Ron Baron’s annual investor events have become the stuff of legend, bringing people like Bruno Mars, Paul McCartney, Alicia Keys and Jerry Seinfeld on stage at the Metropolitan Opera House in New York City each year. His roster of mutual funds have done what the academic literature suggests is impossible - beating peers on every meaningful timeframe and trouncing the indices he’s being benchmarked to.

I’ll let you watch or listen to the show to learn more about how he did it and the investing philosophy he’s imbued his organization with. But I will say that my favorite aspect of it all is the conviction. The willingness to stay long a top idea for years and decades, despite the noise of the media or the critics. I’ve always admired people who don’t give a f*** what anyone thinks if they believe they’re right. I try to live my life, build my firm and navigate my career that way. Seeing Baron do it for as long as he’s done it makes me happy.

What you’re about to learn as you get into our conversation with Ron is the stuff they don’t teach you in school. You are in for an incredible treat.

Ron Baron and his son and co-portfolio manager Michael Baron came by The Compound last week for an incredible conversation you won’t hear anywhere else. Ron started out on The Street in 1969 as a broker looking for commissions based on his investing ideas. He launched his first fund in the early 1980’s with a negative net worth and only one big client - none other than George Soros. By the 1990’s he had become a household name and by the 2020’s he had become a literal legend. Ron estimates he’s returned more than $60 billion to his investors since the early days.

These returns have accelerated in recent years thanks to his early belief in Elon Musk at a time when investing in Tesla was considered controversial and unconventional among mainstream mutual fund managers on Wall Street. Split-adjusted, Baron’s initial purchases of TSLA occurred at a price of $14 a share back in 2014.

A decade and change later and Ron’s having the last laugh.

These days, he’s telling investors he expects SpaceX to become the largest company in the world. Will he have the last laugh again as his forecast of a $20 trillion valuation provokes the same incredulous outrage as his earlier belief in Tesla once did? You can watch or listen on YouTube, Apple or Spotify at the links below and make up your own mind.

I’m just showing the total return of the Baron Partners Fund’s institutional share class versus the total return of the SPY, QQQ and the iShares Russell Midcap Growth index ETF. Doesn’t matter what you choose to compare Ron Baron’s fund to, he beat all his peers and he demolished the indices.

A massive, early, concentrated bet on Tesla and SpaceX were a big part of the story here. People will say “That’s not fair!” No one was stopping anyone else from making this investment. They just didn’t. Or their committee wouldn’t let them. Or their charters kept them out of SpaceX because it was still private. Or they had rules governing position size. Or they couldn’t buy Tesla until it joined the S&P 500 because that’s their universe from which to choose stocks.

Whatever the reason, Baron made the investment and held it through thick and thin. And almost no one else believed to the extent that he did. And these are the results of that belief.

It could have gone a different way. The bears said Tesla was a zero. At best, it would revert to a single-digit automobile stock multiple and you’d lose 70% of your money. At worst, the SEC would successfully convince a court to remove Musk from the CEO seat and force the company into insolvency as the stock and bond markets simultaneously kicked the stool out from under him.

None of those things happened. Baron has retained a $5 billion Tesla position and has amassed a $25 billion stake in SpaceX that began with just a couple of billion dollars in 2017. You can be envious that he’s done this. You can be mad that it wasn’t you or that Elon Musk has outsmarted his critics or that he somehow outran the rules and norms that have historically governed the conduct of a public company CEO.

You can do and say a lot of things in hindsight, kicking and screaming and what-about-ing til the cows come home. But the returns are the returns and you can’t change that.

THE COMPOUND & FRIENDS

Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and Michael Batnick are joined by ⁠Ron Baron⁠ and ⁠Michael Baron⁠ of Baron Capital to discuss: long-term investing, Elon Musk, Tesla, SpaceX, artificial intelligence, and the power of owning exceptional businesses for decades.

Ron explains how Baron Capital grew from $10 million in assets to approximately $70 billion, why the firm invested repeatedly in SpaceX, and why he believes it could eventually become the world’s most valuable company. Ron and Michael also discuss what they saw in Tesla before most of Wall Street, how they evaluate visionary founders, and what allows them to hold through extreme volatility.