Tesla Investor, Elon Musk Fan Ron Baron Launches New Fund Focused On SpaceX, xAI
Investor Ron Baron was an early backer of electric vehicle company Tesla Inc (NASDAQ:TSLA) and has invested in other companies linked to Elon Musk over the years.
A new fund from Baron will give investors exposure to private companies connected to Musk.
What Happened: While Musk is the CEO of publicly traded Tesla, he is also the owner of X, CEO of SpaceX and founder of xAI. Baron has invested in all three of these companies.
Baron Capital Management launched new funds to invest in xAI and SpaceX according to a report from Bloomberg. The new funds would give investors a way to invest more heavily in the Musk-linked companies.
"We are doing this because we want people to know about our mutual funds," Baron told Bloomberg. "I want my business to last for 100 years."
Unlike other special investment vehicles, these Baron funds won't come with high fees, instead giving investors access to the private companies and also boosting the spotlight on Baron Capital Management.
BaronX Cayman launched in April and BaronxAI launched in May, with both funds seeking to raise money from investors, pension plans and endowments.
The new funds charge a management fee of around 1% annually. Investors' money is also locked up for eight years.
The report said Baron Capital has seen high outflows of its mutual funds totaling $7.2 billion from the start of 2022 through May 2024. The new investment vehicles and spotlight could help increase assets under management for the company.
Why It's Important: Baron began buying Tesla stock in 2014, an investment that has risen significantly in value.
A strong performance of Tesla stock and an investment style of backing strong CEOs led to Baron investing in SpaceX and other Musk-linked companies.
Baron first invested in SpaceX in 2017. The space company was recently valued at $210 billion in June 2024, one of the highest values ever given to a private company.
Baron has been adding to the firm's SpaceX investment by buying shares from employees. The firm now owns around 1.2% of the company.
In November 2023, Baron argued that SpaceX could become more valuable than Tesla.
"I think SpaceX has a chance to be even bigger than Tesla in the 2030s," Baron said at the time.
Baron said he expects SpaceX to reach a valuation of $250 billion if the company goes public in an estimated three years. By 2030, Baron thinks SpaceX could reach a valuation of $500 billion to $600 billion.
"And then in the 2030s, that's when I expect to make another 10 times our money."
Baron said he expects to make 30 to 50 times his money in SpaceX over the next 20 years.
Investors have a limited number of ways to invest in SpaceX. Several mutual funds like the Fidelity Blue Chip Growth Fund (FBGRX) and Baron mutual funds own stakes. Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL) also owns a stake in SpaceX.
Tesla, meanwhile, makes up 29% of the firm's assets.
Baron recently correctly predicted the bottom for Tesla shares was in on April 25. Tesla shares are up 51% since that prediction.
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