Finding high growth stocks in a low growth world with Baron Opportunity fund’s Michael Lippert.
WEALTHTRACK Episode #1406; Originally Broadcast on July 28, 2017
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MICHAEL LIPPERT
- Portfolio Manager,
- Baron Opportunity Fund
When was the last time you sat down with a portfolio manager specializing in high growth stocks? I rarely do, since most of the portfolio managers I talk to are value investors of the Benjamin Graham and David Dodd school of investing, the fathers of value investing with their 1934 investment classic Security Analysis. Warren Buffett was a student of theirs at Columbia Business School and wrote the forward to the sixth edition of the book.
Traditional value managers look for bargain stocks, selling at deep discounts to their intrinsic value, often finding them in unpopular or at least overlooked places.
Over the years, Buffett and his business partner Charlie Munger have developed their own style of value investing, but have consistently favored established companies with dominant market positions and products they can understand. Berkshire Hathaway’s top five holdings in a recent quarter were: Kraft Heinz, think macaroni and ketchup, Wells Fargo, a big bank, Apple, a rare tech exception, Coca-Cola, a global icon, and American Express, a household name in financial services.
However, recently and specifically at the last annual meeting of Berkshire Hathaway, Buffett seems to have had a change of heart. He heaped praise on Amazon founder and CEO Jeff Bezos, a high flying stock if there ever was one. And when asked on CNBC, why he hadn’t purchased Amazon stock answered in one word: “stupidity.”
Amazon continues to amaze. Its revenues rose 25% to $38 billion in the second quarter, beating its own estimates and extending its history of ever increasing quarterly sales. However it also reported a 77% drop in the quarter’s profits as it continues to emphasize re-investment and growth over profits. Amazon is one of the few publicly traded companies able to get away with focusing on growth at the expense of earnings. Its stock closed at a new high of $1052.80 on Wednesday, the night before the quarterly results were reported.
This week’s WEALTHTRACK guest has not made Warren Buffett’s mistake. His largest holding is Amazon and he has owned it for years. He is Michael Lippert, Portfolio Manager of the high-growth stock oriented Baron Opportunity fund, one of legendary growth investor Ron Baron’s stable of funds. Lippert has run Opportunity since 2006, having joined Baron as a research analyst in 2001, a big career change from being a partner at a major law firm in Texas. During Lippert’s 11 year tenure as sole manager, Baron Opportunity fund has edged out the S&P 500 and handily beaten its Morningstar Mid-Cap Growth category.
Since Lippert is new to WEALTHTRACK we covered some basics, such as what he means by “high growth’ and his investment approach. But don’t worry, we also delved into his reasons for owning such a large position in Amazon and his current views of the company.
Lippert will also share his “One Investment” idea. Plus, in my Action Point I have a book recommendation if you are looking for a fascinating vacation read! As always, if you miss the show on Public Television, you can watch it on our website. You’ll also find an EXTRA web exclusive interview with Lippert there, about how his children are living the future he is investing in.
Plus a reminder that if you would like to take WEALTHTRACK with you on your commute or travels, you can now find the WEALTHTRACK podcast on TuneIn, Stitcher, and SoundCloud, as well as iTunes. Find out more on the WEALTHTRACK Podcast page.
Have a great summer weekend and make the week ahead a profitable and a productive one.
Best regards,
Consuelo
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HIGH-MARGIN BUSINESS
- Guidewire Software Inc (GWRE)
- Price: $72.75 on 7/25
- 52-week range: $49.18 – $72.99
Amazon.com Inc (AMZN)
Facebook Inc (FB)
Netflix Inc (NFLX)
Guidewire Software Inc (GWRE)
CoStar Group Inc (CSGP)
Tesla Inc (TSLA)
Alphabet Inc A (GOOGL)
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This is Michael Lipperts first appearance on WEALTHTRACK
ON-DEMAND INVESTMENTS
Michael Lippert and the team at Baron Capital look for high growth companies leading disruptive change or generational shifts. He explains how his children are living in the future he is investing in.
