Ron Baron’s firm has had 31 different stocks deliver 1,000% returns over the last 40 years. He shares why he’s now placing massive bets on 2 companies.

  • Billionaire investor Ron Baron hosted the 30th Baron Investment Conference on November 10.
  • Baron said he continues to bet big on Tesla and SpaceX.
  • The firms “will continue to be among the best-growing businesses we own,” Baron said.

Ron Baron is still considering investments in companies that will outperform over the next 10-15 years.

While such a long-term outlook is unusual for an 80-year-old, it’s all the billionaire investor has known for the last four decades. And it was successful.

Baron, who founded Baron Funds in 1982, claims to have found success over the years by adopting a long-only strategy and refusing to sell shares in companies he believes in.

His firm has 31 so-called “ten-bagger” investments, or stocks that have returned 1,000% on the initial investment, thanks to the strategy. According to Morningstar, the Baron Partners Fund (BPTRX) and the Baron Focused Growth Fund (BFGFX) have outperformed 99% of comparable funds over the last decade. Baron co-manages both funds, with his sons Michael and David co-managing the Partners Fund and the Focused Growth Fund, respectively.

On Friday, at the 30th Baron Investment Conference in New York, Baron highlighted two companies on which he remains bullish and believes will continue to deliver monster returns: Tesla (TSLA) and SpaceX. Although SpaceX is not publicly traded, funds such as the ARK Space Exploration & Innovation ETF (ARKX) and the two Baron funds mentioned above provide exposure to it. Tesla and SpaceX are the two most important holdings in both the Partners and Focused Growth funds, accounting for 14% of the firm’s total assets under management.

According to Baron, both companies will be able to significantly increase revenue in the coming years. In terms of Tesla, he stated that while he believes most electric vehicles will be assembled by other companies in the future, the Elon Musk-owned company will be able to sell its self-driving technology to them.

“That’s like Intel being inside of Microsoft computers,” Baron went on to say. “Do you recall seeing ‘Intel Inside?'” That, in my opinion, is what Tesla will be in all cars.”

According to Baron, the company also has a competitive advantage with its self-driving technology because its artificial intelligence can learn from the vast number of miles its cars drive every day.

Many automakers, including GM and Ford, have already agreed to begin building EVs with Tesla charging ports. According to Michael Baron, who spoke with Insider in October, Tesla is also well-positioned with its battery businesses and is better positioned than other firms to mass-produce EVs at a lower cost.

Tesla stock is overvalued by conventional measures. For example, its 12-month forward price-to-earnings ratio is 57.8. However, the Barons believe the stock is undervalued in the long run.

For SpaceX, Baron told CNBC that he believes the company will go public around 2027 and that its value will more than double. One of the main reasons he likes the company is its Starlink satellite system, which provides an alternative way to connect to the internet.

He cited a Wall Street Journal article about the high cost of fiber-optic connection infrastructure, as well as the opportunity it presents for SpaceX. According to the story, a government project to install fiber-optic cables for remote houses in Nevada cost an average of $53,000 per house.

“That’s instead of taking a service that is available right this moment — Starlink — and paying $500 a house, and having an antenna and plugging it in and pointing it to the sky and having internet,” he explained.

Elon Musk stated earlier this month that Starlink has reached balance-sheet parity. Amazon recently launched a satellite competitor.

SpaceX has a space exploration business in addition to its Starlink business. “We expect Tesla and SpaceX, the low-cost providers in technologies that are revolutionizing enormous space and transportation industries, will continue to be among the best-growing businesses we own,” he said.

A Reuters investigation recently brought SpaceX under scrutiny for worker conditions and employee injury rates.

The company is thought to be worth nearly $150 billion.

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