Latest news with #BaronCapital
Business Insider
19-05-2025
- Business
- Business Insider
Legendary investor Ron Baron shares the early contrarian lesson that's helped him return 1,843% over 22 years
It's hard to imagine Ron Baron, the billionaire founder of Baron Capital, knowing little about investing. Baron is one of the most successful investors of his time, amassing more than $41 billion in assets under management since 1982. His Baron Partners Fund (BPTRX) is up 1,843% since launching in May 2003, trouncing the S&P 500's 536% return and beating 99% of similar funds over the last 5-, 10-, and 15-year periods, according to Morningstar data. But like all of us, he was once a beginner, too. After studying chemistry and then attending law school, Baron finally decided he wanted to work in finance. With no job offer, he moved into a friend's basement in New Jersey until he could find work. His engineer parents weren't happy. But his uncle bought him a copy of Joseph E. Granville's " A Strategy Of Daily Stock Market Timing For Maximum Profit." Reading it, Baron learned his first major lesson about investing: taking a contrarian approach to prevailing market consensus can pay off. "What made sense in this book, which was not intuitive, was that when news was really bad, you're supposed to invest, you're supposed to buy things," Baron told the Economic Club of New York on May 13. "And when news was really good, you're supposed to sell things." Essentially, don't chase returns on the back end of rallies when all the good news is already priced in. It's time-tested advice that many investing legends espouse. Warren Buffett's famous mantra was to "be fearful when others are greedy, and greedy when others are fearful." Sir John Templeton wrote: "Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell." Investor sentiment has been all over the place in recent weeks. After President Donald Trump's "Liberation Day" tariffs announcement, investors became exceptionally bearish on stocks. A month ago, CNN's Fear and Greed Index was in "Extreme Fear" territory. But the outlook has improved as Trump has started to back off from his trade war. Right now, "Greed" is the dominant feeling among investors. Today, Baron is uber-bullish on Tesla, saying he believes its share price will grow 10x from current levels. The stock makes up 35% of his Baron Partners Fund. While Baron doesn't trade short-term macro developments, instead betting on companies he thinks will outperform over the long term, he still applies the lesson he learned early in his career by being ahead of the consensus on the stocks he buys and seeing future outcomes that no one else sees. "It's about being the opposite of what everyone else says," he said. And when things are going awry in markets and the economy, Baron stays cool and thinks about the big picture. "I just figure like John Lennon that in the long run, everything's going to work out. And if it doesn't work out, it's not the end yet," he said. "Sooner or later, everything works out. Man causes problems and then fixes the problems."
Yahoo
23-02-2025
- Automotive
- Yahoo
1 AI Robotics Stock to Buy Before It Soars 285% to $5 Trillion, According to a Wall Street Expert
Billionaire Ron Baron is the founder and CEO of Baron Capital, an asset management company that oversees several mutual funds. The Baron Partners Fund returned 29% annually over the last five years, while the S&P 500 (SNPINDEX: ^GSPC) returned 15% annually over the same period. Tesla (NASDAQ: TSLA) has consistently been the largest position in the portfolio. As of December 2024, it accounted for 41% of the fund, up from 38% in the prior year. And Ron Baron remains bullish. He recently told CNBC that Tesla may be worth $5 trillion within a decade. That prediction implies 285% upside from its current market value of $1.3 trillion. Baron sees the catalysts for that price appreciation in autonomous driving technology and robotics. Here are the important details. Tesla reported disappointing financial results in 2024 as it balanced high interest rates (which hurt demand) and price cuts (which hurt profitability). Deliveries fell 1% to 1.79 million, the first annual decline in company history. Revenue increased by just 1% to $97 billion, operating margin narrowed by 2 percentage points, and non-GAAP net income fell 22% to $2.42 per diluted share. On the bright side, Tesla narrowly held its leadership position in global battery-electric car sales despite losing 2.5 percentage points of market share last year. And CEO Elon Musk says key catalysts this year will lay the groundwork for an "epic 2026" and a "ridiculously good" 2027 and 2028. One such catalyst is a sub-$30,000 vehicle reportedly called the Model Q, set to launch in the first half of 2025. More importantly, Tesla reported a 1,000-fold improvement in its full self-driving (FSD) software last year, measured by miles between critical interventions. As such, the company will launch an autonomous ride-sharing (robotaxi) service in Austin in June 2025, followed by "several other cities in America by the end of this year," according to Musk. Meanwhile, Tesla is using its artificial intelligence (AI) expertise to build humanoid robots called Optimus. The company plans to manufacture 10,000 Optimus in 2025, and Musk says they will be doing useful work in Tesla factories this year. He also thinks Tesla may sell Optimus models to other companies as early as the second half of 2026, though he admits there is a great deal of speculation in that timeline. Alphabet's Waymo launched its robotaxi service to the public in Phoenix in December 2018 and has since expanded to several other cities. I have personally ridden in a Waymo in San Francisco, and the experience was incredible. So, Tesla is behind the curve. However, the company has theoretical data and cost advantages that may help its autonomous ride-sharing platform scale more quickly in the future. Data advantage: Tesla's fleet includes millions of autopilot-enabled cars that capture video data. Ark Invest estimates Tesla collects data from 3.5 billion miles annually, while Waymo collects data from 37 million miles annually. That means Tesla is collecting data about 90 times faster than Waymo, so the company should be able to more effectively train the AI models that power its FSD software. Cost advantage: Tesla's FSD platform is powered entirely by computer vision, meaning the software makes driving decisions based solely on inputs from eight external cameras. As a result, the company says it can build a robotaxi for $25,000. Comparatively, Waymo's sixth-generation cars have 13 cameras, 4 lidar, and 6 radar. That equipment alone costs as much as $100,000, according to co-CEO Dmitri Dolgov. Here's the bottom line: Robotaxis could be transformative for Tesla. Ark Invest estimates robotaxis could be a $10 trillion addressable market by 2030, and Elon Musk says FSD software could push Tesla's gross margin to 70%. Comparatively, the company reported a gross margin of 17.9% last year. Musk recently told analysts that Tesla has "the most advanced humanoid robot by a long shot." Initially, Optimus will handle burdensome or dangerous factory work, but the robot will eventually have enough dexterity and precision to thread a needle and play the piano, which opens a near-infinite number of possible applications. As mentioned, the company plans to build about 10,000 Optimus in 2025, and Musk says those robots will be working in Tesla factories by year-end. Data gathered from the robots will inform production decisions on the second model, which is expected to launch in 2026. So, Tesla may sell Optimus to other companies as early as the second half of next year. Importantly, on the fourth-quarter earnings call, Musk said, "Optimus has the potential to be north of $10 trillion in revenue." He has also said on several occasions that Optimus will eventually be the most valuable product Tesla makes, so much so that it may be the most valuable company in the world. "There is a path where Tesla is worth more than the next top five companies combined," Musk recently told analysts. Wall Street expects Tesla's adjusted earnings to increase by 22% annually through 2027, making the current valuation of 140 times adjusted earnings look absurd. However, the consensus estimate does not account for potentially explosive earnings growth after the introduction of autonomous ride-sharing services and humanoid robots. Admittedly, Tesla is a very risky investment because expectations about its AI products are already factored into the valuation to some degree. That means the stock could crash if Tesla fails to scale its robotaxi and robotics businesses. But it also means the stock could be worth much more in the future if the company realizes those goals. Investors need to decide for themselves which outcome they see as most probable. Personally, I believe Tesla will eventually make good on its promises, which may lead to a $5 trillion market value. But I have been wrong before. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $348,579!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $46,554!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $540,990!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of February 21, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Tesla. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy. 1 AI Robotics Stock to Buy Before It Soars 285% to $5 Trillion, According to a Wall Street Expert was originally published by The Motley Fool Sign in to access your portfolio
