How Ron Baron Became the Greatest Fund Manager of All Time

Summary

The Compound and Friends
Episode: How Ron Baron Became the Greatest Fund Manager of All Time
Date: July 24, 2026

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Episode Overview

In this lively and wide-ranging episode, hosts Josh Brown, Michael Batnick, and guest co-host Jason Zweig welcome legendary investor Ron Baron—founder and CEO of Baron Capital—and his son Michael Baron, co-president and portfolio manager at Baron Capital. The conversation delves into Ron's journey from humble beginnings to managing $70 billion in assets, his long-term investing philosophy, the firm’s landmark bets on Tesla and SpaceX, lessons on owner mentality, and their approach to navigating market volatility. Listeners get a firsthand look at the principles and temperament that have made Ron Baron one of the most successful—and unique—fund managers of all time.

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Key Discussion Points and Insights

The Craft and Challenge of Communicating as an Investor

[00:00–01:36]

• The episode begins with a playful discussion about the difficulty of writing shareholder letters amid a fast-changing market landscape.
• Ron Baron shares: "I don't really write very much about the markets. Write really mostly about investing and about businesses and about people, principles about what we do...the mission that we follow, we have. That's my idea. Everyone else is writing about...the market's going to do this, the stock's going to do that. We don't worry about that at all." (Ron Baron, [01:06])

The Evolution of Baron Capital

[02:32–09:16]

• Ron recounts his early struggles: teaching biochemistry, working as a patent examiner, and barely able to afford a phone in NYC in 1969.
• Tales of his early advertising stunts and connections with Wall Street legends.
• Beginning with managing $10M from George Soros, growing Baron Capital to $69B as of June 2026.
• "So 1970s, I did research, sold it for commissions. And then...I went from having a minus net worth to being worth a million dollars in 1980. And then 1982, started Baron Capital. We had $10 million under management...and at the end of June it was $69 billion." (Ron Baron, [06:05])
• Key to growth: buy-and-hold discipline, betting on people, low staff turnover, and compounding.

The Power (and Discipline) of Buy and Hold

[08:21–09:16]

• "The buy is the easy part, the hold is the hard part. And a lot of people talk about doing it, but not everybody does it." (Jason Zweig, [08:21])
• Ron underscores their low turnover—often less than 5%—and how sticking with great companies and people has driven $70B in profits.

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The Philosophy and Methodology Behind Baron Capital

Owner Mentality from Humble Roots

[35:51–46:19]

• Ron’s childhood taught him the importance of owning businesses versus just having a job.
• "I noticed, couldn't miss it when I was growing up...my friends lived in larger houses, drove Cadillacs...they owned a business or they owned a motel...so it always made me think about owning things." (Ron Baron, [35:51])
• First successful stock investment (Monmouth County National Bank) as a teen reinforced a lifelong desire to own, not just rent, wealth-building assets.

Why Most Stocks Are Trash—And How Baron Finds the Exceptions

[34:21–35:51]

• Referencing Bessembinder’s research showing most stocks fail to beat T-bills, Josh presses Ron on his insight to buy and hold outlier businesses.
• Ron focuses on deep research, unique business models, honest and ambitious management teams, and long-term trends like inflation and technological innovation.

Baron's Investment Mission and Culture

[19:27–21:32]

• Baron Capital’s mission is “to change lives,” supported by relentless inquiry and an intense focus on business fundamentals.
• "When companies come to visit us…I want them to think about if their family fortune depended upon them being right, what would they have to know in order to make that investment?" (Ron Baron, [20:17])

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“Legendary Bets”: Tesla and SpaceX

Tesla: A Case Study in Due Diligence and Vision

[28:57–33:16]

• Initial investment in Tesla took over four years of research and building trust with Elon Musk.
• Michael Baron: "At the time, what were they doing? Around 30,000 vehicles a year, one facility...We didn't spend time talking about what are you doing in this one facility...but what are they trying to achieve? And...the mission over at Tesla was to drive humanity to some kind of renewable resource from an energy perspective. Nothing to do with vehicles, nothing to do with transportation..." (Michael Baron, [29:47])
• The firm approached Tesla—as with other core holdings—not as a car company but as an innovation platform, betting on vertical integration and technological leadership.

SpaceX: Private Market Patience and Conviction

[16:21–19:19, 18:46 Notable Quote]

• Baron Capital began investing in SpaceX in 2017 and executed 27 discrete transactions.
• "In SpaceX we're going to make somewhere 20 times, 30 times from the IPO price...Incredible business." (Ron Baron, [18:57])
• Expected value for SpaceX is $20–40 trillion in the long-term, with Ron anticipating it will become “the biggest company in the world.”

The Importance of Investing in People

[19:27–21:32]

• Both Ron and Michael stress that beyond technical analysis, they are fundamentally betting on the integrity, ambition, and vision of leaders—especially Elon Musk.
• Ron: "So Buffett says that before he invests in someone, integrity is the most important thing. Then intelligence, then energy. He says, if you don't have integrity and you get someone high energy, that's a really bad deal...Elon says it's. It's the heart that makes him." (Ron Baron, [20:58])

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Navigating Volatility and the Psychology of Holding

Surviving the Downsides of Ownership

[46:19–52:07]

• Michael on enduring market drawdowns: "On an individual basis, it's very hard to own a stock...We want to own stocks in a portfolio. When you have different companies that act differently in different market environments. And we really pride ourselves on exactly that." (Michael Baron, [47:15])
• The Barons diversify even within a growth mandate and view stock price fluctuations as opportunities rather than signals to act rashly.
• "All the price does is tell you what you can buy and sell security for in a given day. It doesn't tell you if a company's doing well or not." (Ron Baron, [51:49])

How and When They Sell

[50:06–51:01]

• The Barons sell rarely—only if a company fundamentally loses its competitive edge, not because of short-term pain.
• "We don't care about timing, we care about is this still driving towards what they think we can do longer term. And the biggest area that we would sell something is if that competitive advantage deteriorates." (Michael Baron, [50:06])

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The Barron Capital Structure: Team, Culture, and Succession

Teaching Tools and Succession

[69:16–69:48]

• Michael credits his father not just with investing acumen, but with building a replicable culture and training other analysts to think like owners and questioners, not rent-seekers.

The Baron Conference: A Different Kind of Shareholder Meeting

[70:01–74:10]

• Widely considered asset management’s “best event,” the annual Baron Investment Conference at the Met in NYC features star performers, honest executive Q&A, celebrity guests, and fun giveaways.
• "We pay for that. There's no expense for our clients. That's 100% paid for...we give away door prizes every year now of Teslas..." (Ron Baron, [70:53])
• The focus is on founder stories and business vision, not just financial figures.

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Notable Quotes & Memorable Moments

• "If you ever have a chance to ride in a nose cone, don't do it." (Ron Baron, [03:43])
• "Of our profits, we made about $40 billion before Elon and $30 billion more with Elon. So that's our 70." (Ron Baron, [08:53])
• "Some slingshot, right?" (Ron Baron, recounting Elon Musk's return rocket landing, [55:39])
• "So the math is if you have something that's unique...we're investing in businesses that are unique, with people whose character we admire and we trust." (Ron Baron, [45:53])
• "We're trying to judge their character all the time." (Ron Baron, [21:32])
• "Our time horizon is five or ten years. Other guys are going to say, gee, I understand you're going to make all these billions of dollars of investments. But you know what? If I don't perform today, I'm going to get fired. I'm not going to be around for that in 10 years." (Ron Baron, [52:07])
• "We're not just Elon Musk, just the SpaceX of the world. As I was describing earlier, we have these different buckets in the portfolio..." (Michael Baron, [58:13])
• "We made about $7.7 billion in profit on that 4 [hundred] billion. I think we're going to make five times that next 10, 15 years." (Ron Baron on Tesla, [14:36])
• "You have to have these different kinds of buckets. Companies that perform differently in different environments." (Michael Baron, [58:13])

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Thematic Timestamps

| TIMESTAMP | SEGMENT / TOPIC | |-----------|----------------------------------------------------------| | 00:00 | Writing investor letters and challenges in the fast-paced market | | 02:32 | Ron’s background, early days, and first ad campaign | | 06:05 | The founding and explosive growth of Baron Capital | | 08:21 | The discipline (and challenge) of buy-and-hold | | 14:36 | Betting big on Tesla and SpaceX (key holdings) | | 19:27 | Baron Capital’s core mission and unique principles | | 29:47 | In-depth diligence before investing in Tesla | | 35:51 | Owner mentality, childhood lessons, early investments | | 46:19 | How to keep an even keel during market drawdowns | | 50:06 | When the Barons will actually sell a holding | | 58:13 | Managing client expectations and portfolio construction | | 70:01 | The Baron Investment Conference—culture and shareholder engagement |

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Closing Reflections

This episode is a masterclass in long-term investing, business resilience, and the virtues of curiosity, humility, and psychological discipline. Ron Baron’s story—from a debt-burdened biochemistry teacher to a legendary money manager—is a testament to the power of compounding, the importance of owning rather than renting capital, and the enduring value of people-focused research. Listeners come away not just understanding how Baron built his empire, but why his approach—rooted in owning and understanding unique businesses run by extraordinary people—continues to thrive across generations and market cycles.

For those eager to learn more, visit BaronCapitalGroup.com.

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Transcript

[Josh Brown]

Saman, I know we just met, but I have a slight bone to pick.

[Ron Baron]

Go ahead.

[Josh Brown]

I want to read your Q2 letter.

[Ron Baron]

I want to write it.

[Josh Brown]

It's July 22nd, 23rd.

[Ron Baron]

I know. I'm so late. You know, it's tough writing it, but once you get it written, you say, man, I really like how it sounds, but I go over and over and over it.

[Josh Brown]

Baron, AI, you have no excuse.

[Ron Baron]

I know.

[Josh Brown]

Michael, am I right?

[Michael Baron]

I'm behind as well in letters, so. Sensitive topic at the moment.

[Josh Brown]

All right. Not the first person to say this,

[Ron Baron]

but there's so much you have to do all the time to write letters or to be in a program and prepare for it.

[Josh Brown]

And your letter was. It's not one page.

[Ron Baron]

No, it's three.

[Josh Brown]

Yeah. No, it's more than that. For the Ron letter.

[Ron Baron]

Yeah. Letter from Ron.

[Jason Zweig]

Substantial.

[Michael Baron]

It's a lot of work.

[Josh Brown]

Substantial.

[Jason Zweig]

I find that it's very hard to write about markets given the pace of change. You'd write something and something happens the next day, and you either say, this changes what I just wrote, or I wish I had incorporated this new piece of information. Find that things are speeding up, do you?

[Ron Baron]

Really fast. I don't really write very much about the markets. Write really mostly about investing and about businesses and about people, principles about what we do. You know, the mission that we follow, we have. That's my idea. Everyone else is writing about. You watch television. The market's going to do this, the stock's going to do that. We don't worry about that at all. Right.

[Jason Zweig]

There's no value in that kind of commentary because it comes and goes. There's no reason to write it down.

[Ron Baron]

We're an investor in msci, and a lot of what they do, the information they provide to hedge funds, investors, they enable a lot of this to happen. So a lot of volatility comes about because it's going to systematic investing instead of investing in fundamentals the way we do.

[Josh Brown]

You probably love the AI sell off of MSCI and S&P and Moody's, as if AI was going to replace all of these companies.

[Ron Baron]

Well, MSCI is going to be amazing. I was talking to Henry Fernandez, who's the founder and chairman of that company, and he owns a little bit over a billion dollars and we own over a billion dollars, and we're having a contest and. And he said, ron, you know, if you lent me $100 million in. You know, if you lend me $100 million in 10 years, it's going to be worth 4 or $500 million. So I said, I'd rather own it in my name.

[Josh Brown]

Is this the most exciting time? I know you've been doing this for a long time, but there's got to be up there in terms of business change, 56 years. What do you think?

[Ron Baron]

Most exciting time for me. We've never had such a large position as we have in SpaceX and Elon. You know, when you think about how we started our business and we had. So I come to New York in 1969, the summer 1969, 1960s. I didn't get into medical school and I taught for a year, biochemistry at Georgetown Medical School. I taught there. I couldn't get into that school. I was hoping I would get in after a year on PhD fellowship.

[Josh Brown]

Same. Where'd you grow up?

[Ron Baron]

Asbury Park, New Jersey, boardwalk. And so after a year, I got a job in the patent office, working in the daytime as an examiner and went to law school at night on a scholarship. And when I was working in the patent office, my art was chemistry. That was draft exempt. Job, critical skill. And so I issued the patents on the nose cone, on the coatings for the nose cones that they use to come back to earth and not burn up. So I always advise my friends, if you ever have a chance to ride in a nose cone, don't do it.

[Jason Zweig]

You had firsthand knowledge. Good idea.

[Ron Baron]

No. And so that was the 1960s. I come to New York in 1969. I'm in debt $15,000 and my credit wasn't good enough to get a telephone. Couldn't get a telephone. And then I talked my way into a job after three months being unemployed as an analyst in the 1970s, I did research and sold this to hedge funds, mutual funds, partnerships, families for commissions. So my whole reason of being was to buy and sell. And so did you work with AW Jones? They were one of my clients.

[Josh Brown]

And he was like, allegedly the first.

[Jason Zweig]

You were doing Broke. You were doing brokerage.

[Ron Baron]

I was doing brokerage, okay. In fact, one of my clients was AW Jones, and it was not him, but it was a man named Walter Harrison, and he was a portfolio manager there. And I remember I tried advertising for Barron Funds and I said, well, I'll run an ad. I ran an ad in the Wall Street Journal and I made the ad up. And the ad was We Deliver. And it was a picture of a man with a white apron on and a chef's hat and a tray. And I said, we deliver performance, not pizza. And so ran to the Wall street journal. It was $8,000. And the first day we got 50 phone calls in response.

[Jason Zweig]

It worked.

[Josh Brown]

Did you take the phone calls?

[Ron Baron]

They got to me, but we got 50 phone calls and we had three people with me. And so phone calls, 50. Then it went to 10, then it went to 20, then it went to five. And on Friday there were none. And so I call up one of my friends, Walter Harrison from E.W. jones. I said, walter, I need an order. How do you expect me to survive? I need an order. And he said, well, I'd like to have a hamburger rare, with French fries. He liked to add. Right. So I found a greasy spoon place on Wall street and I said, listen, I want the greasiest, you know, leakiest hamburger you can have, but don't deliver till 5 o' clock and put it on the guy's desk and leave it there. And he comes in on Monday morning as it's all over his desk.

[Jason Zweig]

Oh my God.

[Ron Baron]

But I was A.W. jones. Anyway, so 1970s, I did research, sold it for commissions. And then one of my clients. And then 1980, 19. I went from having a minus net worth to being worth a million dollars in 1980. And then 1982, started Barron Capital. We had $10 million under management. It all come from George Soros. And in 1976 or 77, he was one of my clients for ideas. He had had a bad year and Quantum said, why don't you have some other people manage money for you instead of just you? And he gave $5 million to six people, seven people. I was one of them. Favorite guys outside of him. And then everyone else bought and sold and I bought and held. And my performance is better than the others. So I started off Baron Capital with 10 million under management. M million. And then that was 1982, 1992, 100 million. And at the end of June it was 69 billion.

[Josh Brown]

Michael, are you taking notes? You don't know the story.

[Michael Baron]

I've heard it.

[Ron Baron]

And 69 billion is what we had. And then 70 billion is how much profits we've made. So we managed 69. Clap.

[Jason Zweig]

I think that's, I think that's, I think that's got to be one of the biggest deliveries of capital back to investors.

[Josh Brown]

Has to be all time record.

[Ron Baron]

It's 69. It's now say, I don't know, but I think that we're going to make hundreds of billions of dollars next 10, 15 years.

[Josh Brown]

Berkshire did okay, but a little bit different.

[Ron Baron]

You know, we have Baron Capital book value, our management company, our family management company. We had $100,000 book value in 1982, 100,000 and that's now four and a half billion.

[Josh Brown]

No pressure, Michael.

[Ron Baron]

And then there's one and a half billion dollars more of deferred taxes that we owe. If I were going to sell things, which we're not going to sell. So basically 100,000 in 1982 turned into 6 billion.

[Jason Zweig]

I mean it's really unbelievable.

[Ron Baron]

Well, it's not one person. Our business is now 233 people and 45 are analysts. We have very low turnover of our portfolio, very low turnover of the people who work there and just long term investors.

[Jason Zweig]

I was going to say the buy and hold part. The buy is the easy part, the hold is the hard part. And a lot of people talk about doing it, but not everybody does it.

[Ron Baron]

You know, people say one of the most well known hedge funds who was in difficult times five or 10 years ago, whenever it was he talked about being a long term investor, he turned over his portfolio every day. Just crazy things. And our turnover is in very, in all virtual owings, this is less than 10%. And the portfolios that Michael and I and my other son David, manager, it's probably less than 5%. And we just are long term. So we made of our profits, we made about $40 billion before Elon and $30 billion more with Elon. So that's our 70.

[Jason Zweig]

Yeah.

[Ron Baron]

And I think with case of Elon we're going to make. We can't even figure out how we're going to make hundreds of billions from here with our investments in SpaceX and Tesla.

[Josh Brown]

We'll see about that.

[Jason Zweig]

Well, we're going to, we're definitely going to get, we're definitely into that. Do we want to start the show?

[Ron Baron]

Oh, that wasn't, that wasn't it. I got to do that again.

[Jason Zweig]

We got it all, don't worry. Oh boy.

[Josh Brown]

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[Jason Zweig]

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[Josh Brown]

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[Jason Zweig]

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[Josh Brown]

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[Jason Zweig]

Welcome to the Compound and friends. All opinions expressed by Josh Brown, Michael

[Ron Baron]

Batnick and their castmates are solely their own opinions and do not reflect the

[Jason Zweig]

opinion of Redholtz Wealth Management.

[Ron Baron]

This podcast is for informational purposes only

[Jason Zweig]

and should not be relied upon for any investment decisions.

[Ron Baron]

Clients of Ritholtz Wealth Management may maintain

[Jason Zweig]

positions in the securities discussed in this podcast. Compounded friends, episode 252. Ladies and gentlemen, welcome to the world's greatest investing podcast. It is. I don't know if I told you that you did. Four out of five dentists agree. This is their favorite. All right, you guys, we have a.

[Ron Baron]

You got a favorite dentist.

[Jason Zweig]

We have an extremely special pair of guests today. Literally a living legend with us. We are so excited. This is the show that we have wanted to do for quite some time. And without any further ado, let me introduce Ron Baron. Ron is the founder, CEO and portfolio manager for Barron Capital, the growth equity firm he started in 1982. Now manages over 55 billion. He's known as one of the great long term Elon Musk investors. Baron bought most of its Tesla stake between 2014 and 2016 at a split adjusted average around $14 a share and turned a $1.75 billion SpaceX investment that began in 2017 into a roughly $25 billion position. Unbelievable. Welcome to the show, Ron. We're so excited to talk to you about it. And with Ron is Michael Barron. Michael is a co president and a portfolio manager at Barron Capital where he started as a research analyst in 2004. How'd you get in there?

[Michael Baron]

You got to know the right people.

[Jason Zweig]

Michael has co managed the concentrated non div Barron Partners fund alongside his father since 2018. The fund returned about 25% in 2025 versus just 8.7% for the Russell Mid Cap Growth with Tesla at roughly 27% of the portfolio. He also runs Barron Wealth Builder and co manages the Baron First Principles etf, R O N B with Ron and his brother David. Michael, thank you so much for being here.

[Ron Baron]

Thanks for having me.

[Jason Zweig]

All right, here's how I want to start. This is a quote. Since their respective inceptions as mutual funds, 15 funds representing 96.2% of Barron funds AUM have outperformed their benchmarks. And 13 funds representing 95.4% of Barron funds. AUM rank in the top 20% of their respective Morningstar categories. Six funds representing 54% of your AUM rank in the top 5% of their categories. And Barron Partners Fund is the number one performing mutual fund in the United States since its inception as a mutual fund in 2003. That is outrageous. You wake up every day and say, I'm the goat. Or, I mean, how does it feel? I guess, how does it feel, first of all, to be a one of one in a category of your own?

[Ron Baron]

Before we get into that, just want to say not 55 billion. As of June, it's 70 billion.

[Jason Zweig]

All right.

[Ron Baron]

And that comes from $100 million in 1982, 1992, 100 million became 70 billion. And that's one.

[Josh Brown]

And if you wrote your July 2, your Q2 letter, we would have known that.

[Jason Zweig]

Ron, I'll never underestimate you again. Ron.

[Ron Baron]

And then, and then Tesla, we've been investing in Tesla between 2014 and 16. Met him in 2010. It took four years. And he said, what took you so long? Took four years before we began to invest. Then between 14 and 16 invested 400 million. And we made about. Actually, I checked Today, we made $7.7 billion in profit on that 4 billion. I think we're going to make five times that next 10, 15 years. But the big position we have now, that's now about $5 billion of our assets. However, the big investment we have now is SpaceX, and that represents, as of June, about $25 billion. 25 billion out of 70 is Space X. You can't find another fund.

[Jason Zweig]

It's a bet. It's a real bet.

[Ron Baron]

We don't consider ourselves betting. We consider ourselves investing on the basis of knowledge, not bets.

[Josh Brown]

You've got bet cojones.

[Jason Zweig]

Yeah. Either way, it's a conviction. It's a conviction position.

[Ron Baron]

You know, Mark Hoplamazian, who's the president, chief operating officer for Hyatt, was telling me that he and Tom Pritzker, who's my friend, who's the chairman and biggest owner of Hyatt, said that they marveled and they're investors. A lot of executives of companies in which we've invested are investors in SpaceX through us. And he said that they marveled at how we were able to, in SpaceX instance, how did you ever hold onto that stock straight through your point about how hard it is not just to be able to find an investment that goes up a lot, but to find an investment that goes up a lot and not sell it. It's much harder, especially when you're in the private.

[Jason Zweig]

But is it easier in the private markets with SpaceX, I guess you could have sold some, but you could not have sold all even if you wanted to.

[Ron Baron]

And we started buying. We could have sold any day we wanted. Yeah, we started buying SpaceX in 2000. So Tesla was 2014-16. And then they did employee tender offers every year, twice a billion dollars and they get oversubscribed very quickly. And then Elon started in a private company, Elon started buying some of those employee tenders for himself.

[Jason Zweig]

That's great signal.

[Ron Baron]

So because we had a. And he owned 44% of the company and so we had this good relationship with him, so we got included and we were treated the same as Saudi Arabia, as Abu Dhabi, as Fidelity. We're a tiny investor and that's how they treated us. It was incredible. And so we invested in the aggregate on 27 discrete transactions since 2017, purchased stock and we were either the number one or number two or number three purchaser on each of these transactions in SpaceX 27 times. So in talking about selling, we were purchasing. So other than just these tenders, we told them that if they ever see any stock that is available, we want to buy it. And so we would get these calls and say, here's a guy who's been in vestor a long time and he's got $25 million for sale. Do you want it? Said give me a day, I'll call you tomorrow. And they called me, call him back tomorrow. We want it. We bought it. So we kept 27 transactions and then the aggregate we invested, I think it's 2 billion so far and it's now worth about in June, 25 billion. And then we bought a billion dollars more on the ipo. And the reason we bought the billion, they said, well, how come that we bought a billion more? Because we owned 1.25% of. And I didn't want to get diluted. Right. And, but, but I think we're going to make in that investment where I think from Tesla will make four or five times their money next 10 years. We think that in SpaceX we're going to make somewhere 20 times, 30 times from the IPO price. 20 to 30 times next 10 to 15 years. Incredible business.

[Jason Zweig]

You think this is going to be the biggest company in the world? Yes, by, by a wide margin.

[Ron Baron]

I think it's going to be, we think it's going to be 20 to 30 trillion dollars value, at least 40 trillion dollars. It started off at 2 trillion as the IPO.

[Josh Brown]

Ron, when people hear that number, it sounds like you're on drugs.

[Ron Baron]

I don't do drugs. I don't drink.

[Jason Zweig]

But you understand, like when people, people say, well, we're first seeing now the first ever $5 trillion, the S&P market

[Josh Brown]

cap total is what, 70 trillion, whatever it is.

[Ron Baron]

So 70.

[Jason Zweig]

People are saying that. People are saying that.

[Ron Baron]

I think it might be 80.

[Jason Zweig]

What, what your, your vision is for something that's never existed before on earth. So I'm sure you have a great answer for it.

[Ron Baron]

It's. You're right. This is a unique business. And one of the things we look for all the. So, so we have. So, so we have. Our firm is different than most money managers. So we have a mission. And the mission is to change lives. That's our mission. And so when you say have something like a mission, then all of a sudden you get better employees than you do because you're working for something, not just for themselves. And then we have principles that we follow, and the principles are, how do we do it? We question everything we do. You talked about gambling before, about betting. We question everything. And I tell the people with whom we work that what I want them to do when they're making our analysts, when they make recommendations to us, I want them to think about if their family fortune, if their family good well being depended upon them being right, what would they have to know in order to make that investment? What would they have to know? And I said, when companies come to visit us, which they do every single day, they come to visit us to court us, to invest in their businesses. I said, I don't want to see them not typing. I don't want to see them stop asking questions. You ask, and there are no dumb questions. You keep asking questions and you ask questions as though your life depended on. You don't have to write all the time. I don't expect that. But I do expect you to find out what are the critical elements of a business that make us want to invest in it, that make it different than all the other businesses there have to be. And we have to like the people. And so you're asking questions and, and then you're betting on people. That's a bet. And the betting on people is you're trying to judge their character all the time. So Buffett says that before he invests in someone, integrity is the most important thing. Then intelligence, then energy. He says, if you don't have integrity and you get someone high energy, that's a really bad deal. Don't do that. But basically integrity is the most important part. Elon says it's. It's the heart that makes him.

[Jason Zweig]

Is there nothing that Elon has done over the last 10 years that you've been invested in Tesla and now SpaceX, where you've said to yourself, okay, I really like the guy. I really think he has the potential to change the world. But some of these character questions are now tougher for me to answer. Or have you been able to look past the stuff that the media seems to be consumed with? He tweeted this. He said that. What's your take on the public Persona of Elon vs Elon, the business manager?

[Ron Baron]

I think he really does have a big heart. When you think about someone who works or sleeps four or five hours a day, works seven days a week, and if you're worth a trillion or 3 trillion or 5 or 10, what difference does it make? And so why are you doing that? And you're doing that because he wants humanity to survive and he wants better lives for everyone, the things that he's doing. So normally the stock market and our economy double about every 10 years. They make about 2 or 3% a year real growth. And about 4 or 5% is inflation. So 7% a year growth means you double the economy and double the stock market about every 10 years. The value of money falls in half about every 15 years, 4 or 5% inflation. So you have to make twice as much in 15 years just to stay even. So what he's doing is that he thinks that with all of the innovations that he's bringing to bear, that he's changing everyone. So we think we're changing the lives of people with whom we do business. He's changing everyone's life. And I can't even imagine, you know, so growing up, what I thought my life was going to be and what my children's lives were going to be, and for Michael and for his children and their children, I can't imagine what's going to happen. He thinks the growth of the world economy, of the United States economy is going to. Instead of doubling every 10 years, he thinks it's going to grow 10 times every 10 years because of what he does. He thinks there's going to be, you know, generational change. There's going to be guaranteed incomes that people will have. And he's going to try to find the truth in the truth and the universe. So what he does is that he has Asperger's. And he was on, on cmb, on, on. What is it with Sorkin? Saturday Night Live. Saturday Night Live. And I gave Him a couple jokes and I don't know if he used them. I, I think he used one of them. And, and, but when he was there, it was just, you know, he said, I got Asperger's. And so he's, he's a different kind of person. He's the most brilliant engineer on the planet, obviously. And his vision other people don't have. Nobody thinks about the things that he thinks about. And all these things he does, they all tie together, they all somehow fit together. So you always say, gee, I wonder, did he ever think of that before he bought that? Did he ever think. But he's always, you know, trying to make everyone's life better. And so all those people who are investors who work at SpaceX, they're all shareholders at SpaceX, gives everyone shares. So he wants everyone to participate.

[Jason Zweig]

We said this earlier this week, Michael and I were talking and I'm pretty sure I can't prove this, but I'm pretty sure out of every CEO of a publicly traded company, Elon has probably created more millionaire households. I'm trying to think if there's anyone else, maybe Bezos. Maybe Bezos, but I'm not sure because I think the average Tesla employee is probably a higher compensation than the average Amazon employee. But that's not science. I'm just making it up. But I think between investors and employees, it's gotta be Elon Musk.

[Ron Baron]

I'm sure it's the case.

[Jason Zweig]

Do you think that it's just like a lot of the things that people either criticize about Elon Musk are more about style than substance. The way he speaks, the way he handles questions on conference calls, the way he uses social media. And maybe a lot of the things that people criticize are really just. He's a very different, differently behaved person.

[Ron Baron]

He behaves differently.

[Josh Brown]

Yeah, he's very political.

[Ron Baron]

He. Yeah, I suppose. And if I were, you know, there's things. I think that the way he should have gone into the government, in my opinion, was that it would have been better if he said, in my opinion, that what we're going to do here is we're going to make the government more efficient about the way we issue contracts. We're not going to have cost plus contracts where people are incented to take longer and cost more. We're going to do it for fixed bids. In fact, that's what they do now with Defense Department now too with SpaceX, everything for us is fixed price and price is better than everyone else and better quality and delivers on time and stuff. Works as opposed to not. So he should have been holding himself out as I am a builder, I am the best builder on the planet, probably. So when other people take two and three years to build a data center and cost them 40 or $50 billion, then we build it for a gig. Then we build it in six months, 122 days, six months, we build it and it cost us a fraction of what it cost them. So we build. You know, Elon thought that there's going to be a short supply of compute and he thought that was a limiting factor for all this AI to be effectively working. The LLMs will be working so other people. Anthropic goes from $9 billion of annualized revenues to 45 billion in six months. And there's a three or four year old company who Elon trained him and ChatGPT Elon trained him.

[Jason Zweig]

And so Dario and Sam both have that in their family tree.

[Ron Baron]

Right, right. And so he left, you know, and GROK got started. And Grok is so far behind, but within the next probably five or six months, then we're not very far behind Anthropic right now. And I think that within the next six months we will catch them and be equal. A lot of tests were almost equal right now. But when you're buying stuff from Grok is 65% cheaper than anthropic. 65% cheaper.

[Jason Zweig]

So what use of the model?

[Ron Baron]

Yeah, so if you use our model, you're going to have significantly less fewer tokens than if you're using a Grokkin. You don't Anthropic, so you don't really need to use as much as they are with Anthropic.

[Jason Zweig]

What did you see in Tesla in 2014 that the rest of Wall street didn't? Because that predates all of the models. It obviously predates profitability. It's a fairly early stage. I think The IPO was 2010, very little coverage on Wall Street. I know Adam Jonas was writing about it and I don't think any asset manager had come in and made a big bet on it. So you were probably the first. Why were you able to see more of the future than everybody else?

[Michael Baron]

Can I jump in for one second just to clarify, we weren't the first and I don't think we're ever necessarily early on things. We met Elon on the ipo. We had a very small stake due to private equity investment.

[Josh Brown]

This is 2011, 10, 2010.

[Michael Baron]

And we spent a lot of time with him, a lot of time with the management team. Took us around four years of diligence on the company, diligence on him working, what makes him tick, what is he trying to achieve? And at the time, what were they doing? Around 30,000 vehicles a year, Something in that ballpark, One facility over in Fremont, Fremont over in California. And we didn't spend time talking about what are you doing in this one facility or how many vehicles you can actually do in this one place, but what are they trying to achieve? And one of the things I noticed in one of the first visits is there's a big mission. My dad was just speaking about what our mission is in terms of changing lives. And Elon has a mission for all of his businesses. And the mission over at Tesla was to drive humanity to, I'm probably butchering it a little bit, but drive humanity to some kind of renewable resource from an energy perspective. And nothing to do with vehicles, nothing to do with transportation. It's doing good for society, changing us to a better way to consume energy. And when you understand that he is going to be a lot more dynamic than a single business, that's what kind of got us excited. And all of our questioning was really about that, how do you become this much greater business and what Elon's famous for doing, both in Tesla and now we're doing the kind of the same playbook over at SpaceX, it's about vertical integration. So all the prior automobile companies was about outsourcing. Get your seatbelts from someone, get your airbags, your wheels from someone else, and everyone takes a little bit of margin. If you really want to change the world, you need to do it yourself. You need to drive down costs as low, as low as possible. And he's able to make vehicles now that others cannot possibly catch up to. And I think that Tesla is on the cusp of really transforming itself from a hardware company, you know, selling a box on four wheels, earning a one time profit, to a software company, you know, basically selling the mile.

[Jason Zweig]

So. But while you invested in it, all of the car people are telling you you're going to lose all your money. It's a zero. So must have been difficult to tune that out.

[Josh Brown]

Right?

[Michael Baron]

But it's four years of research.

[Jason Zweig]

Maybe you didn't tune it out, maybe you looked at that and said they don't get it, they think they're covering a car company.

[Michael Baron]

Yes, exactly. It took four years of constantly questioning. He was at our conference last year, two years ago last year, three times, and we were talking about that kind of thing. And he says what took you so long on me doing all that diligence. Where was the hold of him? I'm like, Elon, you know, look at you. You know, he's this crazy guy, you know, Remember you always describe him in the first one of the first meetings coming in unshaven and then, you know, a different kind of character, but really he need to get comfortable on the person, you know, what's motivating them, who they are, what they're trying to achieve, and then trying to independently verify whether or not they can successfully do it.

[Jason Zweig]

So Ron, you've done this before. There's a, there's a, an anecdote about Steve Wynn and being an investor in Wynn Resorts for decades, or you know, just like being able to see through short term volatility. And this is another case where I'm guessing you're betting on the jockey, you're betting on the person as much as you're betting on the company. You talk a little bit about some of the similarities between the CEOs who have delivered the most value to you to the Elon Musk situation.

[Ron Baron]

So we have our portfolios are balanced out where we have maybe 25, 30% of our portfolio invested in companies like SpaceX or like Tesla or like Nvidia. And then we have the rest of our companies invested in companies that might be valued relative to book value, relative to cash flow, relative to earnings per share, that are at least double digit returns but more consistent. You know, it's not in the sky.

[Jason Zweig]

It's like more conventional, more conventional investments.

[Ron Baron]

Right, right. And, and it can be hotel companies, it could be an animal hospital company, could be a healthcare uniform company like Figs, which I love. It could be a company that owns real estate like Vail Resort. Yeah, when, after all, when people don't need to work anymore, they're going to need to do something. So.

[Josh Brown]

Okay, Ron, so most stocks are garbages. Most businesses suck. Hendrik Bessembinder has his famous study where he compares what are the lifetime returns of businesses versus the stock market versus inflation versus cash. And here we go. Just 27% of stocks kept pace with the value weighted with, with the stock market. Just 27% of stocks meaning 73% lose versus T bills. Only 42% of stocks over their lifetime beat treasuries. Only 48% delivered a positive lifetime return. So it's basically a coin flip of these companies are even gonna make money for their shareholders over the time of their listening to the time they die or acquired or whatever. And then the median stock lost 7% over its entire lifetime. So most companies are trash and are not worth investing in, certainly not buying and holding. And yet you guys have found a way to buy and hold stocks that have done the opposite, that have generated astounding returns. Astounding returns. So I'm curious, when did you have this insight, like, how did you know that the money was made by waiting? Because that is extraordinarily difficult. Josh mentioned you held win for 27 years. It's, like, unheard of. So how did that insight come to you so early? And how are you finding the stocks that actually are worth buying and holding?

[Ron Baron]

Well, we do research, but some of it, a lot of it comes from my background growing up. So my dad was an engineer for the Army. And I would always ask him. And when I was 1942, he was making $2,500 a year. And then when I was bar mitzvah in 1956, he was making $10,000. And I would ask him all the time, are we middle class yet? And that was when we got to be middle class in 1956. And I noticed, couldn't miss it when I was growing up, that. So we lived in a small house, and my friends lived in larger houses, and they drove Cadillacs and we had an old Ford and used cars all the time. And I was wondering, how'd that happen? And what happened was that they owned a business or they owned a motel or they owned rides on the boardwalk, or they owned a legal practice. They owned something, they owned it. And so it always made me think about owning things as we make money. Then my friend in Asbury park, his name was Mark Masser, his dad had a real estate business in Asbury Park. And I'm talking to him one day, and, I mean, I just had a thousand dollars from my boy message saved up. And he says, you need to invest in the stock market. I said, what's a stock? And he explained to me that it's the easiest thing. You buy something and it's 10 times earnings, and they pay you a dividend, and every year it becomes more valuable and you don't have to manage it. I said, well, that sounds pretty cool. So I go to my parents, my dad, I said, I'd like to invest my thousand dollars in stock market. And he said, well, I've never invested in stocks. I don't know how to do that. And. But if you can show me why you know enough to be able to do that, I'll open an account for you at Merrill Lynch. I Said, okay. So I started going after school and reading these reports. And then my savings account was at Monmouth County national bank in West Allenhurst. And it was Allenhurst and red brick building. The state senator was the top floor pillar building, looked substantial. And, and, and you go with your passbook savings account every three months and they stamp in how much interest you made. And so, so I go there and I read a report about him and I said, I'd like to put my thousand dollars into Monmouth County National Bank. And, and this is why. And he said, okay, you can do that. And So I bought 100 shares at $10 a share and, and with the account at Merrill lynch. And, and then from that point, every day the Asbury Park Press listed the local companies and their prices every day. And so every day I would look up Monmouth counter and it may be 15 local companies.

[Josh Brown]

You remember the ticker?

[Ron Baron]

No, I don't know. I don't think there was a ticker. I don't know. But every day, the stock, I would look at the end of the day and every day it would be 10, 10 and an eighth, 10 and a quarter, 10 and three, 16. Just every day it went up for like six or seven months. And then it got acquired at $17 a share. And I said, oh my God.

[Jason Zweig]

I said, oh, I could do this.

[Ron Baron]

Set my thousand became 1700. That was, you know, two thirds of my first year of college. And, and I said, wow, nothing to this. I can do that. And so that's how I became interested in investing. But it was the idea about owning something. And then after I became an analyst in 1970s and did research and sold this to all these institutions and hedge funds and you know, Soros was a client, Peter lynch was a client. So I had all, all these clients and, and, and every time. And my stocks in the 1970s were McDonald's, Disney, Nike. And Ken Langone calls me up one day and he says, he says, I see you're buying a company, Dalen. And I said, yeah. And he says, do you know who I am? I said, everybody knows who Ken Langone is. Yeah. And he says, well, I'd like to have lunch with you. And so we go to lunch at the Bull and Bear at the Waldorf Astoria. I remember, and I walk in, he's much bigger than I am, and he puts his arm around me. And he went to Bucknell, just like I went to Bucknell and puts his arm around me. And he says, guys like us, we gotta stick together. And I look around and see if there's someone else he's talking to. He's talking to me. And so we sit there and he says, look, I'm buying Dalen. And I think I'm probably. They've just come out of bankruptcy and they owned a company. There was a home improvement company called Handy Dan in California, and it was Arthur Blank and the other guy were running it, and I was buying it because of them. And he says, I'm buying the same thing. I'm buying for clients, he's buying for him. And so I, my, my modus operandi is I buy a stock, goes doubles or triples. I say, buy this, sell this and buy this. So I get two commissions instead of just one, right? So stock doubles or triples or quadruples. And so we share. He says, anything I see, I'll show to you. And anything you see, you show to me will split 50, 50. Say, well, why beat each other up? I said, great, let's do that. And so we do it. And I buy stock at $2 a share, and it goes to 4, 5, $6 a share. I say, okay, that's enough. Let's call my clients and get them to sell it and buy something else. Buy Federal Express. And so we do that. And then these guys at Handy Dan get fired by the head of the company, Dalen Sanford Sigiloff. And then they go to Ken, and Ken raises the money to start Home Depot. So basically, I could have invested in Home Depot at the very beginning, but I had already sold and so I was gone.

[Josh Brown]

Well, you got Tesla, but so I,

[Jason Zweig]

I started in the business in the same way the, the goal of the firm, the brokerage firm, they told us. This is the first thing they told us. We're not in the storage business, we're in the moving business. So if you were right on a stock almost by accident, the first instinct is, great, I'm gonna get two and a half percent commission to get out of this. And it just so happens I have another stock that the client should buy right now because they're liquid. And that was, I mean, that was the way. So you had this insight that I wanna be an owner. I wanna own businesses. That's the key. And it dates back to what you saw when you first became aware of money in your childhood.

[Ron Baron]

And the other thing I always thought about was inflation. And so my parents first house. So when I was born, we lived in rooms and a home in, in red Bank, N.J. and, and then 19. And then we moved to Bradley Beach. And then 1948 and we live on top of a garage. And then 1948, my parents bought their first home. And people are coming back from. From the war. And it was $5,000. $5,000 for a 2,000 square foot home. And. And then they sold it in 1955 for $10,000. That house is now worth $500,000. And then they bought another house or built. My dad built the house in 1955 for 20,000. That's now worth a million and a half dollars.

[Jason Zweig]

Wow.

[Ron Baron]

So basically, that happens to be 4, 5, 6% a year. That's what that is. And Michael and I were just talking. We were coming over here and we're talking about land on the ocean. So everything goes up 4 or 5% a year in price except land on the Ocean. That goes up 7, 8% a year, or 9%. And I was describing to him how some people not very far away from us, three or four houses away, where Izzy Englander lives, actually two houses away from me in the Hamptons, that house. A man comes to visit us in the Hamptons, and he's making vials for drugs. And he wants us to invest with him, you know, smaller vials. And he says, oh, ron, I lived 12 acres three houses away from you. In my. My. My parents had a dairy farm, and the dairy farm was the reason we had it there, was that it was more than 100 miles from the center of New York City. And that was important because. And that was measured from Columbus Circle. And that was important because if you're more than 100 miles from the city, what happened is you can sell milk to the government for a $10 a gallon. And instead of a dollar a gallon, so that's how come they had. That's how come they had the land there. There. 14 acres or 12 acres on the ocean. Right. And, and so. So we're talking through it. He says, but, you know, we sold our land a long time ago for $250,000. That land is now over $80 million. Now between 150 and 200 million.

[Jason Zweig]

Yeah, I bet.

[Ron Baron]

And. And so he's describing to Michael the. That what that means is that happens to be in 80 years, that happens to be 10 doubles. So 2, 4, 8, 16, 32, 64, 128, 250, 500,000. So a thousand times. So basically, you know, whatever you had 80 years ago, 7% a year is a thousand times more today.

[Josh Brown]

Wow.

[Ron Baron]

So that's the math. And so the math is if you have something that's unique. So we're investing in businesses that are unique, with people whose character we admire and we trust. And if Elon does things, you know, who am I? We're not active with investors. I'm going to tell him how to run a business or what he should be doing or how he should be acting.

[Josh Brown]

Let me discuss this. Both of you can answer this. So one of the benefits of ownership is all of the upside, as you've laid it out, Tremendous upside to growth when you're doing 8% a year over 30 year periods of time, Holy shit, that's a lot of money. One of the downsides of ownership is you get all of the downside. And so I'm curious how both of you can answer this, how you manage your emotions. So on a day like today, Tesla is getting the shit beat out of it. It's down 16%. The stock is where it was in August 2025, it's where it was in November 2021. And obviously this is not the first time or second or 100th time that you guys have experienced something like this. Whether it's with Tesla or any other monster winner, this is the price, right? No pain, no gain. But on days like this, months and quarters and years like this, how do you, how do you stick with it? What gives you the confidence to say we're not leaving, we believe in this, in this vision?

[Michael Baron]

Sure, I'll take the first stab at that. On an individual basis, it's very hard to own a stock. It's very hard to own a company if you haven't done the first primary research. And that's what we pride ourselves on, really understanding the business behind it. Not really what's happening on a, on a day by day basis or a quarter by quarter basis. Additionally, owning stocks as an individual is very volatile. You know, you're going to have multiple times like this when all of a sudden something comes out or an earnings report comes out, whether it's SpaceX, last week all of a sudden had a flight, not exactly work, or they scrubbed it and try again next week. And the impact that has on the stock and what it does to individuals if they actually just own that one security. We want to own stocks in a portfolio. When you have different companies that act differently in different market environments. And we really pride ourselves on exactly that. Not having a whole portfolio of the Tesla's and the SpaceX when all of a sudden there's this quote unquote risk off environment, they all move together. And that's what you're kind of seeing right now. In the market, the s and P500 is no longer 500 companies, it's seven or it's eight, including the Mag 7. I like to call it the Mag 8 at this point with SpaceX obviously not in the index yet, but eventually it will be the Russell 1000. Same kind of thing, very concentrated and highly correlated investments. We're growth, we're only growth. We want to do one thing extraordinarily well, that's find these growth oriented businesses. But they need to work in different market environments. We're talking as a firm, people think of us as okay, well you're going to be completely overweight. IT technology kind of investments.

[Josh Brown]

We're not discretionary.

[Michael Baron]

Yeah, we're actually underweight.

[Jason Zweig]

The whole market is overweight tech.

[Michael Baron]

Right.

[Jason Zweig]

Even if you were 30% weighting, you'd be underweight.

[Josh Brown]

So Michael, your answer makes perfect sense from the portfolio manager point of view. I'm just talking about as a person, like are you guys have billions of dollars in Tesla and the Stock is down 16% today. You're a human being. I would imagine that like tonight's gonna be a little bit rough, like you're gonna lose sleep over this. Like how do you manage your emotions through stuff like this?

[Michael Baron]

I mean I used to, I used to, you know. You know, like you said, it's not your first time having a down day. First time I had a down day, yeah, it was real tough. It was probably a tough day, tough week, tough month.

[Jason Zweig]

A lot of managers when they get into a position, they'll say to themselves, if X, Y or Z happen, I'll be wrong and I'll exit the position. It doesn't seem like you guys go into a position already thinking about what could go wrong. It seems like you guys do all that due diligence, spend all that time with the CEO and you just say to yourselves there are going to be good years and bad years, but this is a company that's mission oriented and we're going to stick it out. And there's probably very little that can

[Michael Baron]

change your mind, not to say very little. The reason we would sell a position isn't on timing. And I think that's where the market does. All of a sudden they say, hey, is this happening now? And you're kind of seeing that with Tesla, how much they're going to be spending on Capex, how much they're getting on the Robotaxi and when's that going to come to fruition? We don't care about timing, we care about is this still Driving towards what they think we can do longer term. And the biggest area that we would sell something is if that competitive advantage deteriorates. You know, people think of us as, hey, your growth. You only care about growth. Growth's the easiest thing, I think to kind of identify the harder aspect is understanding the people who are running the business and understanding its competitive advantage. Why can other people not do what they're doing? And we feel that in Tesla's case, Robo taxi, Cyber cab will come. It might be pushed out a quarter or two or even a year. That's okay for us.

[Jason Zweig]

What's interesting about Tesla now to me, maybe I'm seeing this wrong. The competitive advantage they had in EVs, it's not as strong today as it was five years ago. The Chinese are very serious with EVs, but now if you're an owner of the stock, you're talking about Optimus and you're talking about robots. And Tesla probably has a bigger advantage there than in anything they've ever done.

[Michael Baron]

Remember what I said earlier, their mission was never about transportation alone. It was about being, getting us to renewable energy, going into renewable resources.

[Jason Zweig]

So they can make 10 million robots a year, though, in out of, I guess out of Texas. No one else can do anything near that. So like that I almost would talk about 10 million.

[Ron Baron]

He's talking about 100 million, then he's talking about a billion.

[Josh Brown]

So is that how they turn out a year?

[Jason Zweig]

But, so nobody's going to do that.

[Ron Baron]

But no one's going to have any. No one's going to ever do anything like his robots. Yeah, so. So if you think about how you're able to withstand a share price going down, is that the. All the price does is tell you what you can buy and sell security for in a given day. It doesn't tell you if a company's doing well or not.

[Jason Zweig]

You guys aren't getting signal from the fact that the stock is up or down on a given day.

[Ron Baron]

Don't give signals. They're just, you know, they're guys who trade and systemic investing, they trade and they make stocks go up and down. They follow the leader down, they follow the leader up. You know, that's not what we do. We try to find businesses in which we can invest. You know, Henry Fernandez says, you know, Ron, what you guys do is you have an ability to see around corners. You know, you can look long term. Our time horizon is five or ten years. Other guys are going to say, gee, I understand you're going to make all these Billions of dollars of investments. Right. But you know what? If I don't perform today, I'm going to get fired. I'm not going to be around for that in 10 years. So. But we can't get fired. We own the business. So basically the way. And we're the biggest investors in our. In our funds and the money that we manage. We're the largest investors. And so, like 11, 12% of the money we manage is ours. And so which, considering that was minus $15,000 in debt, it's pretty cool. Yeah. So the idea that we have, though, is that it's a time how we think about 5 and 10 years horizon, and we think about what makes one business different than others. So think about SpaceX. So here he comes along. This is a cool story, but he comes along and he's the founder of PayPal and Elon. And then when he has the idea, then his partners want to sell. PayPal wasn't a good sale, but they sell it. And he gets 100 or $110 million for his share. And so he doesn't need to work anymore at that point. He's a very young man. And so he goes to his wife and he says, you know, honey, I think I would like to spend the rest of my life. I want to have rockets that you can use over and over again, like airplanes. And she says, oh, okay. And he says, and there's a good chance we'll not be successful and I could lose, you know, everything. And she says, well, Elon, we have six children. What will we do? Where will we live? And he says, well, your dad has a basement. We can live in the basement. So that's commitments. And then when you think about what he's done, then he says, okay, and goes to visit President Putin, and he wants to buy rockets from Putin. And so he goes there and he spends a week there and meets with Putin every day. And Putin, it's obvious after a while that Putin's given a run around. So he says, okay, Mr. President, thank you very much for your time, but I think I'll be able to do this by myself. And so Putin looks at him and

[Jason Zweig]

build rockets by himself.

[Ron Baron]

Build rockets and make them return and land again. And Putin says, well, Elon, how are you going to get these to orbit with a slingshot? And that was it. That was the end of the conversation. So Elon goes, and now, several years later, and we have the first rocket going up and coming back and landing. And it's a very emotional moment for him. And all the cameras are around, they come right up to him and they say, and he looks into the camera and he says, some slingshot, right? But I mean, it's an inside joke

[Jason Zweig]

for him and Vladimir Putin.

[Ron Baron]

Right, right.

[Michael Baron]

It was good to have inside jokes.

[Ron Baron]

So, but the idea is that the way we invest is that this is not a one time thing. And then done. We're constantly talking to companies every single day. I talk to companies every day and so is he. Every day. You're talking to companies every single day. And my wife says to me, ronnie, I don't. Why are you doing this? Why are you working this way? What is the matter with you? And what I do, My life is so interesting to meet these people and speak to them every day and explain to me how their business operates and explain to me what's different about what they do compared to what everyone else is doing.

[Jason Zweig]

Yeah.

[Ron Baron]

And I say, man, and it strikes the bell. And when you're talking to someone, you say this, you know, why didn't this rocket work? Right? Why didn't it work? What happened? How come the landing strip, you know, the platform blew up and was destroyed, cost $500 million. And how come that was destroyed? What was the matter? And why, why does a landing strip. It's just cements. Why is that so complicated to build $500 million? And why do you have to build them all around the world? And why do you have. So, so you just keep asking questions. And I was Speaking to the CFO for the launch business of SpaceX, I guess, a couple weeks ago. And she told me that a long time ago, she told me she speaks to me more than anyone else. I talk to her every month, a couple times, three times over a month. And she says, I talk to you more than anyone else, maybe one of my husbands. And the way I talk to her, she's in California. And what I do is that my wife says, you don't need to work at home. And so what I do is she goes to sleep. And then midnight I get up and I go to talk to Miley in California. But she says, I like talking to you more than other people because they're just interested in now. And what you're interested in is what you described to me, how things work.

[Josh Brown]

So you guys obviously believe deeply in your bones about what you do, your mission, right? It's apparent you believe it. How long did it take you to train your shareholders to come alongside with you to endure the ups and downs of the businesses that you guys are investing in for Years and decades in some cases.

[Michael Baron]

I don't think there's necessarily as much volatility in our portfolios as you would suspect based on the fact that we are growth equity investors. We're not just Elon Musk, just the SpaceX of the world. As I was describing earlier, we have these different buckets in the portfolio and Byron Partners Fund in good times we do well, we keep up with the market and do a little bit better. But I think where we really earn our stripes is in the more difficult time periods in the economy when tech's out of favor, when growth's out of favor. We showed that we're able to protect investors over the course of an entire cycle. Not in any one given quarter, not in any given year or these random one, three, five year periods, but over the course of a down market cycle, we've shown that we're protecting investors. I think one of the worst times, you know, obviously in our history, maybe the United States history of investing, was the dot com burst through the great financial crisis. Where had you invested in the market, you lost about a third of your money. Had you invested with us? We advanced one and a half, 2% annualized in Baron Partners Fund. I'm not sure the exact number, but something in that ballpark. So you grew 12, 15% while the market went down by a third over that whatever it was, nine, ten year period of time, you can't come back having lost a third of your money. And you have to have these different kinds of buckets. Companies that perform differently in different environments. And like I said, you have Baron Partners Fund, our concentrated portfolios that have these investments with these big open ended growth opportunities. But so many of our other portfolios give that balance and ballast to our clients and to our advisors that like I was saying earlier, if you just buy the S and P, if you just buy the Russell 1000 growth, you're buying seven companies. You're not getting real diversity. And something like we have Baron Generational Growth Fund which has lagged over the past few years because it doesn't own that. It doesn't own this very small section of the market. These big generate the big growth ideas, but it has nice steady growth businesses and the fundamentals of those businesses continue to do well and actually are an inflection point and improving. Yet the sentiment is only going to have seven companies in the future. It's only going to be AI companies doing everything. We're not in that mindset and it's not showing up in the results of these businesses. The companies are doing better and the valuations are incredibly cheap. 50% off of their highs.

[Josh Brown]

You own some software stocks, right?

[Michael Baron]

Yeah.

[Josh Brown]

So you guys are optimistic that some of the AI fears are overblown?

[Michael Baron]

Way overblown. If you have something that is proprietary, such as AI, should be an enabler to these businesses, not a detrimental proprietary data.

[Ron Baron]

Msci, they have proprietary data. They're spending a great deal on people to gather information to provide to hedge funds, for example. And there's also going after private. No one's done that before.

[Josh Brown]

You guys on fax. That too.

[Ron Baron]

Yeah. FactSet is a really interesting story.

[Josh Brown]

Market hates it.

[Ron Baron]

You know, we have been so in the past year, we bought $9 billion worth of stock at about $5 billion has been in software companies. So 5 billion out of 9 for software the past year and in fact set then we have been an investor for a very long time and did well for a long period of time. And then in the past year the stock has fallen from 500 to 200. It's now 250. And we've been buying it as the company's been buying it. So the four or five companies that we've been investing in our software, the companies have been buying in like crazy. And we've been buying right along with the companies. And the narrative is they're not going to exist any longer. And the person who is really interesting to me who runs FactSet now, replaced the prior CEO who we hadn't had good success with for probably three or four or five years. And so was vulnerable, this guy. So he grows up on a farm in India, dirt poor, figures out how to go to the best technical school in India and goes to the best business school in India and then gets recruited by McKinsey and company. And then the financial crisis hits in 2008 and McKinsey says, We'd like you to come to America and to be an advisor. He's 31 years old at the time. We'd like you to come to America to be an advisor to Tim Geithner right off the farm in India. And so he comes to the United States. He works for Geithner for a year or two, then Morgan, then price solved. And then JP Morgan recruits him and he works at JP Morgan and he becomes one of the top candidates to, to succeed Jamie Dimon. He's now 52. He becomes one of the prime candidates, probably in the top 10, and say, well, look, you're in the top 10, but you didn't make the top five. He says, come out of here. And where does he go? Fact set. So I tell Michael, say this is a really cool company. It hasn't been especially well managed for a few years now. And now it's like a junior Bloomberg. But we got the big company in the industry is Bloomberg and they got some vulnerabilities and we get some special things. And now we drop in this new guy who is unbelievable. We weren't allowed to speak to him until he took his position. And so after that we spent a bunch of time with him and he even called me from India, calls me from India when he goes visit his family. I mean, he's really, really good guy. And then of the 11 top executives now at FactSet, eight come from him. And now he's describing to us how all of the services that he's providing are getting embedded in the workflow of the clients that can't be replaced. So basically he's talking about the data that he has, the relationships he has. He says the people in the big companies, they didn't even know who he was. And you know, they, you know, they were just paying the bills or whatever. And he says when we have something that's a commodity type of service and we give it to them for really low prices, but that gets us the entree to give them something that they really need for their business they can't get somewhere else. So, so we find. So whether it's raresk who has all this insurance data or whether it's FactSet or there's Gartner who has, you know, thousands of analysts going out and create this great library. So there's companies that have something special that get. Well, there's no way they're going to exist. That's all going to get replaced by AI.

[Jason Zweig]

The LLMs end up having to pay them for this data.

[Michael Baron]

They're enablers of AI.

[Jason Zweig]

Okay, I like that argument. A lot of people have given up on it because these stocks seem to have no, these stocks seem to have like no one who's willing to come out and say, no, you don't understand. There's nothing Claude can do if they're not working with this proprietary data set or that data set.

[Ron Baron]

Well, a lot of the information that these companies have or arrangements that they have with Claude and all those LLMs, they're going to be commoditized and they're all going to. I was describing before how Grok is 65% cheaper than Quad and not as good so far, but it will be. But we got compute and when we invested in compute. SpaceX did. When we invest in Compute, when other people are investing in the LLMs, we can catch them in LLMs, they can't catch us in compute. And when we've invested in. In Mississippi, as I mentioned before, that was for 25, 30 billion dollars. And we got. We're getting 1.25 billion dollars a month from. From anthropic and getting 900 million dollars a month from. From Google, and I think we're getting about 500 million a month from someone else or 250. So we're getting almost 25, $30 billion a month for something a year, rather for something that cost us $25 or $30 billion to build. To show you how scarce it is, we're getting three times what Core Weave would get for the same amount of compute. Three times. Why is that? Because we got it. No one else has it. And also our compute is different than other people's compute because it's coherent, because it's all together. And when it's all together, that means that it makes each other more powerful. The other thing is really interesting, my job, which I tell Judy, I say, you know what? That. So here I am, I'm 83, and it's still like. It feels like I'm in college. You know, you get to. And so is still learning as things

[Jason Zweig]

change every day, keeping pace with it every day.

[Josh Brown]

Okay, Michael, you like having your dad around at work

[Michael Baron]

most days? No, obviously, he's been incredible to learn from at an extraordinary young age. You know, I joined the business in, what was it, late 2004. So over 20 years at this point. But I jokingly say my training started probably when I was five or six years old, half jokingly saying this. We would talk about investing from an extraordinarily young age, never about what's happened in the stock market, never what's happening in the economy or from a macro perspective, but about companies, what makes one company different, unique, special. And he gave me that training. He made it fun, he made it interesting. People say, were you forced to do this? I don't know. Obviously, it was his grand plan to get both me and my brother into this, but wasn't forced, but he did make it extraordinarily interesting and something. So he obviously trained me, trained my brother. But one thing that he doesn't get enough credit for, I think, is obviously gets credit for being a great investor and building this business, but the people that he's brought into it. So we have, what, 45 investment professionals at Baron Capital, each and every one buys into it. Buys into what? What is a Baron capital type investment? What is a barren capital type portfolio? What makes a company for us, what makes it special? What makes the growth, what makes the people. All those kind of things, all those kind of questioning. So we're not a factory, we're not producing widgets, but it's the people that we have here who get to the right answer more often than not. I think that Covid was a tough time for us. It was a tough time, obviously. I don't know why we would have survived Covid if it was five, 10 years earlier, if we didn't have the technology to enable work home. But work from home sucks because you're not with people, you're not with us that you know. We have companies come to the office non stop and we go see them nonstop. It's never one person in a meeting. And the bad thing about Zoom and Covid was you press that red button and the meeting ends. You know, we have that hour long, hour and a half, two hour long meeting and we spend just as much time with the other analysts there to understand, do a deep dive on what just happened.

[Jason Zweig]

A lot of the good stuff happens outside of the official meeting.

[Michael Baron]

Yes, I agree with that. So it's, you know, it's, my dad is the founder, he's the philosophy, he's all that. But he's training everyone else here to kind of think about investing in the same way. And as you were giving our stats earlier, in terms of what percent of our portfolios beat them Index, which is obviously very hard to do, but not just beating by a little bit. Top quartile, top 5%, top 1%. It's not just Ron Baron, but it's him permeating all these different portfolios in terms of how we think about investing.

[Josh Brown]

Before I let you guys go, we have two more things. Baron, AI, I got out there, I

[Jason Zweig]

got, I got one more thing. How many more do you have?

[Ron Baron]

2.

[Jason Zweig]

And the conference, Prosec people are going to start losing their conference. I thought we have time, all the

[Michael Baron]

time in the world.

[Jason Zweig]

Well, so let's do the conference because I'm fascinated by the fact that I've never been invited to this. I got to get myself into that. You guys throw the, I would have to guess the literal best event in asset management once a year for, for the listeners. This is the Barron Investment Conference. You do it at the Met here in New York City. You've been doing it forever. These are some of the people that you've had there. Josh Brown, Pink, Justin Timberlake, Adam Sandler, John Legend, John Mulaney, Bruno Mars, Sebastian Maniscalco, Fleetwood Mac, Steve Carell, Stephen Colbert, Seth Mars.

[Ron Baron]

How about Paul McCartney?

[Jason Zweig]

Paul McCartney. How about Barbra Streisand, Celine Dion, Sting, Bon Jovi, Rod Stewart, Jerry Seinfeld?

[Michael Baron]

This is the most I'm going to add to that.

[Ron Baron]

We pay for that. There's no expense for our clients. That's 100% paid for. And not only that, but we give away door prizes every year now of Teslas, we give away. We were giving away two a year. And you have to be in your seat when you're. When your numbers close. And then one year, what happened is that a young woman came, and if you're not there, you don't get it. And one year, about three or four or five years ago, a young woman came over to me and said, you know, I can't believe it. You called my number and I was in the restroom and I missed out. So I gave her a Tesla. And since then, we've been given three Teslas a year instead of two a year. But we give. And in addition to that, one of the jobs I had in the summertime was as an ice cream man. And so someone came to me, and the way it worked when I was driving an ice cream truck is that if you did a bill a day, $100 a day, you made $25. That was a big deal. And so I went to areas that other people didn't go to that they thought was too risky. And I was able to do that. $100. And now someone came to us and told us about the ice cream trucks that he has, and he was an orphan. And he explained. And so he said, okay, we want to invest in your business. So we own a couple of trucks. And now every year at the end of our conference, we go to. We have our trucks. They have six trucks. The ice cream trucks pull up ice cream trucks at the end of the conference. So when you leave the conference, we give you ice cream. It's the best ice cream. Best cones, best ice cream. I love it for free. So we give T shirts, we give swag, we give ice cream. Every now and then, we'll give a book or something.

[Jason Zweig]

So your mutual fund shareholders from around the world come in for this.

[Ron Baron]

Around the world.

[Michael Baron]

So they get that entertainment, as you just mentioned. But I was just jotting down a few of the people who've come. Obviously, Elon Musk has been there multiple times. Gwen shot Wilson from SpaceX has been there. Charles Schwab, Steve Wynn, Ralph Lauren, Tom Pritzker, Henry Fernandez, Shopify.

[Jason Zweig]

I can get you guys Barry Ritholtz. I'm just saying it's really cool. And the next one is November 6th.

[Ron Baron]

November 6th.

[Jason Zweig]

Okay. All right.

[Michael Baron]

Executives who don't speak normally at these kind of investment conferences, because it's a very different type of investment conference. You know, we tell these guys, don't give your canned speech. Don't talk about what's happening now in the quarter. But yeah, it's. Exactly. Who are you? How did you get into this? These are founders of businesses. You know, why. Why did you want to found this business? What makes it interesting?

[Ron Baron]

What makes.

[Michael Baron]

What's the vision? Where's this thing going? And have this kind of open dialogue about who these executives are. And I think that's really what people find very fascinating and differentiated about the conference.

[Ron Baron]

So one thing I would add to that is that one year we had Michael followed Carlisle. That's David Rubenstein. And so I'm sitting on the stage with Michael, and then Michael goes to get David and bring him across. Do you know who he is?

[Jason Zweig]

Yes, of course.

[Ron Baron]

And so to bring him across the stage and he's to give a speech, and then he's standing in front of the audience, 5,000 people. And then Michael walks back to me and says, dad, do you know what David just asked me? I said, no. He said, what do you want me to talk about?

[Michael Baron]

Yeah, he said, what do you want to talk? What is. What's going on?

[Jason Zweig]

Something tells me David Rubenstein can improvise.

[Michael Baron]

You kind of wind him up. And he goes, but. And then he says, okay, I got this. I can give this. You know, who I am. How did I find found Carlisle and what we're trying to do? And he says, by the way, should I be funny? I said, david, yeah, sure, be funny.

[Jason Zweig]

Be David Rubenstein.

[Michael Baron]

He was hilarious. Totally hilarious. By the way, I love his show over on Bloomberg, the way he interviews people. It's a very charismatic guy.

[Jason Zweig]

Guys, I want to thank you so much for your time. And it's just. It's been such an honor talking with you and congratulations on all of your milestones and success. It's an amazing thing that you've done. And it sounds like nobody is more excited than the two of you to keep doing it. And that's. That's as cool as it gets to me. So thank you so much. Thank you. Where do we send people who want to learn more about Barron Funds? What's the right what's the right URL or where can they follow and get more of Ron's commentary or anything that the firm puts out? BarenCapitalGroup.com BarenCapitalGroup.com Once again, thank you so much. Michael and Ron down. We appreciate it. All right, cheers guys. This is from us. Thank you so much for watching. Thank you for listening.

[Ron Baron]

We appreciate you.

[Jason Zweig]

We'll talk to you soon. Thanks again. Want to do it one more time or you think we got it?

[Michael Baron]

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[Josh Brown]

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[Ron Baron]

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[Michael Baron]

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[Josh Brown]

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[Michael Baron]

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[Josh Brown]

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[Jason Zweig]

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[Josh Brown]

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[Ron Baron]

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[Jason Zweig]

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