If there's anyone who understands Future Value, it's Ron Baron?
After he himself interviewed Elon Musk, Baron himself was interviewed on CNBC, and even we, who have some experience in the market, were surprised by some of the things he said.
In an interview that we believe will be etched in Wall Street's memory, Baron's wild forecasts for Musk's empire were revealed.
From our personal perspective, this is not just another interview, it's a glimpse into the mind of one of the greatest investors who has put all his weight – and most of his personal money – behind one man's vision.
Baron revealed that he and his fund reaped profits of about $12-13 billion from investments in Elon Musk's companies.
You're probably asking how
One position in Tesla (from 2014) – $400 million was invested and a profit of about $8 billion was achieved.
This is a return of over 2000% (a consistent annual return of over 30%).
A second position in SpaceX (from 2017): a profit of about $4 billion was achieved.
Now, listen to Baron's future forecasts for Musk's companies (the next ten years):
Baron states the following forecast: We think we will earn 5 times from now in the next ten years.
And here is the explanation with the details
SpaceX company: expected to increase 10-fold
Tesla: expected to increase 5-fold
Baron further revealed that $350 million has already been invested in Musk's xAI startup, and this position is already worth $700 million.
In the next funding round, the valuation is expected to double (about $1.5 trillion) and this position is expected to be among the fund's top 10 holdings.
Baron also revealed details about his personal portfolio in the interview – and the figures are simply hard to believe.
In Baron's personal portfolio, about 40% of assets are invested in Tesla, and 25% in SpaceX.
A total of 65% of the portfolio consists of positions related to Elon Musk.
Also in the mutual fund he manages, about 22% of the fund's assets are invested in Tesla and SpaceX (11% each).
Baron said that in the past the fund sold some of its Tesla shares (about 30%).
But this was not because he lost faith, but solely to alleviate client concerns about over-concentration in one stock.
Unlike the fund, Baron himself did not sell a single share.
And not only that...
Baron adds a promise of lifelong holding:
I will not sell a single personal share until all clients sell theirs, and I don't see a situation where I would need to sell Tesla or SpaceX during my lifetime.
Baron also strongly supports Musk's multi-billion dollar compensation plan.
Why?
According to him, Musk is an 'artist':
Baron believes Musk is not an industrialist like Rockefeller or Carnegie, but an artist like da Vinci.
He remembers everything. It's amazing.
Later in the interview, Baron explained more what he meant.
According to him, Musk sees the technologies he develops as art and a mission in shaping the future of humanity.
Baron wholeheartedly believes that Elon Musk does not work for money.
And as he explained: 'Why does he work like crazy and risk his health?
Does the difference between $400 billion and $1 trillion matter to him?
It's not to buy a beach house.'
He works for how people will remember him in the future, meaning how he helped humanity (legacy).' Elon Musk will not receive compensation if the company's value does not increase 6-fold, and Baron is sure it will happen.
During the interview, the interviewer asked Baron if the reason for the 5-10-fold increase in Tesla stock would be due to autonomous vehicles.
Baron's answer? The main driver is actually the Optimus robot, not autonomous vehicles.
I think it's the biggest thing in human history.
He mentions Musk's annual production target (one million units next year, then 10 million, 100 million, and finally one billion units) and believes Musk will indeed meet the targets.