Baron ETF Sells Wynn Stake, Turns to Texas Roadhouse

Baron Capital's Baron SMID Cap ETF (BSCM) sold its position in Wynn Resorts (WYNN) in the third quarter and bought Texas Roadhouse (TXRH) instead. News of the change appeared in a letter from portfolio managers Laird Bieger and Randy Gwirtzman to investors. The letter gave no details on the reason for the Wynn sale.

The managers said they remain positive on consumer stocks. They wrote that they expect airline investments to gain value once conditions in the Middle East return to normal, and that defense investments could recover after the November midterm elections. They also said they believe the sell-off in consumer stocks has been overdone.

With Wynn's exit, the BSCM portfolio no longer holds any gaming stocks. Baron Capital bought Wynn last year, at a time when tariff concerns were weighing on the stock. At the time, it argued that the shares could double, that the company could be attractive to a buyer, and that the planned integrated resort in the United Arab Emirates was not sufficiently valued by the market. However, the stock has lost 31.7% of its value over the past year.

Baron Capital's flagship ETF, Baron First Principles ETF (RONB), allocates 2.27% of its portfolio to Red Rock Resorts (RRR). The fund company had previously said it has been a long-time investor in Red Rock and holds a positive view of the operator's major investments in its Las Vegas casino properties.