Baron fund sees boost from work on bridges, roads
Ron Baron, the investor whose stakes in casinos helped make his Baron Partners Fund the top performer among his peers, said U.S. spending on bridges and roads is creating some of the best investment opportunities in the world.
“For years America has underinvested by trillions of dollars in infrastructure,” said Baron, manager of $22 billion at Baron Capital Management in New York, during a recent interview. “There is a tremendous amount of spending that has to be done.”
The investor, who’s 64, said New Orleans flooding caused by broken levees in 2005 and Minnesota’s bridge collapse in August will lead to more spending on public projects.
That trend has already helped Baron holdings including Fastenal, the largest U.S. retailer of nuts and bolts, and MSC Industrial Direct, a marketer of repair supplies.
The $3.2 billion Baron Partners Fund returned 21 percent this year, through Oct. 30, more than double the gain of the Standard & Poor’s 500 Index during that period.
It’s the No. 1 performer among 40 U.S. market-neutral funds, which aim to profit whether stocks rise or fall, according to data tracked by Bloomberg.
Baron converted Partners from a hedge fund into a mutual fund four years ago.
The American Society of Civil Engineers said in 2005 that $1.6 trillion should be spent over five years to shore up the nation’s infrastructure. Rehabilitation or replacement of the Tappan Zee Bridge north of New York City may cost as much as $14.5 billion, according to a report released in May by the Urban Land Institute and Ernst & Young.
Baron’s biggest holding is Wynn Resorts, which runs a casino in Macau. The Las Vegas-based company recently reported a 94 percent plunge in third-quarter earnings even as revenue doubled from the Chinese resort opened last year. The company had a gain in the year-earlier period that inflated profit.
Wynn’s chief executive officer, billionaire Steve Wynn, “builds properties that attract people,” Baron said. “We are less focused on short-term earnings because we do not believe that matters. We believe that creating a sustainable competitive advantage is more important.”
Baron’s $6.9 billion Growth Fund hasn’t fared as well as the Partners Fund this year. Its 11.7 percent return was enough to beat only half of its peers.