Investor who made $ 4 billion with Tesla expects extra 300% return
In 2016, Ron Baron predicted that Tesla Inc. would become one of the most valuable companies in the world. His company, Baron Capital Management, was among the electric carmaker’s biggest investors at the time, with a 1% stake in the company.
The bet generated a profit of $ 4 billion, but Baron believes this is just the beginning and sees the possibility of tripling that number over the next 10 years. He also predicts similar success for SpaceX, another company run by Elon Musk. The same qualities that made Tesla so successful – a willingness to try new things in an industry stuck with old ideas and an emphasis on cutting costs – will help the rocket maker revolutionize a potential market of 1 Trillion dollars in satellite broadband, he said.
âThey are innovating at the speed of light,â Baron, 78, said in an episode of âBloomberg Wealth with David Rubensteinâ. âAnd they do it with cars. And they do it with space.
Baron Capital’s success as an old-school mutual fund company is an anomaly at a time when stock pickers are increasingly being replaced by index funds and ETFs. He started the business in 1982 with $ 100,000 and now has $ 56.7 billion in assets under management, split equally between individual and institutional investors. He and his family own around 5% of the company’s assets, which are almost entirely invested in publicly traded stocks.
Its Baron Partners Fund has outperformed 99% of its peers in the past three years, according to data compiled by Bloomberg, while the Baron WealthBuilder Fund has outperformed 90% of its competitors during that time.
Yet, if it was up to his parents, he would never have become an investor. They wanted him to go to medical school, but a summer job working nights at a hospital near his hometown of Asbury Park, New Jersey, convinced him that a white coat wasn’t not in his future.
âI hated it,â he says.
After majoring in chemistry at Bucknell University, Baron got a scholarship to Georgetown University – “I didn’t want to go to Vietnam” – and sold Fuller brushes to earn extra money. He then attended George Washington University Law School overnight while working as an examiner for the US Patent Office during the day.
His first financial job was with Janney Montgomery Scott, where he was fired after only a year when a negative report he wrote about a company appeared in the Wall Street Transcript. Baron quickly received an offer to become an analyst, then joined a friend in law school to sell research to institutional investors before setting up his own firm.
Baron said he was not worried about a financial downturn and viewed stocks as a good hedge against inflation. Instead of timing trades, he said he believes a long-term holding strategy leads to the strongest results over time.
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