Billionaire Investor Ron Baron’s Long-Term Growth Strategy
Ron Baron is a billionaire investor known for his successful track record in outperforming the market since the 1980s. As the founder of Baron Capital in 1982, he has consistently delivered impressive results with 16 out of his 19 mutual funds surpassing their benchmarks and representing 98.8% of the firm’s assets under management.
One of Baron’s notable funds is the Baron Partners Fund (BPTIX), which currently manages $6 billion in assets. Since its conversion to a mutual fund in 2003, it has been the number one performing U.S. equity fund, according to Morningstar. With a staggering 47% year-to-date return and a 21% annualized return over the past decade, Baron’s long-term growth strategy is evident.
Investing in Competitively Advantaged Growth Businesses
Baron’s investment philosophy is centered around identifying long-term growth opportunities in competitively advantaged businesses. He believes in investing in companies managed by exceptional executives, whom he admires and trusts. In a recent investor letter, Baron stated, “Investing for the long term in competitively advantaged growth businesses managed by exceptional executives. That’s our strategy.”
Comparing his strategy to Warren Buffett’s, Baron describes himself as “growthier.” Like Buffett, Baron sees stocks as part ownership in publicly traded businesses rather than mere pieces of paper with fluctuating share prices. He believes that a stock’s value should accurately reflect the underlying business’s worth, emphasizing a focus on the fundamentals.
Top Holdings: Tesla and More
Tesla holds a prominent position in Baron’s portfolio, with a staggering 46% weighting in the Partners fund. Baron has been a long-time bull in Tesla and his firm has experienced significant gains, making over 15 times its initial investment since 2014. He predicts that Tesla will become the largest company in the world within the next 10 years, with SpaceX challenging its position a decade later. In fact, Baron made a $100 million private investment in SpaceX in 2022.
Another notable holding is CoStar Group, a data and analytics provider for the commercial real estate sector. Baron purchased this stock in 2019, further diversifying his portfolio. Additionally, he invested in Iridium Communications, a well-established satellite phone communications provider. Baron’s other top holdings include Arch Capital Group, Charles Schwab, FactSet Research, and Hyatt Hotels.
By the end of 2022, Baron Capital managed around $40 billion, solidifying Ron Baron’s reputation as a successful long-term investor.