I recently spent a day in NYC meeting with mutual fund managers at Baron Funds. Here are three quick takeaways.
#1 Don’t ignore energy stocks now.
It may be time for contrarians to step up to the plate! Veteran energy analyst Jamie Stone, fund manager for the Baron Energy and Resource Fund, pointed out that the energy sector currently is THE MOST UNDEROWNED sector by fund managers, a relevant fact contrarians need to know. Two of his team’s big themes in looking for stocks in this sector are unconventional production methods (ex: fracking) and renewable energy sources. He feels the current price of oil is likely to move higher due to strong global demand.
#2 Invest with active managers.
Ron Baron firmly believes in stock picking (active management) over buying an index (passive management). The Baron Asset Fund, which he has managed since 1987, has certainly comparable indices*. His belief is that they can find 30-40 companies with a competitive advantage run by smart, honest people whose stock prices will overtime outperform the more marginal companies.
#3 Don’t be scared of ‘emerging’ markets.
Michael Kass, the highly-regarded manager of the Baron Emerging Markets Fund, is optimistic about the shift in capital away from the large, government-controlled international companies to companies more capable of producing economic benefits. This phenomenon is happening in reform-driven countries like India, China, Indonesia, and Mexico. His expertise has put this fund’s performance in the top 10% of all emerging market funds since its inception*.