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Baron Capital’s Baron SMID Cap ETF (NYSE: BSCM) ditched its position in Wynn Resorts (NASDAQ: WYNN) stock in the third quarter, dumping the casino stock in favor of Texas Roadhouse (NASDAQ: TXRH).
News of the Wynn departure was revealed in a letter to the ETF’s investors penned by portfolio managers Laird Bieger and Randy Gwirtzman, but they did not go into detail as to why they sold the Wynn stake. However, the portfolio managers are bullish on consumer stocks.
“We are very excited about the prospects for all of our portfolio investments. In particular, we believe that our aerospace investments should recapture lost multiples once conditions normalize in the Middle East,” they wrote in the shareholder letter. “And our defense investments (which are particularly undervalued) should rebound once the air clears after the mid-term elections in November. Finally, we think that the sell-off in consumer stocks is overdone and that we are in a unique period in which to invest in high growth, high-quality consumer companies trading at trough valuations.”
With Wynn out of the mix, no gaming stocks are currently found in the BSCM portfolio.
Baron Was Once Bullish on Wynn
Baron Capital previously spoke bullishly on Wynn Resorts upon adding the shares to the Baron Discovery Fund, a mutual fund, in the second quarter of 2025. As of Sept. 30, the gaming stock accounted for 1.3% of that fund’s portfolio.
The fund manager bought Wynn shares last year, citing opportunity amid tariff concerns that were hindering the stock. At that time, Baron Capital noted that the casino stock had the potential to double, that it could be attractive to an acquirer and that markets were giving it little credit for its planned integrated resort in the United Arab Emirates (UAE).
However, the stock is down 31.7% over the past year. As an actively managed ETF free of index constraints, BSCM has the flexibility to add to winning positions and shed losers, such as Wynn.
The ETF “seeks to achieve capital appreciation over the long term by investing in small- and mid-cap U.S. growth companies across a range of industries. Investments are made in emerging and established scalable companies that we believe can benefit from expanding market opportunities, with diversified exposure across industries and position sizing,” according to the issuer.
Baron Still Has Some Casino Exposure
Although Baron Capital’s SMID ETF no longer holds shares of Wynn or any other gaming stock for that matter, the firm’s flagship ETF – the Baron First Principles ETF (NYSE: RONB) – allocates 2.27% of its weight to shares of Red Rock Resorts (NASDAQ: RRR).
The asset manager, which is a longtime Red Rock investor, previously issued constructive commentary on the operator’s investments at several of its marquee Las Vegas casino resorts.