Billionaire Investor Ron Baron Sees ‘Big Opportunities’—And Remains Bullish On Tesla—Despite Market ‘Chaos’

Despite a rough year for the US stock market, Ron Baron and his investors were undeterred as they gathered for the Baron Investment Conference last Friday. The firm's annual gathering was held at the Metropolitan Opera House in New York City and it was the first time in over a year that the firm was able to host it.

The mood was positive. A headline musical performance from Bruno Mars was one of the highlights of the event. Guests were treated to an interview with Musk on stage, as well as a surprise appearance from other tech companies.

Baron has 45% of one of his largest funds invested in the car maker's stock, up from 41% in early 2021.

The $6 billion Baron Partners Fund and the $700 million Baron Focused Growth Fund are two of the funds that Baron has. The funds are both down this year, but they have long-term gains thanks to the huge runup inTesla stock in 2020. Over the last five years, the Baron Partners Fund has returned an average of 25%.

Baron told Forbes in an interview that his company will be the most profitable in the world in 10 years.

Baron Funds has a larger percentage of its portfolio allocated to the stock than many other large shareholders, and it is one of the top 20 largest shareholders in the company.

Baron is confident that his funds will rebound and provide stellar returns in the future because of his big bets on high-growth companies. The performance this year was not great, but he said investors were willing to cut us some slack because of the long-term record.

Baron has been through a lot of bear markets. Following the 21% drop in the S&P 500 index, he thinks there are big opportunities. Nothing was cheap a year ago. Stock prices are cheap.

Growth stocks have been hit hard by higher rates. When markets fall and it is all red on the screen, Baron admits that his buy-and- hold philosophy is more important than ever. He explained that his funds, which typically have very low turnover, have continued to buy when opportune, only selling when fundamentals change. Despite the chaos, companies that we're investing in should benefit.

Predicting a recovery by the end of 2024, Baron predicted that the stock market would double every five to ten years.

The firm has a big bet on Musk. Billions of dollars in gains have been generated by the billionaire money manager who invested $387 million in his firm's position in the electric car maker. Baron is convinced that his firm's position will continue to pay off in the future, even though his firm's share price has dropped by 50%.

The bull believed that the company would be able to improve its profit margins because of its high growth rate. Last month, the company reported 343,000 deliveries, up from just over 250,000 a year ago. Revenue increased over 50% from the same period last year.

Over the last several years, he has invested in Musk's private rocket company. $100 million was invested earlier this year when the company hit a valuation of $125 billion.

Baron said that he buys more whenever the company comes along. He thinks the company could surpass a $150 billion valuation.

Baron told Forbes that the company will provide internet for the planet through its Starlink satellite broadband service. He remained bullish about the company's project, which Musk has called "the Holy Grail of space travel" and important to expanding the boundaries of space exploration.

In a recent interview, Baron said he sees big opportunities with social media platform Twitter, acquired by Musk for $44 billion in a recently completed deal that included a lawsuit that never went to court. Musk told attendees at the conference that the social media company was having serious revenue and cost challenges before he acquired it. The billionaire bragged that the company could potentially be one of the most valuable in the world.

Baron isn't worried about Musk taking on too much, he's the CEO of three companies and needs to make $1 billion in profits over the next year to cover its debt payments.

The billionaire money manager has historically looked to invest in companies that are growing their revenues over 15% annually. He looks for those that invest in their business, which he says is a bullish sign. Baron likes leisure stocks because he believes they have large upside potential in the years to come.

FIGS sells scrubs and other garb to healthcare professionals. Baron said in an interview with CNBC that he liked the company's direct-to-consumer model. FIGS shares are down 75% this year and are currently trading for less than $7. Baron believes he can make up to ten times his original investment if the company succeeds.

Hyatt Hotels went public in 2009. He points out that room rates have gone up. More than 1,100 hotels and properties are operated by the company. Baron said that the business has been doing well thanks to solid margins and growing revenue, with Hyatt consistently beating quarterly earnings expectations. So far this year, shares are down just over six percent.

One of Baron's biggest holdings is ski resort company Vail Resorts, which he first bought shares of in 2006 The stock is down after two years of increases. A big chunk of revenue gets locked in before the season starts with the company's business model and Baron is a big fan of it. The company is able to invest in the customer experience thanks to the solid demand. The company has nearly 40 resorts in 15 states and several countries with an acquisition in Switzerland earlier this year and plans to expand to Japan.