the attractive growth prospects offered by opportunities in the Middle East and Southeast Asia. A liquid market for helicopters exists outside the energy industry for medical, tourism, corporate, law enforcement and similar activities, underpinning the company’s asset values, and lending significant downside protection to this investment.” While recent operating results have been challenged by rising maintenance and other costs, as well as by currency fluctuations, our original thesis remains well intact. Along with significant growth in the fleet (to more than 500 aircraft), per share revenues, day rates, operating income, safety-related performance and other key metrics continue to develop nicely and management has maintained a sound balance sheet. An aging industry fleet and restrained supply dynamics will likely conspire to keep helicopter supply shortages acute, possibly for years, benefiting the largest incumbent players with modern fleets like Bristow. In our estimation, the company’s net asset value or private market value3 sits at least 50% to 80% above the current quote, as evidenced by i) the recent acquisition of Bristow’s closest competitor, CHC Helicopter, at nearly two times Bristow’s current valuation; ii) a realistic “blue book” value of the company’s high quality fleet that is a multiple of the current stock price; and iii) gains on recent sales of older, non-core aircraft. Even considering the terrible sentiment around oil and gas equities, the punishment meted out to the company’s share price has been, in our view, unjustified and overlooks what I believe are bright, longer-term prospects.	31/01/2007	Third Avenue
Energy_Oil & Gas Equipment & Services	CORE LABORATORIES N.V.	CLB US	USD	New York	€ 4,468,676,717.75	Core Laboratories is an oilfield services company whose business mix is highly weighted toward oil recovery, which generates about 56% of its revenue from outside the United States. We believe that the company’s attributes include proprietary skills and equipment that require minimal capital, resulting in high and defensible margins and an excellent balance sheet. During the period, the price of oil rose 11%, while the spot price of gas fell 36%. In addition, on an industrywide basis, North American operations declined faster than international operations while capital spending on higher risk and longer-term exploration projects was dramatically reduced. After a fourth quarter in which energy stocks were sold indiscriminately, we believe that the first quarter saw a return to differentiation, and Core benefitted as a play on many of the most successful trends. In addition, Core steered clear of the credit issues that hindered many other energy companies. (Geoff Jones).	31/03/2009	Baron Funds
Consumer Staples_Personal Products	AMERICAN ORIENTAL BIOENGINEE	AOB US	USD	New York	€ 39,742,097.49	With its 32% operating margins, 36% return on equity and annual earnings per share growth of 40% over the past five years, American Oriental Bioengineering might be expected to be riding a wave of investor enthusiasm. Instead, at a recent $9.70, its shares (net of cash) trade at only 10x this year’s estimated earnings. That’s less than half the multiple of the typical Nasdaq stock.AOB, not surprisingly, is far from a typical stock. While traded in the U.S., the company operates only in China, where it is a leading seller of plant-based pharmaceuticals and nutritional supplements. The majority of its products are branded and sold over-the-counter for such everyday problems as nasal congestion, gingivitis and menstrual cramps. “Think Tylenol, not Zocor,” says Shaumo Sadhukhan of hedge fund Lotus Partners. Since going public through a reverse merger in late 2001, the company has pursued a straightforward business plan: using capital raised in the West, acquire cheap branded healthcare franchises in China and then upgrade marketing, distribution and technology to dramatically improve sales and operations. For example, anti-viral product manufacturer HSPL, bought by AOB in 2004 for $7 million, is expected to earn about $10 million in operating profit this year, says Sadhukhan. GLP, a women’s health company acquired for $24 million in 2006, should have pretax earnings this year of at least $15 million. “Will every deal end up being for 1-2x operating income after AOB has had a chance to improve operations? No. But they bring unique assets and expertise to any deal they decide to do,” says Sadhukhan.The list of potential risks is long, of course. There is considerable uncertainty about longer-term regulatory impacts on drug pricing and distribution as the Chinese health care system rapidly modernizes and consolidates. For the time being, says Sadhukhan, AOB has been a beneficiary rather than victim of regulatory fiat, as its reputation as a strong operator positions it well to capitalize on the state’s push to consolidate the country’s thousands of small, profitless pharmaceutical companies. He also doesn’t see Western-style pharmaceuticals pushing aside the traditional remedies sold by AOB anytime soon. “They’ve been taking traditional Chinese medicines for thousands of years – it’s part of Chinese culture,” he says.The company has also been subject to a wide variety of negative comment about its public listing through a reverse merger, allegations of impropriety on the part of certain of its board members, and charges that it at times has made overly aggressive claims about the effectiveness of its products. Its record of raising capital for acquisitions through dilutive financings has also been a concern, says Sadhukhan. While many U.S. investors would consider investing in any purely domestic Chinese company to be a leap of faith they aren’t prepared to make, AOB makes a concerted effort to allay such fears. Chief Operating Officer Lily Li speaks fluent English and makes frequent trips to the company’s Madison Avenue office in New York City. Both the Director of Finance and newly hired Chief Strategy Officer are based in New York. None of that, however, is a replacement for on-the-ground research in China, says Sadhukhan: “You have to be there to get truly comfortable that the company is real, the products are real and that the story they’re telling American investors checks out,” he says. “That can only come from visiting distributors, pharmacies, hospitals and their manufacturing plants.”In some ways, AOB’s risk profile is lower than that of its U.S. pharmaceutical counterparts. Its over-the-counter products rely not on patents, but on strong brands, an extensive distribution system and, in many cases, government controls on competitive entry to maintain leading market positions. In addition, instead of spending heavily on research and development with highly uncertain outcomes, AOB’s business model involves selling est	30/06/2008	Investor Insight, Shaumo Sadhukhan
Consumer Staples_Packaged Foods & Meats	DOLE FOOD CO INC	DOLE US	USD	New York	€ 668,181,303.13	Dole Food Company is the world’s leading producer, marketer and distributor of fresh fruit and fresh vegetables. In addition, the company has a line of valueadded products such as canned pineapple juice and fruit in plastic bowls. Dole is a global company distributing nearly 200 products in more than 90 countries. Its key products are bananas, which contribute roughly a third of sales, as well as packaged salad and packaged fruit. In the primary markets Dole serves, it has strong market share in its key products. In bananas, Dole has number one market share in North America and Japan, and number two market share in Europe. Dole’s fresh vegetables business operates only in the U.S., where Dole has number two market share in packaged salad. In the U.S., Dole’s line of packaged fruit products has greater than 50% market share in categories such as canned pineapples, canned pineapple juice and fruit in plastic jars. Dole’s business is supported by ownership of significant land assets and infrastructure, including farm land, ports and the largest dedicated refrigerated containerized fleet in the world.Over the long term, we believe Dole will benefit from growing global consumption of fresh fruit and fresh vegetables. In emerging markets, we expect economic growth to drive this trend. In more developed markets, we expect growing public awareness, government outreach precipitated by rising healthcare costs, and continued refinement of the body of science supporting a diet rich in fruit and vegetables to all nudge per capita consumption of fresh fruit and fresh vegetables upward. In the near-term, Dole management has indicated there are opportunities to significantly increase the packaged salad business’ operating earnings through marketing innovations and cost efficiencies. In addition, we expect Dole’s earnings to benefit significantly from de-leveraging as the company uses its cash flow to pay down debt, reducing interest expense going forward. At the present time, we think Dole’s shares are priced modestly relative to the company’s competitors, particularly given Dole’s industry leadership. Lastly, relative to historical averages the industry as a group is trading at low valuation multiples of expected future earnings, indicating to us further potential upside for Dole shares. (Katherine Harman)	31/03/2010	Baron Funds
Consumer Staples_Packaged Foods & Meats	MCCORMICK & CO-NON VTG SHRS	MKC US	USD	New York	€ 4,974,127,576.97	The global leader in spices, herbs and seasonings, McCormick & Co. makes the world’s food taste better. In grocery stores, McCormick’s brands dominate the shelves, and the company is also the leading producer of store brand spices. The company goes well beyond just basil and oregano, specializing in unique spice blends, pepper grinders, soup mixes and more. Outside home kitchens, McCormick provides flavors to restaurants and food manufacturers, with a marquee list of clients including Frito Lay®, McDonald’s®, KFC® and others. After acquiring Lawry’s in 2008, the company now features a leading line of marinades, as well as Lawry’s iconic seasoning blends. Finally, McCormick is not only an American story; the company is growing in international markets, especially emerging countries where consumers can increasingly afford inexpensive goods that were until recently out of reach. Spicing it up Over several decades, McCormick has grown its entire lineup through innovation and marketing. Its products are one of the most indispensible yet inexpensive parts of any meal. Parents preparing dinner for their families can make meals far more delicious for just pennies. McCormick’s marinades, spice blends, and recipes simplify meals while making them taste better. Even when consumers eat outside of the home, they are still enjoying the company’s wares because restaurants use them too. Bringing Innovation Home During recessions, advertising spending declines as McCormick’s commitment to innovation increasingly strengthens its relationship with consumers while improving the company’s economics. Recently the company introduced Recipe Inspirations, a single product holding pre-measured spice packets, complete with directions for creating a home-cooked dish. Such original products provide better operating margins for investors. Moreover, as the economy recovers, these slightly more costly—yet very reasonable—items become more attractive to consumers.A Tasty Opportunity Ariel has owned McCormick’s stock in the past, and we have been closely monitoring its shares ever since. In October 2009, we got another chance to build a position in this industry leader at a bargain price. As consumers readjusted their spending in the Great Recession, McCormick was well-positioned. More consumers were eating at home, but had become accustomed to the complex flavors found in restaurant meals and bought McCormick spices to replicate those tastes. Investors, however, became concerned consumers would bypass McCormick’s branded offerings and go straight to generic store brands. While McCormick actually produces many of these store brand spices, they do so at much lower margins. Investors were also concerned Wal-Mart would reduce the presence of branded spices in its stores. In our opinion, Wall Street’s overblown pessimism created a buying opportunity.As such, short-term market fears have enabled us to purchase a household name with a strong market position. As of December 31, 2009, shares traded at $36.13, a 21% discount to our private market value of $45.93.	31/12/2009	Ariel Funds
Consumer Staples_Packaged Foods & Meats	MEAD JOHNSON NUTRITION CO	MJN US	USD	New York	€ 11,752,436,525.62	Mead Johnson manufactures and markets infant formula and children’s nutrition products in North America, Latin America, Europe, and the Asia-Pacific. The company’s last reported quarter was roughly in line with the Street’s expectations, with EPS $0.03 below expectations due to marketing expenses. Total sales were up 2.5%. Asia and Latin America continue to be the growth drivers, Latin America up 15.1% and China up 25%. There is no change to our thesis. We feel Mead Johnson is unique thanks to its brand names and patents in the pediatric nutrition market where it has established a strong reputation for science based pediatric nutrition market where it has established a strong reputation for science based pediatric nutrition products to give infants and children the best start in life.	31/03/2010	Dennis Lynch, head of Equity Growth team, Morgan Stanley
Consumer Staples_Packaged Foods & Meats	SANDERSON FARMS INC	SAFM US	USD	NASDAQ GS	€ 834,934,257.95	When Mr. Market finds himself in one of those short-term, earnings-centric moods we, at Third Avenue, can often find investment opportunities in the stocks that he has knocked aside. Sanderson Farms Common saw its share price severely dented by a clouded outlook for next year’s earnings. We have owned Sanderson in the Fund before; we know the business and we know the management team. Founded in the late 1940s, Sanderson Farms is the nation’s fourth largest poultry producer and is arguably the lowest cost producer in the industry. We view Sanderson as a high quality franchise within a mundane, commodity business. Sanderson shares seem to exemplify much of Third Avenue’s investment philosophy. Both the business and the company boast a number of attractive attributes, including: • Generally high rates of return on assets and equity (on average and over time). Notably these enviablereturns have been achieved using little financial leverage and despite a host of volatile elements attached to the operations;• A fortress-like balance sheet, with zero goodwill and a net cash position, in stark contrast to some of the industry’s financially constrained competitors;• High barriers to entry, via periodically significant capital outlays and long-term customer contracts and relationships. For example, the cost of a new plant like the one currently under development by the company can cost in excess of $100 million;• The company’s capital spending appears to have been productive and, historically, the business has required little in the way of access to external sources of capital (Sanderson opportunistically raised equity earlier this year at $53 per share, only the second time in more than twenty years for the company to issue equity in the public markets, in order to help fund the development of two new plants).• A management team that has consciously and admirably avoided “diworsification,” e.g., diversifying into other proteins like pork or expanding through dilutive acquisitions in other areas;• CEO Joe Sanderson and employees own more than 12% of the company’s stock, suggesting they think and act like owners, not just managers;• Efficient operations that protect the business in difficult periods and benefit from an ability to pass through, with a lag, higher input costs. Management seems closely attuned to its operational core competencies and intent on sticking to them;• Chicken appears to be a very competitive form of protein relative to beef and pork, in particular, as it relates to feed requirements (e.g., corn, soy and other cost components) and, over the last few decades, has enjoyed relatively steady increases in per capita consumption, in contrast to other forms of protein.The business does come with some blemishes, however, most of which are out of management’s control. For example, China and Russia, two key export markets, periodically impose tariffs or quotas on certain types of U.S. chicken parts(According to Sanderson management, the industry’s shipments of broiler pounds to China and Russia in the first half of 2010 declined by nearly 87% and 90%, respectively. In 2009 China and Russia accounted for more than 40% of the export market for U.S. producers). Similarly our government’s policies (e.g., in the areas of energy or U.S. dollar debasement) tend to exacerbate the spikes in corn and similar commodity prices (which negatively impacts producers not only of chicken but of beef and pork as well). I call Sanderson a “one-step back and two steps forward” kind of business. Given time, the business has developed well, but not without temporary setbacks. Today, that backward step primarily relates to i) weakened demand from food service customers (think high unemployment levels); ii) squabbling with Russia and China (for the moment, Russian exports have resumed); and iii) upward pressure on corn and soy prices. These problems tend to come with the territory, but the pain is usually temporary. Looking furt	29/10/2010	Third Avenue
Consumer Staples_Hypermarkets & Super Centers	CARREFOUR SA	CA FP	EUR	EN Paris	€ 11,565,695,312.50	Headquartered in Paris, Carrefour is the number two retailer in the world with top food share in France, Spain, and Brazil. Over one third of cash flow comes from rapidly growing emerging markets including China. Blue Capital, a joint venture between Colony Capital and Europe’s richest man, Bernard Arnault, holds three board seats and more than 20% of votes. Over the last fourteen months they successfully pursued selling both non-core geographies such as Thailand and owned real estate such as French supermarkets for multiples well above those implicit in the stock’s price. In addition, the company successfully spun off Dia, its hard goods discount retailer. Dia is now listed on the Spanish stock exchange and a member of the IBEX 35. Carrefour’s 60% price-to-value ratio reflects the market’s assumption that margins and sales in France will stay at trough levels and ignores both the faster growing emerging market business and the significant worth of the company’s real estate. Blue Capital is committed to capturing value recognition for Carrefour’s dominant market share positions and valuable real estate. We believe they are likely to pursue additional highreturn asset sales and to force adjustments needed to move French operating margins from current trough levels. Unlike most of our holdings which have positive momentum, the challenges for Carrefour in the very short term will get harder before they get easier. Premised on conservative 2012 free cash flow projections, the company’s current FCF yield is 11.4%.	31/12/2011	LongLeaf
Consumer Staples_Food Retail	WHOLE FOODS MARKET INC	WFM US	USD	NASDAQ GS	€ 10,892,638,295.12	Whole Foods Market was one of our best-performing stocks during the quarter as shares of the beaten down natural foods chain rallied sharply on signs of sales stabilization, renewed focus on cost control and the settlement of an FTC lawsuit alleging anti-trust violations. We originally invested in the company in 2003, when the then 150-store retailer was focused on fast growth — opening 15 to 20 stores per year — and generating brisk double-digit sales in the process. We made our initial investment at a time when the company was executing well and riding the wave of ‘trading up’ and healthier living. Its fresh and exciting stores, broad selection and savvy merchandising transformed Whole Foods from a niche grocer into the dominant natural-foods supermarket in the country, with $8 billion in total sales and 270 stores. At its peak, the company sported a $5 billion market capitalization. Along the way, however, a series of strategic missteps and distractions led to deteriorating financial results that threatened shareholders. These included opening larger stores that hurt productivity, expanding internationally too soon and at great cost, and acquiring a struggling competitor with lower levels of profitability. Last year, as sales began to suffer from reduced consumer spending, these self-inflicted problems slashed returns. Earnings this year are expected to be down 50% from their 2006 peak of $1.40.We sold our Whole Foods stock almost a year ago, preferring to wait until we saw evidence of better expense control, management discipline, and sales improvement. During this time, we monitored the business closely and grew increasingly more confident late in the year as the company reduced store growth, opened smaller stores, reduced capital expenditures and paid down debt. Last fall, when the market cap briefly dipped below $1 billion, we seized on an opportunity to buy back a best-in-class brand at 2003 prices all over again. With sales starting to show resilience —comparative stores down only 4% last quarter — and store-contribution margins beginning to improve, we believe Whole Foods is poised to resume year-over-year earnings growth later this year. More important this time around is how it will achieve that growth, which we believe will be through a disciplined approach and measured expansion. Looking ahead, we believe Whole Foods can achieve $10 billion in sales and more than $2 in earnings per share over the next three years, more than double the depressed run-rate. As such, we expect to realize a healthy return on investment. (Matt Weiss).	31/03/2009	Baron Funds
Consumer Staples_Food Distributors	UNITED NATURAL FOODS INC	UNFI US	USD	NASDAQ GS	€ 1,670,710,606.20	United Natural Foods (“UNFI”) is the largest wholesale distributor of natural, specialty and organic products in the United States. With $4 billion in annual sales, 28 fulfillment centers and distribution in 25,000 grocery stores, UNFI is the low-cost leader in a rapidly growing market. The company supplies over 60,000 products to customers throughout North America and serves a variety of retail formats, including large natural food chains such as Whole Foods, mom and pop natural products retailers, conventional supermarkets and food service customers. UNFI competes in an $80 billion natural and organic products market, where growth from brands such as Kashi Cereal, Fage Yogurt, and Amy’s Organic is outpacing conventional grocery categories by a factor of four. This is being fueled by consumers’ increasing shift toward healthier eating as well as greater food safety and environmental awareness. UNFI is a value-added distributor that helps its customers better plan, present and promote the natural food categories within its stores. We believe UNFI is wellpositioned to take meaningful share over the next few years, both within established accounts such as Whole Foods — which is adding 20 new stores per year — as well as large, new accounts at conventional grocery chains, which are increasing their allocation to these categories. We anticipate that UNFI will be able to offer these larger supermarkets more products at lower cost and leverage their distribution infrastructure in the process, resulting in accelerated sales and earnings growth. (Matt Weiss)	31/03/2011	Baron Funds
Consumer Discretionary_Specialized Consumer Services	SERVICE CORP INTERNATIONAL	SCI US	USD	New York	€ 1,855,672,716.51	Headquartered in Houston, Service Corp is the largest provider of death care products and services in the U.S. The company’s vast real estate assets cannot be replicated because of the difficulty permitting cemeteries. Management not only has delivered strong operating results, but has a record of generating high returns through acquisitions and share repurchases. The market penalizes the stock because a decreased death rate is currently depressing earnings. This challenge will fade with the wave of baby boomers moving into their later years. Estimated free cash flow for 2012 provides a 10.3% FCF yield.	31/12/2011	LongLeaf
Consumer Discretionary_Restaurants	BRAVO BRIO RESTAURANT GROUP	BBRG US	USD	NASDAQ GS	€ 288,280,661.78	Bravo Brio Restaurant Group is a leading operator of full service Italian restaurants, under two concepts, Brio, a high-end Tuscan grill, and Bravo, which offers mid-priced classic Italian fare. The company was founded as a family business and over time took in private equity capital to grow and recruited a seasoned CEO to lead. We believe the concepts are differentiated and attractively positioned, especially the upscale Brio concept where there is limited competition. We think there is significant opportunity for growth. There are only 86 restaurants in the chain, split evenly between the two concepts, and we believe there ultimately can be three times as many.New unit development returns are compelling, 30-40% cash on cash, which are near the top of the industry. We believe the concepts and management team are proven, having successfully developed stores across the country. We think the company can grow earnings at over 25% per year into the foreseeable future, as it ramps up its development program and increases its margins through scale.We purchased the bulk of our position on the IPO at what we considered an attractive price, since the trading multiple was less than the growth rate. Even with the stock up some, we see great upside, since we believe earnings can compound nicely and we expect some multiple expansion.	31/12/2010	Baron Funds
Consumer Discretionary_Publishing	NEW YORK TIMES CO-A	NYT US	USD	New York	€ 803,992,629.82	The New York Times is an innovative newspaper distributor. We think its business could become increasingly profitable, as newspaper sales continue to migrate from physical distribution to electronic distribution. In addition to its flagship New York Times newspaper, the company owns The Boston Globe, The Herald Tribune and 14 local newspapers. Circulation revenue accounts for approximately 40% of revenue at the Times’ newspaper division. This is significantly higher than competitors that on average receive 20% of their revenue from their readers’ subscriptions or newspaper purchases. We attribute this outsized revenue source to the company’s high quality and entrenched journalistic product that cannot be easily duplicated by others. We believe that the company can significantly improve the profit it obtains from this revenue source. An estimated more than 20 million Apple iPads and Amazon Kindles were sold in 2010 with additional companies introducing e-readers in 2011. However, customers who use the online and e-reader products are currently charged minimal rates for the content while homedelivery consumers pay reasonable subscription fees. We believe this will change early in 2011. The company has announced plans to create a “tieredgated” system for its digital pricing. All users will be charged an appropriate fee for the amount of content they consume. We believe this additional revenue could add meaningfully to profits, while not significantly reducing The New York Times’ loyal readership base, which is important to advertisers.As more consumers elect to obtain content from digital sources, The New York Times’ overhead can be reduced significantly. Volatile printing costs and high distribution expenses should be reduced while offering the consumer a more convenient product. The company has already closed some company owned printing facilities and outsourced other functions to create a more variable cost structure. Currently, the revenue achieved per digital ad is significantly below that of a printed advertisement. We feel that this gap should narrow considerably. The continuing shift towards digital consumption of The New York Times should eventually allow advertisers to more effectively target their customers and exhibit more captivating ads, which include videos and e-commerce. We think these additional benefits could result in higher ad rates and greater profits for the business. (Michael Baron)	31/12/2010	Baron Funds
Consumer Discretionary_Movies & Entertainment	MADISON SQUARE GARDEN CO-A	MSG US	USD	NASDAQ GS	€ 1,853,526,515.35	Based in New York, Madison Square Garden (MSG) owns one of the most valuable regional sports networks at a time when live sports content is increasingly important to traditional distributors. In addition, the company owns two of the best franchises in the NBA and NHL (Knicks and Rangers) and the iconic Madison Square Garden arena in which these teams play. The Dolan family controls the company, owns 20%, and has done a tremendous job building network value. The market is punishing the stock because the teams are generating no profits currently, and MSG’s billion dollar arena renovation that will draw higher team revenues is depressing this year’s earnings. The media network generates a valuable cash coupon, and comparable transactions imply a breakup value of the teams and arena over twice the stock’s price. Additionally, programming contracts with huge revenues are being signed, causing the values of big-market NBA teams to explode. Because of the current renovation, 2012 FCF will be negative. Adjusted for the arena renovation, the FCF yield is 7.0%.	31/12/2011	LongLeaf
Consumer Discretionary_Leisure Facilities	VAIL RESORTS INC	MTN US	USD	New York	€ 1,137,860,671.06	Vail Resorts, the largest ski resort company in the United States, declined 6.3% in the first quarter. The decline was due to investor concerns that an increase in the price of oil could adversely impact the ongoing economic recovery and result in less consumer discretionary spending. However, Vail’s results remain strong and, based upon advance bookings, there is not yet evidence of a reduction in consumer spending. Significant advance season pass sales give significant stability to this business. We think the recent openings of high quality hotel resorts at Vail, including Arabelle, Four Seasons and Ritz Carlton, as well as the amenities of newly opened luxury condos at the Solaris, make Vail an even more attractive destination to vacationers and should help offset any economic weakness in the short term. Over the long run, with a physically more attractive resort and, arguably, the best ski mountain in North America, Vail Resorts has substantial pricing power for its lift tickets, its principal revenue source. In our opinion, its resort is uniquely positioned, and its significant multiple valuation discount to hotel businesses that are not as well positioned is unwarranted. When Vail sells its remaining inventory of condo units at One Ski Hill place in Breckenridge and the Ritz residences in Lionshead, we expect its cash will be nearly equivalent to its debt. (David Baron)	31/03/2011	Baron Funds
Consumer Discretionary_Leisure Facilities	WHISTLER BLACKCOMB HOLDINGS	WB CN	CAD	Toronto	€ 314,668,754.66	Whistler Blackcomb is the largest Canadian ski resort company. It owns the Whistler ski resort in Vancouver. We think the company stands to benefit from the growth in skier visits likely to occur due to exposure of the 2010 Olympics. Salt Lake City achieved five times the average growth in skier visits in the five years following the Olympics in 2002. We think the same could happen in Whistler over the next few years. We think this combined with consistent 2% to 3% annual increased lift ticket prices should boost profits significantly. In addition, Whistler stands to benefit from $2 billion of government capital spent on improving Whistler’s infrastructure over the past two years in preparation for the Olympics. The number of lanes on the highway leading to resort has increased significantly and reduced driving time 20%. Airport capacity has increased 17%, making it easier to reach the resort. Finally, we believe Whistler is concentrating its efforts on its higher margin destination customers, which currently comprise 52% of visitation a year. This compares to Vail which has 58% of its customers as destination guests and which peaked at 60% in 2008. Destination visitors generate 30% higher lift ticket prices than locals and spend more on average than local customers. We think, with season pass sales up 18.5% this year in units, stronger advanced bookings and solid snowfall, which resulted in an earlier than expected opening of the resort, the 2010/2011 ski season is off to a great start. (David Baron)	31/12/2010	Baron Funds
Consumer Discretionary_Internet Retail	AMAZON.COM INC	AMZN US	USD	NASDAQ GS	€ 60,724,448,241.46	Amazon.com, Inc., a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers the largest online global retail selection. Amazon.com seeks to be a customer-centric company, where customers can find and discover practically anything they may want to buy online and endeavors to offer its customers the lowest possible prices. In 2008, total global eCommerce sales were approximately $300 billion, and this represented less than a 4%penetration rate of the $8 trillion spent on total global retail sales. In 2008, Amazon’s grossed up revenues were approximately $27 billion, or about 9% of eCommerce sales and less than 0.5% of global retail sales. As a comparison, Amazon’s sales represented less than 7% of Wal-Mart’s sales. We believe that the eCommerce channel will continue to grow and increase its retail market share. Within this growing channel, we think Amazon should be able to increase its own market share as it continues to expand its vast selection of products and, in conjunction with lower prices and the overlapping shopping experience, should continue to drive traffic.	30/09/2009	Baron Funds
Consumer Discretionary_Internet Retail	PRICELINE.COM INC	PCLN US	USD	NASDAQ GS	€ 21,813,231,657.00	One notable new purchase during the quarter was priceline.com. The company operates well-known Internet travel websites in the U.S. and abroad. Its domestic website primarily sells hotel rooms and airline tickets according to a ‘name your own price’ methodology that the company developed and widely marketed through catchy television ads. Its foreign websites are more traditional e-commerce sites that allow users to purchase rooms and tickets from vendors they select at a fixed, transparent price. We believe that the company has an attractive business model and a marketleading position in the best markets. We believe there is an ongoing secular trend whereby leisure and business travelers will continue to book their travel plans online. The European and Asian markets remain meaningfully behind the American market in Internet travel penetration, and we believe that priceline.com’s competitive position is especially strong in those faster-growing markets. The company already generates substantial cash flow and high margins, and we believe that these have room for substantial growth.	30/09/2009	Baron Funds
Consumer Discretionary_Internet Retail	VITACOST.COM INC	VITC US	USD	NASDAQ GM	€ 160,201,680.35	During the quarter, we invested in the newly public company Vitacost.com. Vitacost is the leading online seller of vitamins and supplements, a $25 billion market that is only 3% penetrated online. This market has been growing 25% online, as the benefits of scale, cost structure and distribution work well for the online environment. Vitacost has been growing faster than the market, differentiating itself with its vast selection of products, ease of use and low prices. Traditional offline competitors have a tough time matching Vitacosts’s pricing due to their brick-and-mortar cost bases and their reluctance to avoid cannibalizing higherpriced offline sales. Today, VitaCost offers 23,000 different products, and has plans to grow that to 60,000 by the end of next year. The company uses its vast selection as a net to attract customers, and then attempts to up-sell them to its own higher-margin proprietary products, which it now does about 33% of the time. We believe the stock is attractively valued at only 5-times operating cash flow, with achievable near-nearterm targets and a significant long-term opportunity. (Robert Peck)	30/09/2009	Baron Funds
Consumer Discretionary_Homebuilding	TOLL BROTHERS INC	TOL US	USD	New York	€ 2,833,704,445.35	Toll Brothers, Inc.—We recently re-established a position in Toll Brothers, a stock we had owned until June 2006. Toll is a leading high-end homebuilder serving both the move-up market and the empty nester buyer in many regions of the U.S. The stock is down almost 70% from its all-time high reached in July 2005 and is down about 33% over the last year. The stock trades at about 85% of book value which is below where it had traded in previous down cycles. We believe that Toll Brothers has several competitive advantages and is well positioned to benefit from an eventual recovery in the housing market. Toll is a leader in building luxury homes and competes mostly with private builders. Since it is the private sector that is facing rising liquidity constraints for acquisitions and to fund current operations, we think Toll should be able to gain significant market share in both the current housing downturn as well as the subsequent recovery. Toll also has a unique land-based model. Management focuses on identifying difficult to entitle land in premiere, supplyconstrained locations for the high-end home buyer. As a result, we believe that the company’s land holdings will retain more of their value through the current downturn. Moreover, the company is well positioned from a liquidity perspective. At the end of the quarter, Toll’s net debt to capitalization stood at 23%, which is, incidentally, the lowest in its history. It also has about $2.5 billion of available liquidity with no significant debt maturities until 2011. We have high regard for Bob Toll and his management team. The company has consistently achieved the highest profit margins of any builder in the industry and, in our view, is an excellent operator. 31/12/08: We continue to be positive on the outlook for Toll Brothers because (i) reports indicate to us that a housing stimulus program may be imminent (perhaps 4.5% mortgage rates, measures to stem foreclosures, tax credits to buyers of homes, etc.), and (ii) we believe Toll Brothers is uniquely positioned to benefit from a turnaround in the housing market. As a builder of luxury homes, we believe Toll Brothers has a competitive advantage as its key competitors, the private builders, are facing ongoing liquidity constraints. Toll Brothers has close to $3 billion of liquidity and no debt maturities coming due until 2011. Therefore, we expect Toll’s strong liquidity position will enable the company to take advantage of opportunities generated by less financially flexible peers. As an aside, we believe that many of Toll Brothers’ land holdings are in premiere locations and should retain more of its value through the balance of the housing downturn. Lastly, we have high regard for Bob Toll and his management team and believe they will capitalize on future opportunities. (Jeff Kolitch)	31/12/2008	Baron Funds
Consumer Discretionary_General Merchandise Stores	DOLLAR GENERAL CORP	DG US	USD	New York	€ 10,604,097,803.69	Dollar General is a well-established discount retailer that sells consumables such as paper/cleaning products, food and health/beauty products, as well as kitchen supplies, apparel and seasonal products. The company’s 8,700 small-box (7,000 square feet) stores, mostly located in the south, southwest and midwest regions, generate over $10 billion in annual revenue. The firm has impressively achieved positive same-store sales growth for 20 straight years. In mid-2007, it was acquired by a private equity consortium led by KKR, Goldman Sachs and Citigroup, who brought in a new management team that redesigned the stores, closed or relocated underperforming stores, improved private label brands and implemented cost-cutting initiatives. All of these have helped the company boost sales growth and margins; same-store sales growth accelerated from 2% in 2007 to 9% in 2008 and 11% year-to-date, while operating margin has improved from 4% to 8%. Going forward, Dollar General believes it can expand its store base by 5% annually while continuing to improve its products and supply chain management. Given the recession that has gripped the US over the last two years, it is unsurprising that these prospective retail IPOs are less exposed to economic weakness than the broader sector. Both Dollar General and rue21 offer relatively low price points for their goods and are therefore benefiting from tradedowns, which has helped them generate strong same-store sales growth. Most of Dollar General’s products are priced below $10 and 25% are less than $1, and the company believes its products are generally cheaper than those at supermarkets or drugstores and at comparable prices to large-box retailers like Wal-Mart. Most of rue21’s apparel is priced under $40, and it sells fragrances, many accessories and some apparel for under $10.	30/10/2009	Renaissance Capital
Consumer Discretionary_Computer & Electronics Retail	BEST BUY CO INC	BBY US	USD	New York	€ 6,582,482,161.67	Best Buy Co., headquartered in Richfield, MN, is the largest consumer electronics retailer in the U.S. BBY operates 4,000 stores and with a market cap of $17.8 billion, meets three of our five valuation criteria (price-to-earnings, price-to-sales, and price-to-cash flow). Catalysts for the company are new management, new products/new markets, and restructuring activity. Brian Dunn, formerly the company’s COO and a 25-yr veteran of BBY was named CEO in mid-2009. Mr. Dunn is much more focused on cost management and margin expansion than his predecessor and new management is working to expand BBY’s market reach from not only consumer electronics hardware but also higher margin content services. BBY currently participates in the services market through its mobile phone business and will now expand into other content service categories such as video and internet. The company has reduced its corporate headquarters employee base, restructured its store personnel by adding more hourly sales associates, and upgraded its point-of-sale system at its domestic locations. These efforts are expected to allow the company to leverage expenses better, expand margins, and increase cash flow. As we look forward to a change in the company’s product mix, added benefits include a 1.3% dividend yield and a $2.5 billion buyback program which the company restarted during the first quarter of 2010.	30/04/2010	TCW
Consumer Discretionary_Casinos & Gaming	WYNN RESORTS LTD	WYNN US	USD	NASDAQ GS	€ 8,724,005,197.07	Wynn Resorts’ shares rose on increased investor optimism that the ongoing declines in visitation at its Las Vegas properties had bottomed, implying that operating results in that market may not fall any further. In addition, during April, the company’s booking window increased slightly as customers took advantage of promotional deals and booked rooms earlier to qualify for promotional rates. This helped the company to better manage its yield, resulting in improved revenue per available room during the quarter. As a result, since the end of the first quarter, occupancy levels at its Las Vegas properties increased from the 80%-range to the 90%-range, even with the much larger room count that resulted from the opening of its Encore Las Vegas property in December 2008. We believe that Wynn has also done a fine job cutting its overhead costs to reflect its lower current level of revenues, and we believe that this should improve its ongoing results. In addition, the company improved the strength of its balance sheet during the quarter by extending $900 million of its $1.3 billion in debt maturing over the next two years, while also achieving a relaxation of covenants on that debt. The company also completed an equity offering in March. We believe that Wynn’s improved balance sheet has placed the company in a stronger financial position than nearly all its competitors, affording Wynn greater flexibility to reinvest in its existing properties and to take advantage of any asset acquisition opportunities that may arise from its competitors’ distress. (David Baron)	30/06/2009	Baron Funds
Consumer Discretionary_Broadcasting	DISCOVERY COMMUNICATIONS-A	DISCA US	USD	NASDAQ GS	€ 11,350,511,781.11	Discovery Communications is a leading pure-play cable network/programming operator with three widely distributed channels (Discovery, Animal Planet and the Learning Channel) and seven smaller channels. Revenues are roughly 50% subscription (highly predictable) and 50% advertising (more economically sensitive). Today, less than half of revenues come from international markets but there is growth potential here with operations in 170 countries. Two other initiatives have also been announced: a 50:50 partnership with Oprah Winfrey to launch OWN (Oprah Winfrey Network) in January 2011 and a JV with Hasbro to re-launch the Discovery Kids channel. The company has considerable free cash flow which we believe can top $3/share by 2013.	29/01/2010	Baron Funds
Consumer Discretionary_Broadcasting	LIBERTY MEDIA CORP - LIBER-A	LMCA US	USD	NASDAQ GS	€ 8,134,385,373.15	Liberty Media Corp. is cable pioneer John Malone’s tracking stock vehicle that represents investments held by the company. For the most part, they reflect the remaining ownership stakes in media companies that Dr. Malone’s cable company, TCI, was able to garner over the years given its massive distribution clout. Liberty is enormously tax efficient, and will swap or sell stakes in companies as a means to realize their significant value. Liberty understands the strategic value of these assets to other parties, and actively works to monetize these values. Over the years, Liberty has sold BET to Viacom in exchange for a stake in Viacom (and now CBS), spun off Discovery Holdings to shareholders, and converted a position in Gemstar into a controlling position in DirecTV, also recently spun off to shareholders. Liberty also invests its considerable cash position, the most impressive of these investments was in the form of a loan commitment to Sirius during the credit crunch in early 2009. Liberty also garnered a 40% equity stake in Sirius for a de minimus investment, which is today worth nearly $3 billion, or nearly $30 per Liberty share (and the loans have been paid off).Liberty shares trade at a substantial discount to a net asset value that is nearly double the stock price, and management continues to take prudent steps to close that discount. Selling, swapping or spinning out assets have been one means to do so, but the company is now in a position to buy back a substantial amount of stock, which, given the large discount to net asset value, would be accretive to NAV per share. We see that sizable discount to NAV continuing to narrow, as Liberty appears to be in a long-term liquidation/ value realization mode. (Rich Rosenstein).	30/09/2010	Baron Funds
Consumer Discretionary_Auto Parts & Equipment	AUTOLIV INC	ALV US	USD	New York	€ 4,446,812,236.59	The automobile industry has been through a tumultuous few years. The economic recession, high oil prices, and financial instability of many original equipment (“OE”) manufacturers significantly reduced industry sales. Governments have stepped in to not only take ownership of these businesses but also to stimulate demand for certain vehicles. These efforts have largely paid off and the industry is now on more stable footing. However, new vehicle purchases still significantly lag its prior highs and a normalized replacement cycle. Vehicles per household are at their lowest level since 2004. Cars that are over 12 years old currently consist of 35% of the U.S. population, an all-time record. We expect this pent-up demand will lead to a stronger than anticipated seasonal adjusted annual rate of sales (“SAAR”) over the next few years. While many OE suppliers will ride this wave of increased production, we feel that Autoliv, the leading manufacturer of vehicle safety products, has transformed its business and its profitability to particularly benefit in the years ahead.Autoliv’s heritage is in passive safety, decreasing the likelihood of serious injury once the car is in an accident. The discrepancy between the level of products on vehicles is fairly broad. The average North American car has $140 of product while the average European vehicle has $215. Yet both geographies are significantly below their potential considering some Mercedes cars have over $800 of safety content. We anticipate that proposed legislation and harsher crash rating standards will increase the amount of passive safety equipment on vehicles in developed markets. In addition, the growth rate of vehicles in the emerging markets is two to three times greater than the developed countries. China’s passenger vehicle and light commercial vehicles totaled 17.3 million in 2010 and had grown in excess of 4 million units per year since 2008. Average content in China is currently $200 with a wide disparity between the low end and high end. Vehicles are seen as a status symbol in China and we think new purchasers are not likely to skimp on safety features. Autoliv is well positioned with the Chinese domestics and popular foreign brands by having factories near the OE’s production facilities. India and Brazil only produce 2.5 million and 3 million cars per year, respectively. We estimate that Brazil should be able to double its production while India could one day surpass the U.S. Autoliv has plants that already sell to the leading OEMs in these countries. But Autoliv is expanding its safety line beyond just protecting passengers once they endure an accident. Active safety products that can prevent an accident, is currently a $400 million market that is estimated to become $1.5 billion by 2015. Autoliv currently has a 20% share of this market. We believe Autoliv can achieve a 30% share of the larger market. Its well managed balance sheet and cash flow generating core business have resulted in its ability to make strategic acquisitions and spend on research and development focused in this field. Autoliv’s products that are currently in various stages of development and that we believe could be on vehicles soon include radar, infrared devices and cameras.Finally, Autoliv spent time during the economic slowdown to open factories in low-cost countries, close underperforming facilities and create a more variable cost structure. Autoliv has moved its operating margin to the highest levels in the company’s history. While most analysts feel that this is unsustainable, we believe the company’s reliability and low cost operations, and OE’s desire to work with fewer suppliers, bodes well for continued high margins.We believe the macro factors that are benefiting the auto industry, along with Autoliv’s focus on emerging markets, development of active safety products and reduced cost structure bodes well for the company’s future growth. (Michael Baron)	31/03/2011	Baron Funds
Consumer Discretionary_Apparel, Accessories & Luxury	CARTER'S INC	CRI US	USD	New York	€ 1,903,037,199.70	CARTER’S INC. (CRI): Date: Sep 14, 2010, Growth: C, Competitive Moat: C+, Management: C, Financial Health: B, Opinion: Undervalued retailer, some market advantages. Buy.Carter’s (CRI) is a retailer of children’s apparel, the largest in the industry with a 12% overall market share, and a 140-year history. The company has two primary channels of distribution that contribute roughly equally to total sales. Carter’s apparel is sold wholesale to over 4,000 department and chain stores, such as Macy’s (M) or Kohl’s (KSS). Special brand lines were developed for Walmart (WMT - the “Child of Mine” brand) and Target (TGT - “Just One You”), representing about 20% of sales. Additionally, Carter’s operates 289 self-branded locations and an additional 175 OshKosh stores. OshKosh (acquired in 2005) is the firm’s older age brand, while Carter’s focuses more on newborn and infant clothing.While several retailers occupy the Magic Formula screens at present, Carter’s has some interesting characteristics that may make it a more attractive play than others. For one, children’s clothing is a less volatile business than standard apparel. While adults will bargain shop in a recession, and teens are constantly changing fashion allegiances, parents and grandparents usually do not put as strict a lid on spending for the little ones, and fashion is a lesser concern. This helped the children’s apparel market to a less severe decline in spending during the 2008-09 recession - a 3.5% decline vs. 5.1% in general apparel, according to NPD.Demographic trends are also favorable. The U.S. is in a mini “baby boom” right now. More babies were born in 2007 than in any year in the country’s history, and the 2000-2009 period was the highest decade for births since the 1950’s, by far. Combine this with those 1950’s births becoming grandparents, and the situation is ripe for organic growth in spending on children. Carter’s is well-positioned to benefit. Same-store sales growth has consistently been in the mid-to-high single digits over the past several years.On a operational level, Carter’s has plenty of avenues for growth. With 464 stores, many analysts believe there is expansion potential to 600 or more locations. Consider that competitor Children’s Place (PLCE) has over 950 stores, and Gymboree (GYMB) about 650, and the ultimate potential may be even higher. Growth should be attainable here.Carter’s also has solid financial characteristics. Cash and debt roughly balance out, at $245 million and $232 million, respectively. The company just pre-paid $100 million in debt back June, further strengthening their position. Operating margins after subtracting out one-time charges have been good in the 10-13% range. They have been particularly strong recently, with trailing twelve month margin at 15%. Free cash flow margins are 8-10%, high for a retailer, and return on capital is excellent at 20%.There are some risks here. Several big chain retailers have been looking to move to private label clothing to improve their margins. Walmart’s floor space reduction for Child of Mine has hurt, with the line posting a 47% sales decline in the most recent quarter. Carter’s also posted its first same-store sales decline in three years for Q2, fueling concerns that competition such as Gymboree’s Crazy 8 stores are hurting traffic. Finally, there seems to be some lingering concern over past management blunders. Carter’s had to restate earnings last year due to accounting mis-steps, and also wrote down $155 million in goodwill from the purchase of OshKosh after continued poor performance. That is almost half the purchase price of $312 million, indicating significant overpayment.Overall, though, Carter’s looks like an attractive Magic Formula investment. At about $24, the stock’s adjusted earnings yield (EBIT/EV) is 17.4%, well above its 5-year average of 10%. Taking into account 2011 projections, modest growth rates, and historical multiples, I believe a good sell price for t	30/09/2010	Magic Diligence
Consumer Discretionary_Apparel Retail	RUE21 INC	RUE US	USD	NASDAQ GS	€ 493,792,079.02	While Dollar General’s consumer staple products make it a relatively defensive retail concept, rue21 is being positioned as a classic growth story. The company operates 527 stores that sell trend-focused value-priced apparel targeted at the 11-17 demographic. Its stores, which average about 4,500 square feet, are located in strip malls, regional malls and outlet centers, primarily in underserved small and middle markets. After emerging from bankruptcy in 2002 with a new management team, the firm has doubled its store base in the last three years and has averaged 8% same-store sales growth over the last five quarters. With its focus on teens and social networking-driven marketing campaigns, the company believes it can translate its strength in this demographic to 16-18% annual square footage growth and 2-4% same-store sales growth while increasing gross margins through product mix and scale. Given the recession that has gripped the US over the last two years, it is unsurprising that these prospective retail IPOs are less exposed to economic weakness than the broader sector. Both Dollar General and rue21 offer relatively low price points for their goods and are therefore benefiting from tradedowns, which has helped them generate strong same-store sales growth. Most of Dollar General’s products are priced below $10 and 25% are less than $1, and the company believes its products are generally cheaper than those at supermarkets or drugstores and at comparable prices to large-box retailers like Wal-Mart. Most of rue21’s apparel is priced under $40, and it sells fragrances, many accessories and some apparel for under $10.	30/10/2009	Renaissance Capital
Consumer Discretionary_Apparel Retail	URBAN OUTFITTERS INC	URBN US	USD	NASDAQ GS	€ 3,134,444,741.98	The Fund also purchased Urban Outfitters, a specialty retail company that targets teenagers and young women through its Urban Outfitters, Anthropologie and Free People divisions. The company, which was founded by current chairman Richard Hayne and his wife, traces its roots to a single store near the University of Pennsylvania campus in 1970. It has since grown to encompass approximately 300 retail stores, several branded websites, and a wholesale division that sells to other merchants. Despite the chain’s size, we believe it has managed to preserve a boutique-like feel throughout its stores, known for offering a ‘wide and shallow’ assortment of electric, original clothing and accessories. Historically, the company has had among the highest operating margins among specialty retailers as a result of operating efficiently and selling a significant percentage of highly-profitable private label merchandise. During the period from 2001 through 2008, Urban consistently grew its earnings by greater than 20% per year. However, like almost all retailers, Urban’s business has been greatly impacted by the recession, and sales and margins have suffered. We believe that Urban’s earnings will decline slightly in 2009, as sales slow, new store openings are scaled back, and operating margins decline. However, we believe that management has taken important steps to re-accelerate earnings when the economy stabilizes and consumer spending patterns return to more normalized levels. These steps have included reducing operating costs in ways that would not impact its customers’ shopping experience; raising initial mark ups on merchandise by negotiating better prices from its factory partners; and, increasing its mix of private label merchandise, which carries better margins than third-party merchandise. We believe that these actions position the company to increase its margins when sales trends improve. In addition, the company’s Internet-based business has grown faster than its other distribution channels, and we believe it has the potential to realize operating margins meaningfully above the corporate average. Lastly, Urban has nearly $600 million of cash on its balance sheet, affording it flexibility to repurchase shares and fund its growth initiatives. We believe that Urban’s earnings per share can increase meaningfully within the next few years through an eventual return to positive same store sales results, mid-teens square footage growth, and operating margin expansion. (Laird Bieger)	30/06/2009	Baron Funds
Consumer Discretionary_Advertising	ARBITRON INC	ARB US	USD	New York	€ 724,138,285.21	Arbitron is the leading provider of audience measurement to the radio industry. The ratings are used by broadcasters and advertisers to price and place advertising on radio stations. It is sold on a subscription basis, and the company has had a near-monopoly of the business forever. Arbitron historically gathered the information through a tedious process of written diaries and has, for 15 years, been working on an improved solution, a more accurate digital tool called the “portable people meter” (PPM). After a painful and exhausting launch, PPM finally established itself and became the de-facto standard when the largest radio group (Clear Channel) signed on for the service and the potential competition (Nielsen) dropped its effort to develop an alternate solution. Having watched this from afar for years, we immediately established a sizeable position in Arbitron on the news. We believe that the company can grow its cash flow by 30% over the next 4 years, as PPM is rolled out, that Arbitron will generate significant free cash flow for the period, (since the development costs are behind them) and, importantly, that the trading multiple of the stock will expand to ten plus times cash flow to reflect the quality of the company’s earnings stream and its monopolistic position. We believe this would lead to a doubling of the stock price over time.	31/12/2010	Baron Funds
Consumer Discretionary_Advertising	INTERPUBLIC GROUP OF COS INC	IPG US	USD	New York	€ 3,753,090,456.82	Interpublic represents the largest collection of advertising, marketing and communication firms in the world. The company owns some of the most recognized names in the industry including McCann Erickson, Draftfcb, Lowe and Partners, Campbell Ewald, Jack Morton and R/GA. Interpublic’s 41,800 marketing professionals help generate over $6.5 billion in annual revenues. Return to Competitive Margins Interpublic has been lagging its competitors’ operating margins for nearly a decade as it continues to clean up past acquisitions made by prior management. Current CEO Michael Roth has worked to streamline the company’s cost structure. Specifically, Roth shrunk headcount, improved financial controls and shed excess office space. As a result of these efforts, the company has shown significant margin improvement and, in our view, is now on a path to match peer margins in the coming years. Customized Global Message Interpublic is one of the few advertising companies that can provide a consistent international presence in over 100 countries. IPG’s global reach is extremely important as many of its clients look to international markets as a major source of revenue growth. Its clients can rely on one global agency to develop an integrated message worldwide but with an understanding of local markets to appropriately tweak the message to fit the target audience. This capability allows for greater efficiency since it eliminates the need for clients to select different agencies in each country, which is time-consuming and expensive. Fragmentation of the Advertising Industry The proliferation of new distribution channels has caused continuing industry fragmentation. For decades, developing an advertising campaign meant choosing the mix between television, radio and print. Today, clients have to consider digital, viral, public relations, mobile, search engine and many other marketing options as well. With this increased complexity, companies have become more reliant on Interpublic to get the biggest bang for their advertising buck. We believe continued fragmentation of marketing distribution options and more focus on maximizing advertising dollars will continue to benefit global agencies like Interpublic. Intriguing Valuation With economic concerns continuing to hang over the stock, shares of Interpublic are trading at a bargain price in our view. The market is valuing the company as if it cannot return to peer level profitability. And yet we believe that with Roth’s improvements and the inevitable return of global economic growth, industry-standard profitability is a matter of “when” and not “if.” As of December 31, 2011, shares traded at $9.73, a 40% discount to our private market value of $16.27.	31/12/2011	Ariel Funds

Year	Quarter	Bvps	YoY Bvps Gr.	Roe 1Y
2007	Q1	263.4
2007	Q2	265.1
2007	Q3	270.6
2007	Q4	279.3
2008	Q1	283.3	7.5%	8.2%
2008	Q2	283.9	7.1%	7.8%
2008	Q3	274.8	1.6%	5.3%
2008	Q4	272.0	-2.6%	3.4%
2009	Q1	279.1	-1.5%	3.4%
2009	Q2	293.2	3.3%	3.3%
2009	Q3	303.0	10.3%	4.2%
2009	Q4	307.2	13.0%	4.3%
2010	Q1	315.7	13.1%	4.5%
2010	Q2	326.1	11.2%	4.5%
2010	Q3	334.8	10.5%	5.7%
2010	Q4	335.8	9.3%	6.2%
2011	Q1	340.3	7.8%	6.1%
2011	Q2	345.7	6.0%	5.3%
2011	Q3	351.4	5.0%	5.7%

Average			6.8%	5.2%

Beppaun's

Tuesday, May 8, 2012

Hugh Hendry (Eclectica), end of April 2012 update (pdf)

Sunday, April 22, 2012

Some notes about Contango (MCF)

Friday, March 9, 2012

National Western Life (NWLI)'s investment thesis borrowed from Redfield, Blonsky & Co., LLC

Friday, February 24, 2012

Great Investment Thesis from Great Money Managers