How much have Baron Partners Fund and Baron Focused Growth Fund invested in Tesla (TSLA, Financial)?
A December 14, 2020, Barron's article, "Funds: Risk as Tesla Joins the S&P 500," reported that "if Tesla's rally continues beyond the S&P 500's rebalance, funds with large Tesla holdings will benefit the most." The article went on to note that, as of November 30, 2020, "$5.9 billion Baron Partners Fund has 43.4% of its total investments and $569 million Baron Focused Growth Fund has 39.9% of its net assets in the car maker." Both Baron mutual funds are classified under SEC guidelines as "non-diversified." Concentrated portfolios like Baron Partners Fund and Baron Focused Growth Fund entail greater risk. Both Funds have been successful since their respective inceptions and year to date. For example, since Baron Partners Fund converted from a private partnership to a mutual fund on April 30, 2003, it is ranked 4th among all US equity mutual funds with 2,267 classes through November 30, 2020.* Baron Focused Growth Fund's performance has exceeded its benchmark index by approximately 500 basis points annualized since its inception.
*This is a hypothetical ranking created by Baron Capital using Morningstar data and is as of 11/30/2020. Note, the peer group used for this analysis includes all U.S. equity share classes in Morningstar Direct domiciled in the U.S., including obsolete funds, index funds, and ETFs. The individual Morningstar Categories used for this analysis are the Morningstar Large Blend, Large Growth, Large Value, Mid-Cap Blend, Mid-Cap Growth, Mid-Cap Value, Small Blend, Small Growth, and Small Value Categories. There are 2,267 share classes in these nine Morningstar Categories for the period from 4/30/2003 to 11/30/2020.
When did Baron purchase its shares in Tesla?
Since June 2014, Baron, on behalf of its clients and the Firm, has purchased 8.3 million Tesla shares for $372 million.1 (The average per share purchase price of $45 and number of shares purchased are adjusted for a five-for-one August 2020 stock split.) In several interviews on CNBC's Squawk Box over the past six years, Baron Funds CEO Ron Baron (Trades, Portfolio) stated that he expected Baron to earn more than 20X its initial purchase cost on its Tesla investment over 10 years. Tesla's 12/11/2020 share price was $610 per share. On behalf of its clients, Baron sold 745,000 Tesla shares two months ago for $445 per share on average, and 308,000 shares last week for $638 per share on average. Sales were made because Tesla's share price increase had caused it to become such a large part of client portfolios. Baron owns at 12/11/2020 approximately 7 million Tesla shares and has realized and unrealized gains in Tesla to date of approximately $4.5 billion. Based upon our estimate of Tesla's growth, we believe that Tesla's share price could reach $2,000 per share in 2030. That is approximately 3.3X its current level.
Has Baron ever made such a large percentage gain on an investment?
Yes. Baron has made 10X to 90X our initial investments numerous times during the past 28 years.** Among the most notable of those investments are Charles Schwab, MSCI, IDEXX Laboratories, ANSYS, Morningstar, Equinix, CoStar, Robert Half, Choice Hotels, Vail Resorts, Mettler-Toledo and Arch Capital. We have also earned more than 5X our investment cost in dozens of other investments.** One investment that Ron expects to discuss increasingly over the next several years is SpaceX. Baron has invested about $252.5 million (current value is approximately $346 million) in that private business founded by Tesla CEO Elon Musk and we hope can earn 30X-50X over the next 10 to 12 years on that investment! That's right. 30X-50X!!! Of course, there can be no assurance that our investment in what may already be the largest privately owned business in America will be as successful as Tesla.
**There is no guarantee that these extraordinary results can be repeated.
About Baron Capital
What is Baron's AUM? Do Ron Baron (Trades, Portfolio) and other Baron employees have significant investments in Baron Funds?
Baron's AUM as of December 11, 2020 approximated $44.7 billion. Our Firm's founder, Ron Baron (Trades, Portfolio), his immediate family, and Baron Capital, our privately owned management company that we regard as a "family business," are the largest investors in Baron Funds. Their investments represent approximately 4.8% of our Firm's assets under management. In addition, many of our employees, including all our portfolio managers, have significant investments in Baron Funds.
How has Baron performed over the years?
Baron Funds had $100 million assets under management in 1992. Our Firm has since earned more than $42 billion realized and unrealized profits for its investors, including Ron Baron (Trades, Portfolio) and our other employees. As of September 30, 2020, 16 of 17 Baron mutual funds, representing 98.3% of Baron Funds' AUM have outperformed their indices since inception; 14 Baron mutual funds, representing 98.2% of Baron Funds' AUM are in the top 16% of their mutual fund peer groups; and nine Baron mutual funds, representing 66.6%, are in the top 7% of their peers since inception.
1 This number excludes shares purchased for a terminated wrap account platform.
Investors should consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus and summary prospectuses contain this and other information about the Funds. You may obtain them from the Funds' distributor, Baron Capital, Inc., by calling 1-800- 99BARON or visiting www.BaronFunds.com. Please read them carefully before investing.
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