Morningstar Advisor - August/September 2011 - (Page 54)

Undiscovered Manager New Growth, Rooted in Experience By Christopher Davis RiverPark’s founders apply the lessons they learned at Baron Capital to their own slate of funds. To get back to your roots, sometimes you have to uproot yourself first. That is what Morty Schaja and Mitch Rubin did. The Baron Capital expatriates founded RiverPark in 2006 believing that their longtime former employer had become too big for its breeches. By the time they left, Baron had amassed more than $15 billion in assets—a tremendous sum for the small-cap-focused firm. Baron had become large for good reason. Flagship offering Baron Growth BGRFX boasted a sterling long-term record and sailed through the early-2000s bear market relatively unscathed. However, such success changed the firm. Unable to invest in smaller names as easily, its portfolios became less concentrated and increasingly reliant on mid-caps. The small-cap funds were already closed to new investors, but Schaja, then Baron’s president and COO, says he urged firm founder Ron Baron to turn away money from existing shareholders as well. Baron refused, and assets swelled further. “What had made Baron special no longer was the case,” Schaja says. In March 2006, both Schaja, now RiverPark’s CEO, and Rubin jumped ship. (We asked Baron for a comment, but as of our publication deadline, we hadn’t heard from the firm.) Between 2006 and the recent launch of their retail offerings, the pair operated a hedge fund, which they fortuitously shut down before 2008’s autumn credit crisis. 54 Morningstar Advisor August/September 2011

Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2011

Morningstar Advisor - August/September 2011
Letter From the Editor
Simplicity and Design Matter
Do You Use ETFs Strategically or Tactically?
The Institutional Way
How to Analyze an ETF
Eyeing ETFs’ Next Chapter
Small-Cap/Large-Cap Flip-Flop?
Four Picks for the Present
Investment Briefs
Morningstar Investment Conference
Pitfalls of Peer Groups
A REIT Recovery, With a Catch
Turning Fund Distribution on Its Head
Here Come ETF Managed Portfolios
Circle These Picks Amid the Crop of New ETFs
ETF Analyst Favorites
Beware, the Accidental Portfolio Manager
It’s the Destination, Not the Vehicle
New Growth, Rooted in Experience
Better Ways to Look at ETFs
How to Better Manage Your Clients’ Future(s)
More Bargain Than Bubble
Cheap, Local, and On a Roll
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
First-Quarter Assets Hit an All-Time High
You Say You Want a Revolution?

Morningstar Advisor - August/September 2011