newjerseynewsroom.com

BY WARREN BOROSON

NEWJERSEYNEWSROOM.COM

BOROSON ON MONEY

What the Baron funds have done for 18 straight years is unique: Put on an extravaganza just for shareholders. In recent years, it's been at the Metropolitan Opera House.

Free breakfast, free lunch, free t-shirts, talks by people from companies the Baron funds own, talks by the managers of the Baron funds, a talk by Ron Baron himself – and finally, at long last, a celebrity guest.

Guests in the past have included Cher, Billy Crystal, Elton John, Jerry Seinfeld, Bette Midler, and Paul Simon. This year's guest: Rod Stewart.

A woman I met at the parking garage had left early, she claimed, because Stewart had lost his voice two years ago. (But someone who stayed told me the audience loved him.)

Okay, down to business.

***

Spokespeople for companies that Baron funds own were worth listening to, and you might want to investigate their stocks: Strayer Education, Ritchie Bros. Auctioneers, Tetra Tech, Choice Hotels International, and Covance.

Covance was especially interesting, and not just because it's headquartered in Princeton. Value Line gives the stock two stars (above-average performance expected over the next six months to a year), and says nice things about the company's prospects.

The company's chairman and CEO, Joseph Herring, explained that Covance does drug development for top pharmaceutical companies, and business is booming. (It's a CRO - contract research organization.) Covance has offices in 22 countries, and does clinical studies in 32. It has $1.7 billion in annual revenues and more than 10,000 employees. In one case, Covance saved a client $500 million a year - "a great way," said Herring, "to build a relationship." www.covance.com, (888) 268-2623

***

I must confess that if I weren't invited to the Baron's fancy shindig every year, I might not own any Baron funds. In fact, I had to check my records to see which one my family does own. (Baron Growth.)

People living in and around New Jersey should especially be interested in the Baron funds. It is shareholders who don't come to these extravaganzas – mainly, those living outside the Metropolitan area - who subsidize us shareholders who do attend. And it must cost a few million. Renting the Met isn't cheap. And neither, I suspect, are the services of Rod the Noisemaker.

As for the meals, lunch choices included a sandwich of Black Forest ham, Wisconsin cheddar cheese, and green apples on a brioche roll, with mustard chutney. There was also vegetarian lunch, an Asian chicken lunch, and a kosher Asia chicken lunch. Again, costing a pretty penny.

***

All the Baron funds buy growth stocks – companies hot as firecrackers. This strategy doesn't always work. While the funds are doing fine this year, last year was a nightmare. Baron Fifth Avenue lost 38.92 percent, Baron Asset 40.75 percent, Partners 46.67 percent, Growth 39.18 percent, and Small Cap 40.24 percent.

In short, the funds are risky. Not only that, but they're not cheap. Morningstar complains about the funds' "relatively high costs."

 

Baron Fifth: "strong pedigree and distinctive approach give it appeal, but it's not a slam-dunk choice."

Baron Asset: "requires tolerance of its quirks, but it remains worthwhile ... High costs erode this fund's appeal, but we still like it."

Growth: "inconsistent relative returns over the short term, but we think seasoned management [Ron Baron himself] and a prudent approach make it a long-term winner."

Small Cap: a "fine fund."

If you can't make up your mind which to buy, if any, go for the fund where your current portfolio is light: small cap, mid cap, or large cap.

What a production! I got there at 10:30 on Oct. 23, and it's first-come, first-served. I wound up in the family circle – nosebleed territory. When I was a kid attending the opera, the family circle was all I could afford. Now, after a long and undistinguished career in journalism, I'm back in the family circle.

Dick, a friend of mine from Rockaway, took a train in ($10), got on line at 7:45 a.m., and wound up in the orchestra – but had to wait a long time to get in.

Getting in is no cinch. You must obtain a badge, which you must wear at all times; you must show picture identification. And after 11 a.m., no one can enter. I guess the people who run the shindig know that by 11 a.m., almost all the seats are filled.

During a question-and-answer period, by the way, someone daringly suggested that the funds' expenses be lowered. There was a small murmur of approval. Ron Baron himself answered: Shareholders buying $1 million or more of shares now get a break.

A shocked silence followed.

My very favorite part of the day: over lunch, listening to a rehearsal of "Don Giovanni" by singers form the New York City Opera in Alice Tully Hall. Young, strong voices. I chose this over rock-and-roll concerts. But I missed the mystery comedian, who turned out to be Jason Alexander, who received good reviews from people who heard him.

Will I attend next year's Baron conference? Probably. Next year, the entertainment will probably be a comedian, not some noisy rock-and-roller.

***

Also attending the shindig was Marylou Reeves, CFP, president of Thomas Mack Associates in Rockaway.

She was critical of the Baron funds' high costs. But, in its defense, she pointed out, "Baron hires incredibly smart people. And a huge bonus for me this year was having the opportunity to talk with Michael Kass, manager of Baron International Growth Fund. This new fund is very small, which gives it the nimbleness to go after any size company that fits it growth model. He gave me a brief description of his fund that was comprehensive but easy to grasp. Morningstar does not rate this new fund, but it's now on my radar screen to keep track of."

She added: "I am not a Rod Stewart fan, but the clients I was with loved him."

Send any financial questions to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .