On Friday I attended the 29th Annual Baron Investment Conference, which I've been fortunate to do several times over the past 20 years.
What's a died-in-the wool value investor hanging out at a conference led by growth legend Ron Baron?
It started innocently enough, with an interview I did with Baron back in 2001 or so. While I lack the wiring that growth investors possess, I was fascinated by his approach, and ultimately took positions in a couple of Baron Funds over the years.
I've learned that the line between growth and value is sometimes very narrow, and have sometimes taken positions in former growth names that crossed that line. Broken growth stories can be fascinating and rewarding at times.
Friday's conference was fascinating.
First, Elon Musk was there, and gave a great interview with Ron Baron. I am convinced that Musk is indeed a genius, a quirky one at that, and the Twitter saga will be interesting to follow.
Second, a handful of interesting companies, in which Baron Funds has significant stakes, presented. And there was one in particular that caught my eye, one that may indeed be on the thin line between growth and value.
Vail Resorts (MTN) operates 41 mountain ski resorts in the U.S. and internationally, as well as a collection of luxury hotels, condos, and golf courses. The value investor in me is struck by the fact that it outright owns 43 properties, and a portion of several others.
Year-to-date the shares are down 33%, and trade at 2017 levels. In fact, MTN topped out at $376 just over a year ago, and closed Friday at $215, a 43% drop.
Perhaps that's not surprising given the current state of the economy, and challenged consumer, that might not be able or willing to fork over big bucks for ski getaways in 2022-2023. The question is whether this presents opportunity now, and in the near-future, if MTN continues to drop.
The shares currently trade at about 24x and 21x 2023 and 2024 consensus estimates, respectively, which are not ridiculous multiples for this business. MTN also has a yield of 3.5% on its dividend, which has grown at a 26% compound annual growth rate since 2012.
MTN ended its latest quarter with $1.1 billion in cash and $2.7 billion in debt. The latter does not concern me given the incredible company-owned real-estate assets.
I'm in no hurry here, but MTN is squarely on my radar.
Interestingly, if the forward P/E multiple for the next two years was below 15x, MTN would likely qualify for my 2023 Tax Loss Selling Recovery Portfolio, which I'll be unveiling in the coming weeks.