Baron Capital Management
- The Tesla stock holdings of billionaire investor Ron Baron's namesake fund have ballooned to more than $6.1 billion.
- He first invested in the electric carmaker in 2014 with an initial stake of $380 million.
- "I think we'll probably be an investor for another 10 years, same with SpaceX," he told CNBC.
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The Tesla stock holdings of billionaire investor Ron Baron's namesake fund have ballooned to more than $6.1 billion since he first invested in the electric carmaker in 2014.
And he plans to stick with it as shares have reached new highs, making the company the second-fastest to reach a market cap of $1 trillion.
"That is sort of a normal type of investment thing – a very long-term investment for us," he told CNBC Wednesday. "I think we'll probably be an investor for another 10 years, same with SpaceX."
Baron Capital Management built its stake in Tesla between 2014 and 2016. The fund first invested $380 million at an average cost per share of $43.07, he said. Now, Tesla stock is priced at just over $1,000 a piece.
His fund also owns around 1.3 million shares of Elon Musk's SpaceX, which was first purchased in September 2017.
Baron Capital, with more than 400 investments in its portfolio and $58.9 billion of assets under management, has made its clients $54 billion of profits - of which $6.1 billion is from Tesla, the founder said.
But the longtime Tesla bull - who predicted the company would hit a trillion-dollar valuation years before before it did - had his doubts too, saying holding the stock in earlier years wasn't easy amid significant gyrations.
"When I first met Elon 10 years ago ... I was very skeptical about whether it would be successful," he said, adding that in his lifetime, more than 50 car companies he knew have failed.
Then things started to take a turn for him when Tesla produced the Model S in 2012.
Still, Baron said even Musk's friends thought the carmaker would not make for an attractive investment since the Tesla CEO wasn't focused on short-term profitability.
Instead, Musk reinvested profits into building new factories, doing research, and launching new car models.
"We're investing in businesses that are investing in themselves - that are penalizing current profits to become much larger businesses," Baron said. "That's what he was doing."