Billionaire investor Ron Baron has had high conviction in Elon Musk for years. The investor, who owns stakes in Tesla Inc (NASDAQ:TSLA), SpaceX and xAI, may have even more conviction in Musk for the future.
Ron Baron Up $12 to $13 Billion With Musk
An investment in Tesla back in 2014 has made an incredible return for Baron and Baron Capital, the fund that he founded. Investments in SpaceX also produced strong returns, adding to the impact that Musk has had on the investor and his fund.
In an interview with CNBC, Baron estimated that he has made around $12 billion to $13 billion from his investments in Tesla and SpaceX. The investor put $400 million into Tesla in 2014 and later invested in SpaceX.
While the returns have been great over the past 11 years, Baron doesn't see this stopping anytime soon.
"I think we're gonna make five times that in the next 10 years," Baron said of the investment in Tesla.
For the investment in SpaceX, Baron is even more bullish, predicting a 10x return over the next 10 years.
Baron acknowledged the risk of putting a large percentage of investment into one or two companies.
In his personal portfolio, Baron has around 65% of his investment tied to Musk, with around 40% in Tesla and around 25% in SpaceX.
Years ago, Baron sold some Tesla shares from the funds because it was too large a position, not because of losing faith in Musk or the company.
"I didn't feel uncomfortable, my clients felt uncomfortable," Baron said of the previous concentration risk of Tesla in the funds.
For the mutual funds, it's around 11% in Tesla, 11% in SpaceX and a smaller percentage in xAI. Baron noted that the fund has invested $350 million in xAI, which is now worth $700 million and could be double that at the next valuation.
Here are the top 10 holdings of Baron Capital as of Nov. 7:
- SpaceX
- Tesla
- Arch Capital (NASDAQ:ACGL)
- MSCI Inc (NYSE:MSCI)
- IDEXX Laboratories (NASDAQ:IDXX)
- CoStar Group (NASDAQ:CSGP)
- Guidewire Software (NYSE:GWRE)
- Gartner Inc (NYSE:IT)
- Hyatt Hotels Corporation (NYSE:H)
- Vail Resorts (NYSE:MTN)
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Baron Isn't Selling
After making $12 billion to $13 billion on previous bets on Musk, Baron said he's not selling Tesla or SpaceX stock anytime soon for Baron Capital. For his personal stake in both companies, Baron said he definitely isn't selling.
"I don't expect to sell in my lifetime Tesla or SpaceX, either one," Baron said.
The billionaire investor said he didn't sell a single share before when Baron Capital lowered its weighting in Tesla.
Baron highlighted the new pay package for Musk and the value creation that needs to happen for the Tesla CEO to get paid, something the investor believes will happen.
"This is not like a Rockefeller, like a Carnegie, like Mellon, like Morgan, Ford, the great industrialists. This guy is like Da Vinci, an artist."
Baron said Musk works crazy hours despite being rich and not having to do this, but does so for the betterment of the world and certain industries.
"He wants to think about how people will remember him someday, what he's created."
The Baron Capital founder highlighted the Optimus Bot humanoid robot as being the next huge thing from Tesla, with Musk's full confidence in it being the biggest thing ever.
"He thinks it's a billion [units] a year."
Baron said he believes Musk when he says Optimus could be labor-saving and help everyone live better.
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Photo: Photo Agency / Shutterstock
