Ron Baron on Investing in Tesla and SpaceX (Podcast)

or private companies or real estate. Just Google search him on East Hampton and the property he bought for a hundred million dollars in the midst of the financial real estate collapse in oh seven. He turned that into golden. I mean, he just has an eye for intrinsic value and a process for doing things that really is is just amazing. What I ended up doing in this conversation was kind of giving him a nudge and men just getting out of his way. He just tells all sorts

of stories about how different investments work out. I asked him, what are you doing in the growth space? I really know you as a small cap guy, and that's how he built his reputation. And he describes the small caps that he bought when he was first getting started in the eighties. You know, small companies like Disney and Highat and International Gaming. And it's hilarious because forty years ago

those were small cap companies. He just seemed to have a knack of identifying the companies that were about to go from relatively small two giants. And it's pretty hilarious to hear him discuss that when he was a broker in the seventies, he was upset because he would buy stocks, watch them triple, and sell them and then watch them go up thirty acts over the next thirty years, which is why his turnover ratio is insane. It's like four percent.

He's very Warren Buffett like. He never sells. He finds a good company and he rides them forever. So he's a legend in the industry. I found this to be just an endlessly entertaining and fascinating conversation with no further ado. My conversation with Ron Barron VI is Masters in Business with Barry Ridholts on Bloomberg Radio. My extra special guest

this week is Ron Barron, founder of Baron Capital. He began the firm in n two, and it has become known for its long term, fundamental active approach to growth investing. Seventeen of their mutual funds have assets of forty nine billion dollars. One of the funds run by Ron and his son Michael, was up a hundred and forty eight sent in. Nearly all of their funds have been beating their benchmarks since their inception. Way back in Ron Baron, Welcome to Bloomberg. Thanks. So let's go way back to

your childhood. You you had written you were fourteen when you talked to your father into letting you buy your first stock. You put a thousand dollars into the market, and by the time you hit college it had quadruple to four thousand dollars, and you were hooked. You just began studying the market almost obsessively. You're right. Tell us a little bit about how that led to your interest

in in being a money manager. Well, my dad was an engineer for the army and my mother was a buying the agent for the army, and so professionals and the people who were most successful we're doctors and lawyers. And if you had a house on the on the lake, Uh, it was worth fifty thou dollars. Our house is where twenty thou dollars. And so I and the guy i've on the lake he owned rides on the board, book and go of a Cadillac and probably made a hundred

thousand dollars a year. That's to me with success. And so I wanted to be a doctor. I didn't get into medical school when you were talking about the first investment. I've been working seven four since I've been fourteen. That's when you got working papers. So my first job was as a caddy. I had all these summer jobs caddy waiter, bart m bus boy, lifeguard, uh border ski instructor, cabanah boy. One summer I actually had a job where I was

working nine to five was a lifeguard. At eleven to seven, I worked in the emergency room as in orderly and people would come in on Saturday night shot or stay up that I'd have to hold him down, A skinny little kid would hold him down on a gurney until the next a kin came and gave permission to operate.

The bok died while I was holding him. So my job was I would have to clean bedpands, I'd have to hold people on the on the gurney until they until they got permission to op rate, and then UH in emergency in the internal in the I c U. When people died, I would unplug him and I'd have to put the bodies, wrap them in sheets, and I'd have to put him in the freezer. That was my job eleven to seven for for there in the nine to five. So I was always interested in being successful.

I didn't know exactly what success was. And when I invested. When my convinced my dad to allow me to invest in stocks, he was never able to invest in stocks. When I when you can. When I convinced them, I was able to take my thousand dollars they had from my boar Misva and I ultimately invested it in UH Mommouth County National Bank. My dad said, you know not the stock market, but you know. Tell me about a

company you want to invest in. Explain to me why you want to invest in, research it, and if it makes sense to me, you can do it. And UH the the local bank UH was owned. Mamma County National Bank was principally owned by one of the wealthiest people in probably the wealthiest person in my neighborhood. Uh and he owned that banks, three story red brick building, white pillars in front, Virgin style building. Senator of Senator Stout from New Jersey had his office in the building. And

uh and allowed to me. I looked through the company, and I missed my dad to let me invest. That's where I had my savings. Uh And they were getting two and a half percent interest or two and a quarter percentials. You're bringing your past book and every quarter they print out your interest. So ultimately invested in that, and then I would go home. So I was interesting girls in sports and and but every day I look at the Asbury Park Press and they had ten or

fifteen local stocks. And every day from the time I invested my hundred shares and ten dollars to share, every single day the stock you to stay the same. We went up in eighth or sixteenth or a quarter every single day. And then seven months later, eight month later, it was acquired for seventeen dollars when I paid ten for it. And so all of a sudden, my thousand dollars became worth seventeen hundred. I said, almost gotten nothing

to this. I want to do this, and uh so so I wanted to UH be an investor somehow, and I would read about a well known investors, you know, UH very side with Manhattan's fund. And then I went to UH and I graduated college, didn't get into medical school. I didn't want to go to Vietnam UH and UH.

I had a fellowship PhD fellowship at Georgetown, and I thought I would do that for a year and biochemistry and ride my motorcycle where my white jacket pretended I was a doctor and UH as I did that for a year, and I was making sixteen hundred dollars a year, and I was working as a bartender UH and a waiter at seventy nine UH in Georgetown and UH and then the summer on Fridays and Saturdays to make extra money. And I was living in a basement in Rock Creek Park.

And that summer UH one of my friends who actually did get into medical school, my best friend. We said, Okay, why don't we see if we can sell fuller brushes. Maybe we can make money doing that. So we went into a neighborhood. We sold the record number of fuller brushes. It was a black neighborhood, and sold a record number

of fuller brushes and Southeast Washington, I think it was. Uh. And then UH, when we ultimately went back to deliver those brushes, uh, there were no deposits and people wouldn't even answer the door. You'd hear a little voice inside saying, I mean, mommy, it's a fuller brushman. And they get away from the door and said, not a single person

took a brush that they bought. But but this this, it changed my life because we went came to a building high rise and uh, and it said absolutely nos to listening as I said, okay, Bob, you start at the top and I'll start at the bottom. We'll meet in the middle. So where you know, we just bang on doors. And so we bang on doors, and somewhere in the middle of the building, a guy answers the door. And he's a few years older than I am. And

he's well dressed. He has an apartment, and he has furniture, and he has windows to look out the sky instead of you know, standing on a chair to look out at grass, you know, because you're in the basement and uh. And he's dressed nicely and he's a wife. She's cooking dinner for him in the kitchen and said, what do you how come you're not in Vietnam? He says, while I'm working in the patent office. I'm a patent examiner. Uh. And I said, well, how do you do that? And

he's making eleven thousand dollars a year. I said how do you do that? And he said, well, you take the law wars and if you get into a law school, then you can get a job in the patent office

as an examiner. And I said, okay, I want to and uh and she invites me and buy some pull of brushes actually uh And but the big thing is he tells me about here's this critical skills job, about that I can it for fit into and uh uh and starting salary with seven thousand seven dollars, they go from making sixteen a year they bring in a basement to making seventy nine dollars a year for the next three years and a draft exempt job. And I said, wow,

that's great. So I took the boards, did a real did real well, got into George Washington Law school, went to school at night and patent examined in the daytime. And then when I got to be twenty six, and now I was always interested in stock market. I read about it, never had any courses on it, ever had any courses economics except for Echo went on one in college and then uh, but I read all these books and uh. And then I got to be twenty six

and I couldn't be drafted anymore. And the day after my birthday, I quit my job in the patent office and they had a going away munch for me at the at the holiday in which I was laid for across the street from Crystol City in Virginia. I'm late

for a lunch at a date, you know, girlfriend. And as I get there, and I'm late, and everybody understood where I was and and so I come in a motorcycle and and uh and and and everyone started joking around and and my boss was Mr Lieman, and somehow he really liked me, and he sort of identified with this crazy guy who was young in the long hair and boots Stevie war and uh and and somebody liked me, and so he was always promoting me and and but it was never very good at a patent examiner. But

he's dead. So his speech's going away speech, uh to me at the patent office lunch too, to honor me for the school. He says, you know, um, there was ah Iron he didn't like being a patent examiner so much, and he was okay at it, but you know, it wasn't his thing. And but you know, he's always been interested in the stock market, and that's he's going to go to New York and and find his uh calling.

But there was another patent examiner he had the same idea where he also didn't like being a patent examiner so much. And that was a long time ago, in nineteen thirties, and and he lived in Switzerland or Germany and uh. And that was Albert Einstein, and he did okay, and I expect Ron to do okay. So he was comparing me to Albert Einstein. Uh. And then I go to New York and of course I'm now in debt

fifteen thousand dollars. I was actually in debt fourteen thousand, four hundred fifteen thousand debt, but had six hundred hours in cash. I go to live again in a basement of one of my friends from college from high school and in Maplewood, New Jersey, and I would go every day to New York, uh to try to knock on doors to to interview for a job as an analyst. It was just impossible to get a job. In nineteen sixty nine, I was I was unemployed for three months.

I was running out of money. Called my dad, you know, I'm never getting a job on Wall Street. I would I would apply for jobs as a chauffeur, thinking that for a guy who was ahead of a Wall Street firm, thinking that, see if I can talk to him, and if I can get a job for him, and maybe I can poke my way into some starter job. They're

like a mail room guy or something. And but no jobs and uh and and ultimately I convinced Tony ta Bell from Delicated Harvard to Bell, which is part of Jenne Moncremer Scott uh to give me a chance, and I wrote a hired me in the fall of nineteen sixty nine, and I was the research department for Jennie Montgomery Scott broken firm in Philadelphia, and they had two

fifty offices, two fifty brokers in five offices. And Tony every week was in a Princeton which is where I lived with him at his firm Delicate Harvard to Bell and uh and and what I would do is I would go. He would every week stocks for me to go visit the companies that go visit them, and I write a letter and then the letter went to all

the salesmen. And then so I left Washington making eleven thousand dollars a year and here I am making fifteen thousand dollars a year and promised me eighteen thousand by the end of the year. I didn't get the raise. UH and UH and then UH. And then I got fired because I wrote a negative report about a company that UH that ultimate bankrupt. But I screwed up Jane mcgommery Scott forward in the underwriting UH and then UH. And it was very easy for me to get my

next job. And Alan n Abelson from Barrens UH, he was he was on my list for this letter that I wrote every week. And I wrote a letter every week for Jennue mcgommery Scott gave it to their salesman that the companies have been to visit go to the two fifty brokers in these five different offices or six offices, and that was what they sold to their clients every week. The companies that have been to visit UH. So ultimately.

That was for for three years and then UH, now I go to UH New York and get another analyst job. And then I went became partners with a friend of mine from law school and we sold research to two hedge funds. I had a hundred clients ultimately and hedge funds, mutual funds, anyone who is well known, I would do

research and sell us them for their commissions. And U and I went from from having a negative net worth of fifteen thousand dollars in nineteen seventy to getting UH to making a million dollars in a year in nineteen eighty being worth a million dollars and then nineteen eighty

two started Barren Capital. At that time we had ten million dollars under management and million that's with an emma and involved from from one person UH he had who saw us and and he had given six people, six people who were his favorite stockbrokers in the nineteen seventies, seventies six or seventy seven. He gave each of us five million dollars after he had had a tough year. So they said Quantum said, why don't you have some other people manage money for you? And that have just you,

and he picked his six favorite uh brokers. I was one of them, and my five million became worth ten millions, and everyone else to buy and sell and trade and uh and my my little segments of that quantum fund was called Man Drake and Raked the magician Man Drake. And what I would do is I would just buy stuff. Then I'd hold it and uh and and that's why the five million became ten And in nineteen ninety two we were up to a hundred and we started our

first mutual fund. Nineteen eighty seven, Baroness had fund and initially eighty two there were three people Susan Robbins, Lynda Martinson and me. Uh. Then nine two had a hundred million, and maybe we were ten people. Then now we have a hundred. Now we have forty nine point one billion, and that we've made our clients forty seven billion in profits that I've gone from having h you know, negative

net worth to a million dollar net worth. And now Forbes says I'm one of the wealthiest people in the country and I have five and five and a half percent of the two billion seven of the money that's invested in the mutual funds is me, my two sons and me. That's an amazing story. I have to ask this so I know you primarily as a small cap manager. In fact, the Barren Small Cap Funds is up an average of eleven point four percent a year since its inception.

It's benchmark is the Russell two thousand, which is only up seven point four percent. Let's discuss a little bit how you built your reputation originally around small caps. Tell us a little bit about that. Well, Barren Small Cap Fund happens to be managed by Cliff Greenberg, not by me, and he's done terrific. And Aaron Growth Fund is managed

by me. Uh and with with Neil Rosenberg and the Cager on that one since that inception in its fourteen point one six compared to nine point four for the for the rest of two thousands, ten and a half for the SMP and then uh so all these funds. So starting off the idea that we had originally when when I was still doing research in the seventies and selling it for commissions. My ideas were smaller companies like McDonald's, Disney,

Federal Expressed, a Nike, Mattel Highest. They were small companies billions two or three billion dollars, Mark kept him. And my idea was that I was getting about one and in commissions for every idea that I had. And so I would go around and if I get home to spend six or seven or eight hundred thousand dollars on the stock, I would make six or seven or eight

thousand dollars in commissions. And and then uh, it didn't take me long to figure out, Okay, well, if I got him to buy a stock for six or seven or eight thousand dollar commission, then if I'd gone up to sell a stock and I would make another six or seven or eight thousand dollars in commissions. That's that was my my, you know. So that was how I paid the rent. And then after about IBus six or seven or eight years, uh I was. I looked back

and I said, man, I am a disaster. I looked at all these companies, saying and they had gone up so much, and and uh, I said, I could have been rich, you know, said, there's all these things. I was, what am I crazy? Looking at these things and selling them them so quick? And I have destined day land with uh with ken Lan gone. And he calls me up one day and he says him, ken Lan going we went to college together. Uh, he's got ten years older than I am, or eight years older than I am.

Went to buck now and he said, you know, people like us, we gotta stay together. Said people like, what are you talking about? And say he says, why don't we go to lunch? And uh, so we go to lunch at h I guess it was lunch at the Waldorf and it was the Bull and Bear restaurant. But he was in and as I knew him, he didn't you know, And he said, look, you're buying this company, Dalen. Uh, and I'm buying it just could come out of bankruptcy. And it was run by a guy named san Fredcigaloff.

And there were two guys who had a business inside of that that I felt it was really cool. Uh Marcus and what was the other guy's name? They both were in Handy Dan ultimately became home Depot and uh and and so so I invest in this company for my clients. And Kenada's INVESTINGLFS run just killing me every time I see something. You fight before the stock. Why don't we just do something where we split things. You take half and I'll take half. I said, fine, that

sounds good to me. And if I see something, I'll show it to you. You see something, you show it to me. And was split at fifty fifty. I said great. He was buying it for himself. I was buying it for my clients. And stop goes from two dollars to four or five dollars to share. I sell my stock because I made commissions selling and uh. And he hangs on and then ultimately, uh, he write refinances the whole thing, and those guys who were running handy Dan get fired.

And then you go to Ken. He raises the money for him and builds home. DEEPO, that's home depot. That's where it comes from. And if I had been an investor and I stayed with it, you know, it would have been so much earlier for me to be successful. Uh. But but small companies, companies and other people weren't following so much that they're growing real, asked uh and uh, and that's that's where we focused. The best week for the week before I'm writing about this in my current

quarterly letter. Um, I was. I got a phone call from Chuck matheson the same thing happened with me with him where I guess in the eighties. Uh, and he and I were both buying international game and market Capp was a hundred million dollars. He was buying it to take it over. I was buying it to make brokerage commissions. And uh and and and uh hell he calls up and he said, why don't we And it was the

same kind of split thing. I said, fine, And so I make my doubles or triples or quadruples or something and uh and he stays with it, and it goes from a hundred million dollars of market Capp to ten

billions ten billion, A hundred millions of ten billion. He told me, I was the only guy ever really understood what this megabucks was and and how important it was, and how it was just leaking up all these slot machines and all these different casinos, and uh, says H. And ultimately, like in an guess it was around two thousand's. Then the government he sent us in New York wanted to have independent directors for independent chairman for mutual funds.

And Chuck came the chairman of our mutual fund company of Barren Funds for five years, and we wanted to have an independent director, independent executive chairman, and so he calls me up about and now he's in his probably eighty five, ninety years old, and he's retired and he's living in Reno, and last time his home was about a year ago, two years ago, and it's visiting a plant, Tesla plant in Reno, and he bites me over and spent an afternoon with him. It was so much fun.

But he calls me up and he's now chairman emeritus for Barren Funds and chairman emeritiths also from an international game, and it calls me up. He said, Ron, congratulations on on on Tesla. He says, you know, I never thought this would work, and you know you were right, and you hung in there and everyone was criticizing you and you believed and you were right. I was wrong and everybody else was wrong, and you made congratulations on that. And uh. And then I'm talking to my trader who's

been working at Baron Capital since nineteen uh seven. I think he told me, uh, And I'm talking to him about the conversation uh uh uh Chuck had with me. Oh yeah, Chuck. The way he starts the conversation is he says, you know when I first met you in the nineteen eighties, Uh all you were you were talking about with investing in wireless telephones. And he says, and this is this is how I started off my next shareholder letter, the letter from Ron. It's a Ron. Here's

the quote. Ron, when I first met you thirty five years ago, you were investing in wireless telephones. Wow, that's a pretty fear idea. I thought, that's Chucks. He's thinking, I'm in the nineties eighties and I'm investing in US Cellular and mccau u Cellular, in lynd Broadcasting and uh uh George Lindeman's metromobile and uh and he says, Man, that's crazy, the wireless telephones. I was thinking about Maxwell

smart gets smart on television. You know, you take off your shoe and you're talking to your shoe and uh and and and of course wireless phones. That's that's come you know everything. And and then I was talking to uh, to David our Trader about conversation. So he says, you know, and I was talking about Tesla, and Chuck just called to congratulate me about Tesla. And he says, Ron, you always invested in things like this you know, when I first joined you in the nineteen eighties, you were talking

about cellular telephones. You were just getting back with Judy from a vacation in Italy, a week vacation in Italy, and you just, uh said, and everywhere I go, people are talking on these little cell phones. This is gonna be unbelievable. I have, whether you're rich or whether you're poor. At that time, you know, uh, we had bought a when we started married Capital, I bought a telephone. I bought one. It was five thousand dollars. It was a briefcase,

the size of a briefcase. And now it's late eighties and they're and they're down to smaller phones. They're still they look like a um, you know, a brick or something the size of a brick. And but you know, and he said, and you were talking about it then, and that's all you want to invest in then, and all these companies, so you always invested in those kind of things, and so so the idea was initially, uh to investing companies that were worth more than they were

selling more in the stock market. And if you could buy a hotel room, for example, or uh, you know, if it cost you a hundred thousand dollars to build, and you made ten thousand dollars a year after you built it, and you could buy it in the stock more could for seven seventy dollars. Uh and and then it would go to the value that That's how it started. And then, uh, you know when when I when I went out of my own, I figured that was a

safe thing to do. I didn't, you know, I Warren Buffetts thing where you buy the cigarette butts on the street, and and Mario Gabelly, you know, it's about you know, buying things, you know, discounted cash flow. And but that wasn't really what I love doing. I loved finding these businesses that were that could grow tremendously from from what they were now. And and that's where so it started off,

finding smaller companies that people ignored. But then what would happen is that, you know, out of the ten things that you bought, uh, two or three would be amazing successes, and then uh, you know a few of them would be sort of ordinary. The more you brought up and the harder it was to sell them to get out at the other side, and then they're always you left over with things that you know, how do you get out of them? And you and the answer was you don't.

So so I was that interested in that and uh and I wanted to have a business that was going to last for a long time. And so again going back to my parents, I wanted to have a business that people uh like my parents, I would be able

to invest in the stock market. Uh. You know, and because I always believed and and uh so so I always believe in this sort of thing, and and and the idea behind the mutual funds was that here's a way that I would be able to give a service to people like my parents so they could save for their retirements in their life events. I got a phone call about so so uh you know. So we have a house in Long Island and uh I went in Florida, where I am now, and then of course we live

in New York and uh in our house in Long Island. Uh, one of my sons and his wife were staying there are about a month or two ago, and we get a and he calls me up and he said, Dad, I just got four bottles of dom peren young from from Uh. He tells me who's from? And I said, oh, wow, Bob. He he worked with me when I was at her Spells and Stern from deventy three to eighty two. It was a retail stockbroker. And he sends me four bottles of John Premier. Unit said, man, that's a lot of money.

I gotta call him to thank them. I can't understand why he would send me campaigne. I pulled him up and he says, roun Uh. You know when seventy three to eight two, when you were working at her Spelled and Stern, and then ultimately you and Susan who was my assistant left. Susan is now vice president Baron Capital and she's our health care analyst. Uh, and left. And

I said, I have that. And you were selling your research to hedge institutions and I saw you were doing and and I have and I have retail broker, retail broker, and they were my my clients. I pay you back then some of your ideas that I said, but if I have a chance to invest with you, I am going to invest with you. And so when you started your first fund in eighty seven, I invested in it. And then when you started Barren Parker's funds, and like

the very cool idea. So I did something that I never do, and I advised my clients they should never do. I borrowed two hundred thousand dollars to invest in Barrenpartments funds I had to invest with you, and and so you put in the two And then he said, and then after it doubled or tripled, I sold half of it, and and I left the other hundred thousand dollars in.

And the other hundred thousand dollars that I took out, I put that into, uh, this little fund of funds called Castle, which I wanted to which which which we had at Barrens on a parent capital for some of the employees to invest in, some of the people who I was friends with, and and then some of it I was doing myself. And so he says, and then, uh, that that hundred thousand dollars left in Barren Partner's fun that is now over forty thousand shares a Barren Partner's

fun It's worth over seven million dollars. So the hundred thousand became worth over seven millions. And then the hundred thousand I took out that became worth a million seven And and he says, and basically I want you to know that you've paid for my son to go to medical school and just graduated from medical school. You've paid for him to go to medical school. In addition to that, I have another child's disabled and I never really understood how it's going to take care of him for the

rest of my life. And uh, you've taken care of him for the rest of my life. Um, so so so here so there isn't anything that you could do that I wouldn't that I wouldn't believe in. And I walked on the street. My my youngest son got married, uh last September, uh a year and a half ago, and uh and hiss from from Virginia Beach and his parents came up, of course to the wedding and everything.

We have wedding in our house and uh and when uh they came to our office and when uh, we're walking home from our office in the General Motors Building to our apartment. As we're walking out Madison Avenue, two people jumped out of doorways to say thank you, Ron, thank you Ron, and uh and Jane's mother who I'm walking with, Judy's walking with her dad. Uh, she said,

does this always happen to you. It's unbelievable. All over the place, people are always saying thank you when I when we have our annual meeting, they come out of our conference afterwards, it's the same thing where they say, gee, you know, thank you for my life, thank you for doing this, thank you for it's it's amazing. One of my this guy who is telling me about Ray Novak actually, who was my high school friend who was living in Maplewood, Uh, when I was living in his basement trying to get

a job on Wall Street. He's now a director of Barren's funds and he has been for five thirty years. And and uh, you know, he calls me up and he says, you know, I'm I'm seventy seven now and uh, and I've been investing with you, um the very beginning, and thank you for all this. You know you I don't have to think about stuff anymore. And I was for a while, I was trying to pick stocks, and you know, I try to read a lot, and he said,

I can't pick stocks. You know. I come to your meetings, you know, to the board meetings every three months, and I see what you're doing. And I listened to the ANALYSTSIA working for you. There's a hundred and seventy two people in now a parent capital and forty one or forty two our analysts and portfolio managers has been there a really long time. And UH, and I see and and well every at all of them a long time.

And we hire one or two people a year, three sometimes and we hired ten or fifteen people a year in total. And you know, they could be in risk managements, or they can be legal accounting, applying, compliance, sales, hum. All these two I t h. Of course, I wouldn't have any clues far as what we need to hire, because I know what I need to hire for research, but all these other people, So I'm in charge of forty people, and uh, and Lynda Mornson who is the

third employee, Susan Robbins and I and Linda Uh. She's the president of the firm and chairman of the mutual funds or she has all these different titles and chief operating after and she's the one who hires all these other people that we need. And initially other guys there would say, why are we hiring? What is that all about? What is this attribute? What do those people do and always you know, saying and thinking, See if if we're hiring all these other people, then that means that I'm

going to make less money. And so because some of that money is going to them instead it to me. That's the mind mindset the people have when um business growth and everyone thinks that it's growing because they're great. Of course they are great, but everyone thinks everything is because of them until they go home at night and think about it and to say, oh, maybe it's not all because of me. But but then all of a sudden,

small smaller piece of a bigger pie. Yeah, And but then all of a sudden everyone's g I can't write my shareholder letters without talking to Claudia. And so Claudia is this a young woman who into M I T and mask and says all this risk metrics and everything that she looks at and explains things to me. But she can explain where we're making money, where we're not

and ron taking this much risk. And and for me, I don't really care that much about I have to see where I'm making where I'm losing and and uh, and to make sure that things don't get too out of whack. But for the most part. Uh you know

Henry Fernandez from from from ms C. I. Uh. So he invites me to speak to his board of directors and and he says, uh, you know, he wants to talk about capital allocations and about investments that he should be making and shouldn't be buying back stock or she's paying out dividends or she's making acquisitions, or what should he be doing? And do I like it? Do I like this? And I talked to the board and but he says, you know, uh, most of the things that we do, I mean that's not what you do. You're

an investor. I mean you find companies, uh you think are going to become dramatically an MSCI said. Henry says, you know, run, I would not have a public company were not for you, nine in two thousand nine when I'm going public, or two thousand and eight when I'm going to public, I couldn't go public without you doing it. He has an immigrant his parents. Uh they had Uh dad was a general in Venezuela and there was a change, a coup and they had to flee from the country.

And he goes to Morgan Stanley. That's what Morgan Stanley MSc I uh, and he starts the business and then ultimately, uh, he let the Morgan Stanley doesn't bring in public. But when he goes public and the market isn't receptives, but we even invest in the company, and and then uh, and it stopped doubles, and then it goes back down. And now we've made about twenty times our money. And said, you know, I often I often asked myself that how is it. You know, some other guys at Barren Capital sold,

but you didn't. You always brought more and and you hung in there the whole time. And other people were criticizing for for this acquisition, but you understand the strategy of what we were trying to accomplish. And while that's not you know, you're not competing against an index. You beat the indexes all the time, but you know, not every single year, but over the long term you kill them.

And but but uh, you know and and and all the things I described everyone else about uh, you know, volatility and standard deviation, just everything I described everyone else. And that's important that they need to have. You're an investor. You find these businesses and whether it goes upward down,

you don't think about it. J. Pritsker, who was one of the people who who who was the first really mentor when I when I was starting, and and he told me I was investment highest and then and and he told me once he said, Ron, you know more about HIGAHT than I know about Highest. He says, you know and and and But the idea was about trying to understand the businesses in which we're investing so well that you can just ride to it. And he would tell me, he says, I don't ever think about the

price of a stock. But during the day, you know, during the year, the only time I ever think about stock prices is when I'm either going to buy or whether I'm going to sell. Let's talk a little bit about how you put the long in long term investing. A couple of names you've owned Charles Schwab since Choice Hotels since ninety six, Veiled Resources. It's where do you get the conviction to be so long term in your core holdings. There's something about every business. The most important

element of a bit. Of course, they got to grow and you really got to like and trust the people. Uh and uh. But what is important. It's about competitive advantage. What is it about these businesses in which you've invested, which we've invested, to give them a chance to last for a long time and give the pricing power. In the case that Chall Schuab, that was the we had a mutual fund business and had a hundred million dollars in management. Fifty was the mutual fund, fifty was separate accounts.

We could not make that business grow eight seven it's fifty million mutual fund. We had fifty million mutual funds. It couldn't make a grow And all of a sudden we get into Chall Schwab on the plat forms. We've learned about financial advisors. We learned about I had no idea who they were, like you r a S and UH. We learned about them and we learned that they're clearing through Schwab and UH and and they have SWAB has a platform, the mutual fund marketplace. And then they had

once source and we got on UH. We got people who were advisors to recommend to charl Schwab, which was for twenty th hours we would they would have to do the work and they weren't sure they were going to have a worthwhile spend on us. Where with the demands so we got a whole bunch of people to call. They said, okay, we'll put you on, and they put

us on and we started. UH. They said a lot of people know who you are, but UH and I how to buy what was telling And we got on the platform, are funded well, we got recommended, we got uh one of the top fund choices, and all of a sudden where we couldn't get any money coming in starting in ten thousand a day, fifty thousand a day, a hundred thousand dollars a day, and then UH we started growing. And so when I saw that happening and it all came from Schwab, I said, wow, I better

really studied charl Schwab, and I started Charles Schwab. And I saw that people were leaving big brokerage firms to go on their own and then use Charl Schwab to clear. And they didn't want to sell the product that the brokerage firms that they were working for, we're asking them to sell. And they didn't want to just raise money. They wanted to uh, to have their own business. And and so it made sense to me, And and I

really like Chuck. In fact, he was just being honored fairly. Uh, I guess the last few years, uh at some restaurants downtown and uh and and he invited me to be one of the people at you know, you know, at this lunch, at this dinner, and and then I don't know, maybe a hundred people were there, a hundred fifty people and see I was up there, and and he said, and he called me out from from from the podium about how you know, people like Ron Barron were able

to be offered to his clients, which was a really good deal to Joshuab they're responsible. It would be crazy for me to have a business like ours that couldn't grow. And all of a sudden we get his platform and grow, and for me not to realize that was a really big opportunity, had an invest in it. So we invest in it. We made fifty times their money. Fifty times their money so far so far? Are you are you still long, Charles Schwab all this time? Yes, that's thirty

years ago. That's amazing. I know your turnover rate is about five to seven percent, and the Baron Growth Fund the average turnover is under three. That very much stands out compared to your peers who often have turnover rates of fifty or a hun or even more than will turn over a whole portfolio, you know, twice a year. What are the advantages of the buy and sell approach

that that you've embraced. When I was describing to you before about Disney and McDonald's and cetera, Express and Nike in the nineteen seventies, uh I had been remained an

investor in all those companies. They were up fifty sixty, and we're investing in Disney in the nineteen seventies, when they were building disney World in Florida, they had disney Land in California, which was five thousand acres h and everyone around them built other properties and made all that extra money, and you know, in the Orange Groves in California and in Florida, they said, Okay, we're doing this

differently this time. Instead of having five thousand acres where we just have a park, we're gonna buy a hundred thousand acres and and we're gonna have the hotels, we're gonna have all the other services. We're going to get the money from that. So I was investing in Disney in the nineteen seventies when they were building Disneyland. I was in Disney World. I was investing in McDonald's at a time. When I would I would go my girlfriend at the time was in Washington, and when I would

go down to Washington, I would go. Every weekend she would come to New York. I would go to Washington and and uh, it was big Max. Would I couldn't

wait to go at a big Max. And they were like less than a dollar seventy five eight cents, I don't know, And I felt it With the McDonald's, the big opportunity was that they were they owned the land that was underneath of the franchise's properties, and the Coca Cola's were then uh and cents where coke maybe fries were ten cents, maybe the Hamburgers were twenty or twenty five cents. And said, oh my god, the profit margin

that they're on the verge of making. They could raise the price from ten to fifteen cents and then all of a sudden, the extra five cents is all profits. Or they could raise the fry from ten cents to twelve cents, or apple pie that they had from from fifteen cents to twenty cents. So they thought there was a tremendous amount of leverage in the pricing that they had. And plus they had UH this land and underneath the

ball of the hotel. So there's something about the business that felt Vail was the best mountain I had ever seen ski I love skiing. It was the best mountain. Other people would have six hundred acres, asked them with six hundred acres. They always fourteen thousand acres, And you know, and there was and the big opportunity in Bail was that when we invested in it in nineteen seventy six,

it was sixteen or seventeen dollars to share. And then Leon So what happened in Vail is that it was controlled by a man named George Gillette bar against the property and then built the radio station in uh Tallahassee I guess it was or somewhere in Florida, and borrowed two fifty million dollars in bankrupt Leon black bot the dead and turned into the equity UH and then brought the company public so you could pay back some of the money that he borrowed to buy the to buy

this and the stock of sixteen or seventeen dollars and then Uh, my idea since well ever since yes and bo. And what I did was that when he distributed his stock at thirty dollars to share in in two thousand six to all of his partners, I knew a lot of his partners. In fact, one of his partners is one of my friends. His name is Billy Mack Matt Callie real Estate. In fact, I was just talking to him the other day. Uh. We were playing golf in Florida, and he said, you know, I only know a few stocks.

I know you're Tesla told me about I know a ridium. I bought a ridium when you told me to buy a ridium of seven dollars to share it now forty seven? Uh and uh and then veil Uh. I was an investor with Leon and then when he sold his distribute all the stock at thirty dollars our twenty eight dollars, I came to you because you were buying the stock, and I said, what should I do? And you told me I told him, as a billy, what you should do is you should buy all the stock you can

buy at this price. But if you want to sell your stock, I want to buy your stock. And so all those guys who I knew from from from from Leon Blacks, from Apollo. We're selling the stock. I bought it all, and so we bought ten or twelve percent of the company around thirty dollars a share is now to seven or two eighty something like that. But the big idea was that it was the best place you could see, and there had been nothing done in the

town to re gentrify it. And that was a town built in the nine eighties, about nineteen eighty, and it would really decrepit, and the places would be junkie, and you would stay there and you pay five hundred or thousand dollars a night, and then you go skiing on a mount for forty five dollars. And I said, if you made this town better, buy, sell, build, and then sell,

build and sell, build and sell. Uh, then what would happen is that the town would be so great and everyone would come there and we would be happy to spend anything he charged to stay in the town, even if he didn't own it. But we make all the money on this on the mountain. Instead of forty five dollars a day, he could a hundred dollars a day, and so he Uh. He thought that was too risky, but he guesked me make a presentation to the board.

I said, I'm not an active investor. I'm not trying to make me do things that this is the way that Ron too in risk I'm just want to fix it up and sell it. And and and he did and uh and then uh and all the people got through stock. And then what happened is that the new person comes in, Rob Cats Rob. I got so lucky with him, and Rob all the ideas that I had about building and selling building he took off and he did. And in addition to that, he took a ski task.

And now he sells more than half of the tickets in advance before the season even starts, before we know it's in the snow. And as a results of that, we have half the ski pass and sold an import of a networking mountains that he can sell, for example in the north East. Now we can sell people go skiing in Bail from the Northeast. They couldn't get there

before and now they can buy the tickets. Uh there, and so we have all this money in until and and then what what happens is that instead of charging my hundred dollars that wanted to charge. He now charges

two hundreds to ski in the mountain. And uh, and then he has his whole network that he's a speeder for the skip geest a ticket but the best mountain, and he's got the best distribution system and uh and and uh and it's a great brand and these a spectacular So Ron, I get the sense that your experience as a stockbroker buying and selling those companies that kept going up even after you sold it very much impacted

how you behave as a mutual fund manager. You learned you had such a terrible experience selling winners in the seventies that in the eighties and nineties you decided, I just can't get rid of these really good companies with great growth prospects. Yes, that's it, that's the whole idea.

And if they have competitive advantage. So so the big picture, the big picture I have is that my parents, so when we bought when I was five years old, and so I'm born in and we live in a we live for that was during the war and we're living in my my parents and I of course I didn't know what I was doing. I'm a year old living in Red Bank, New Jersey, in three rooms owned by a racist, uh who is a Helen racist or husband's fighting in the war and my dad's working for the

army and we're living in these three rooms. In we go live in Bradley Beach, which is just out of Astbury Park, and we live in a garage apartment. Detached garage apartment. Where are they It's so small that they have to have the refrigerator as the fit. They kitchen's outside on the porch. Uh. And so we lived there until forty eight. My parents by their first house for five thousand dollars in Wana Massa, also outside of Astbury Park,

five thousand dollars. Then in nineteen they sell it for ten thousand dollars to build a twenty thousand dollar house in west down Hurst, also outside of Astbury Park. So to those houses, for example, I went back three or four or five years ago to see to see those houses eleven twenty two Grassmarer Avenue, five forty two Deal Parkway, UH and I go look at those houses and the house on on in Wana Massa that's the one they

sold for ten thousand. It was every single house on the street was the same they're coming back after World War Two. They're all the same. They were like one was yellow and one was brown, and one had a little brick front and one had a car port. They're all the same. In my house with a second from the corner. It was the nicest house in the block. I was still proud. They had a little a little fence around the front yard maybe the quarter acre house. And they had put a dormer on the route. Uh

so therefore then extra rooms. I'm standing there looking at this house taking pictures of it, and a big giant guy comes to the door. Don't wanted to shoot me or something, thinking that, you know, who is this guy? I go up to him and I said, you know, I I'm Ron Barron and this was I was the one who lived in this house for the just when it was built, a brand new house. And he said I know your name actually, and I said wow, and and it turned me turned out that this guy is

the construction guy and his wife is a is a nurse. Uh. And he said it works at night and uh. He says, come on. And I couldn't come in because they had dogs and I were afraid of dogs. But I said, what's this house worth he says, three thou dollars. I said, wow, my parents wore made a bad sale. And then I go to the other house that the gil Parkway in West down Earth, the same thing that was the one they built for twenty and they sold ultimately for a

hundred when my dad retired. That's also worth three hundred, three hundred, fifty four thous and and so so I think about it in terms of inflation. And when when I was young, and I thought, a hundred thousand dollars for the guy who lived on the corner and drove a Cadillac and we had an old Ford. Uh. And he had a house on the on the lake, and we had a house in the middle of the block. In a quarter of April or something like that, I said, and and and uh. And he owned rides on the

boardwalk and a real estate guy. And I said, boy, I want to be successful like that. But but again, a hundred thousand dollars that was a hold the money in the world. And and they had a fifty thou dollar house, And so I said, how do you have that? And and so the concept of inflation, concept of what things cost. When I was in when I graduated college in nineteen sixty five. My last year in college was

you know, my everything was thirty five dollars. When my first year was twos, my kids was fifty or sixty seventy thousand dollars. When my grandchildren are going to the school right now, Uh, there are six and eight years old, and I think their school must be fifty thousand dollars a year, sixty thousand dollars year, and they've got the

school anymore, that's a virtual. So whether it's a car when I when when I bought a two forty z uh for when I came to New York, uh for two thousand dollars or twenty dollars, And now they're I don't know it, twenty or thirty thousand dollars for these cars. So so yeah, and and my salary of seventy nine when it's a patent examiner, those are now sixty thousand dollars, seventy thousand dollars. So my big picture is that the

value of your money bowls and every seventeen years. So if you have a hundred thousand dollars today, in seventeen years, you have fifty thousand dollars of buying power in seventeen more years, seventeen more years of the twelve. So basically I think that the stock market, uh is the hedge against against the devaluation of your currency. So the stock

market basically doubles every ten or twelve years. So historically it's about ten percent a year including dividends, so it's two or three and that's because it keeps up with the economy. Two or three percent reel or three or four percent inflation. People say it's now inflation. You go try to hire someone for the same price that they paid last year and you'll find out how much inflation is. Ron. Let me, let me tell you a little bit about

a bad sale you made. Those two forty z s that car you had, they become very collectible and nice versions of them today from the seventies. Nice versions go for thousand dollars. Wow, we know when when when I bought it? And when I bought it, this must be in nineteen nineteen seventy, nineteen seventy. Uh. Then what happened is that the list price was dollars and in order, but there was a waiting list had mispriced it. There's a waiting list on those cars, and you had to

paid the deal or cash, you know, a bribe. You had to give him three or four or five hundred dollars. So basically it cost me three thousand dollars for this price car, so I can get it immediately. It put an orange car, and then uh and then two or three or four years later the price had gone up

and I sold the car. I bought it for three thousands when it was listed for hundred, and after I owned it for three or four years, I sold her for thirty hundreds or thirty sold it for more than I paid for it, and I paid over list when I bought it originally, So it doesn't surprise me. I guess that. Yes, So what they do with those cars is they do a full frame off restoration. They take them apart down to the last nut and bolt, and then rebuild them the practically brand new forty year old cars.

Ron you've mentioned Matt Calli earlier. I want to share a quote of yours about real estate that I found intriguing. Quote. We believe there is a strong case to allocate capital to real estate in the public markets in an actively managed strategy. So so let's discuss how you do that, how do you actively manage real estate investments in the public markets. So we have a utual fund. It is probably ten years old. I think it must be certainly in the top one percent of real estate utual funds.

Instead of just investing in reads, uh, we invest income the needs that are sea corps. And it can be a hotel business like a high for example. Or it can be a a service business like co Star, which

enables people to walk around and buy apartments. Our rent apartments when you walk by the building, and will show you instead of looking at the newspaper for the department, Um that might be for sale, you can actually walk by one and you can look at it on your iPad and you can see what that apartment, whether it's available, and how much the rent is and go in and

u and rented and uh so. Or it could be a tracks where it's going out there and building uh you know decks over again with wood that's uh you know, composite and it's better than the traditional would last longer and uh and it looks more attractive. So it's not just investing in wreaths. Or it can be investing in a gaming company, uh, like a like a a Penn Gaming, which which has sold the real estate that it owns

but operates the properties. Now you have a play in pen and I've investing with Peter Carlino in Penn Gaming since Three Mile Island right after you know, there was a I don't remember what year it was, but it was in nineteen seventies, I think somewhere where uh you know, there was a nuclear explosion at three Mile Island in Pennsylvania and in Harrisburg and went to visit him something. Sometime after that he was going public for the first time, and I think the market cap and his company was

twenty five or thirty million dollars. He ultimately sold a company for seven billions. So so you find these people and uh that that you can trust and you think are really capable. You know, do I do I really what? I trust this person to manage money for my family. That is that's something I would feel comfortable choosing them to be someone who would be uh in charge of the assets that my family has. I wor wasn't here

and so it's the same kind of idea. So what we're doing is like with Peter Carlino, there isn't anything this guy told me that he's ever not performed. And Stewart Fatum from Choice Hotels. Uh, there isn't anything I know. Stewart ptom a thousand times. When I was in the patent office in Washington, I borrowed, UH. Somehow I had to get two thousand dollars because a Manner of Care was going public in sixty nine. That was a company

his father had started. And man of Care was a nursing home company, and I had read about NINETI they had the nursing homes and medicare that I kind of figured out somewhere, and and Washington Post wrote these stories best that I got invest in that company, and so I invested. I borrowed two thousand dollars to get a margin account and UH a thousand dollars in patting office credit union, three hundred hours from household finance, three hundreds

from beneficial finance. Somehow I came up with another four hundred dollars. They have no idea how, but I had. I got the two thousand dollars to open up an account it I think the firm was called Reynolds UH company, and and invested in Manner Care and manner of Care uh was ultimately went up a thousand times from thousands of times, since the company had a book value of twelve million dollars when it went public, and it came public at twenty million dollars when first trade. You know,

I p O twenty million dollars. That's the value of the whole company. It was. We became in the seventies, I was recommending the stock to my institutional clients. In the eighties, We'll be came the largest institutional shareholder of manner Care and it was sold ultimately for Carlisle roof for four and a half billion work point three four point four four from five something like that. And but before it was sold Choice Hotel. Now we got Choice Hotels is now a d stock and our cost is

maybe originally three dollars. So and Stewart being him one of those people anything he said, there's good to be at J Prince who was one of those people. Anything they said. Prince who used to say to me run Now I would talk to about contracts and and he

would say, ron a contract doesn't mean anything. If you have to have a contract to enforce an agreement, you're doing business with the wrong person, because that just because any good lawyer can break any single contract you have, So you have to look, you only have the contracts. You can keep track of what the deal was not so you can expect to enforce it. So, Ron, let's talk a little bit about one of your are bigger holdings.

You've been a buyer of Tesla since the stock has just exploded last year it was up over six Is there any upside left here? Where do you think the stock goes from here? Well, we bought stock in Tesla. We spent three eighty five million dollars between two thousand and fourteen and two thousand and sixteen by eight million shares a million one shares, and uh, the average prices forty to share forty two dollars to share is now eight hund sixty and eight hund fifty, and so it's

now a hearing fifty billion dollar market cap. Who is forty to forty five billion when we started. Uh, I think that in and I've been saying this for a while. When we bought it, I thought that we would make twenty times our money. We've been twenty times our money and so far, and I think that it's going to be a two trillion dollar company over the next ten years, eight or ten years. That's two thousand dollars a share. And uh, and can we get lucky? Yeah, I can

get lucky. And and UH to phil Us, autonomous driving takes off the way I think it could be, that could be worth another five billion or trillion dollars. Uh. Ride sharing could be a really big deal. Uh. The solar roofs, that could be a nice business form the

battery business. Now, when they build factories, the factories they build or for tund fifty thousand cars a year of production and a factory when they built them in California, when they built it in the first one in Fremont, that was about seventeen thousand dollars of capital spending a car. Now in China about four thousand dollars a car, and the factory in China is probably a two hundred fifty thousand. People thought it was gonna be a hundred fifty thousand

car factory, and that was the opportunity people perceived. And but we thought that they do millions of pars a year in China and that one factory they built so far is a two hundred fifty thousand par factory a year, and which is now at the rate it's producing, and that's making somewhere around two and a half billion dollars a year. So they invested a billion as making two

and a half day. And when you invested in McDonald's a long time ago, you can invest a million dollars as a franchise a and if you work, you know, crazy hours and you put on your apron and got old dirty, maybe you can make a quarter of million dollars a year from million dollar investment. These guys have a billion dollar investment to making two an a half

day in a year. Uh. Pretty wild, Like when when he goes into China and uh, they spend two million dollars two billion dollars in the first hotel in Macau and uh, and they gave him they were so happy that he came. He gave him land that he sold for a billion dollars. He has a billion dollars net and he started making a hundred million dollars a month. But this is a testla they make a billion a billion dollar investments and they make two and a half

billion a year. They're gonna do the same thing in Germany, the same thing in Texas. What about SpaceX which Elon Musk also wait one more thing, and and it tests the battery business, which I think the car business could be a six or seven hundred billion dollar business and revenues a year and making two hundred million dollars a year two hundred billion a year in ten years. So that's how you get to this two train dollar value.

But that's not including the batteries. He thinks that the battery can be also a business as big as the car business. So think about that. So here he thinks he's gonna go from five thousand cars a year to twenty million cars a year, and he thinks his battery business, who is gonna be the biggest car business. So I'm talking about the two trillion dollars because of the cars. I'm not talking about it for the batteries as far as space X. But that is is that that's the

business that But we're an investor. We own a little bit less than one percent. It's a private company, and the value on its forty billion maybe and that was where we started with Tesla. I think that SpaceX is on the way to two trillion dollars also, so I think that in TESTA, we're gonna make a triple in ten years. I think that in space X we're gonna

make thirty to fifty times in ten years. Uh. And one of the big reasons for that is that in the nineteen sixties when we started, you know, when President Kennedy's they were going through the moon. Uh and uh the rockets that he used there were disposable hundred million dollars rockets to the million dollar rockets they used one

time and then it burns up. I was when I was working in the patent office, by the way, just as a little side here, when one of the things I did was I gave the patents on the nose on the coatings that were used on the capsules that returned to Earth, so all those capsules to make them not burn up. I was the one who gave the

patents on that stuff. It's amazing. Uh. So yeah, full sir, and and so with h with with SpaceX, the competitive advantage that they have, the competitive advantage that test has this battery stuff. A competitive advantage of space X had is that they use the rockets over and over again. So the fuel to get into outer space is maybe an orbit maybe five thousand dollars a million dollars. Uh, And the rockets are a hundred two or a million dollars.

They're throwing away a hundred two or million dollars instead of just spending the rock in the fuel over and over again. So now Tesla, the invention that they have is that they use the rockets over and over and over again. And so everyone said, man, you can't do that, you know, you know, landing a rocket on a platform in the ocean that's moving, they could use it again and again. That's insane. Nobody could do. That's like dropping a pencil from your from your hand, landing on the

racer and standing up doesn't work. He did it. And so it's so if someone else is going to do with China. When they were successful at this landing these rockets, China had an a toorial in the Wall Street Journal and they said, congratulations Elon Musk, But boy, are are brilliant Chinese engineers. You're really missing out. You're getting beaten not by a country, you're getting beaten by a guy. But no matter with you, you've got to catch up.

And they and they think and the China, uh, you know, editorial and the Wall Street Journal was we think we are I don't remember if it's five years behind or ten years behind, but way behind Elon Musk behind the unit based behind Elon Musk. Um. So. So the idea here is that there's three there's seven billion people on Earth or seven half billion, and uh, and half of them don't have internet. If you happen to live in East Hampton or Vale or or even Palm Beach. Uh,

there's uh, there's not good reception for internet. And so the big opportunity and the relatively short term is that they can get they can have very low cost of launch. So Elon Musk, company, Google and seven we are a little bit less than one. And I think that this uh internet to the broadband, from satellite to your home, you're going to be an unbelievable business. Unbelievable and uh because there's so many people that needed. So so this is like the utility, this is like water, and this

is like electricity. You've got to have broadband and if you want to if you want to cut that down on the inequality, this president of the world, you've got to have people educated the way you're getting educated as a broadband do you own any other non public companies or is this is SpaceX the only private firm your Barren Funds investment. We own Rivan, which is another UH electric car company, a small position than that, and that's on twenty present by Amazon and UH we have a

small position in that. We're just investing right now in Cruise that's another private company that's going to do a car service UH or the autonomous driving in UH in San Francisco and UH very shortly that's about to start. We're investors in that. And then we're investors in a couple of small investments that were investor in a battery company. The Goldman Sacks also a very small investment. Baron Growth

Fund has this investment. UH and UH. The big problem with the electric vehicles is where the batteries coming from. And and and this company Goldman Sacks sponsored in Volkswagen is the the big customer for making these batteries in in Europe and using hydropower Norway hydropower and then a farmer's network to allow farmers to get better seed and

lower prices. We're investor in that. So we have a bunch of small investments, but we have in Bearing Growth fund for example, about a bunch of investments that we invested ten twenty million dollars that are worth two million, three hundred million dollars. It was I had sold a little bit of Tesla, and I wanted people to see what I'm doing you so they don't think that I've died and the only reason we still own test this because I'm dead. So so so, so I put a

note up on our website. I said that what happened is that, uh, it became a very large percentage of a few funds that we managed, bearing Partner's Fund, bar and Focus Growth Fund, one off shore fund that we have, and so its results of that, I decided it would be a prudent for me as as a business owner, not just as an investorment a company to show people that actually we do take profits on occasion and uh you know when when when it's something not because there's

something wrong with the business troup because I'm afraid about the volume of alatility in the stock, but rather because I want to show people that we're responsible. So out of the eight million shares, uh that that we have eight million one shares, we sold five thousand shares for our clients at at at four hundred and fifty and five thousand shairs remember of course, uh, five thousand shares at six fifty and two hift thousand shares at at eight d fifty, and so basically us it's painful every

time I've sold it. But people just say, gee, how can you? Don't you ever sell? That's a matter with you. And and but for so, what I did in in Tesla is that I said that that now I will be I'm not buying stocks. I only invest in our

mutual funds. And that was the commitment I made. And since with a couple of little, tiny exceptions, and the exceptions where when we wanted to have a large cap growth fund, I said, okay, this ten million dollars just without knowing anything about Berkshire Hathaway and Goldman Stacks and Cloudcom. You're not really doing research. I'll best tenny stocks and and see how they do, and I'll compare that that's

my benchmark against our large cap growth. So we did that, and I did a couple of little things like that is what I did. And then uh, then when Testa comes along, I said, geez, this is gonna be this

monster company, and uh. And what I want to do is I went to the board and I said, in two thousand and fourteen and two thousand and sixteen, I wrote all the stock I could buy for a couple of funds that I managed, and most of the mutual funds at Bearing Capital, which all are uh real estate or healthcare or fintech or emerging markets or small camp they can't own Tesla, and so I and a couple of guys that could own it. I tried to persuade him, and I wasn't successful. I said, I'm not used taking

anyone's opportunity. If I invest in this, I'm not gonna do it personally, but I'd like to take fifty million dollars on behalf the Barren Capital and invest it in Tesla. Uh. And I think I can make a billion dollars on it, and I can afford to lose fifty million. It wouldn't be pleasant, but I can afford to lose it, but I can't afford not to make a billion. And if I do make it, I'll give some of the profits to people who work at Barren Capital. In addition, at

Barren Capital would just be stronger. And my goal is to make it. They asked for a hundred years. So I wanted to be have a stronger balance sheet, even stronger than it does now, and they gave me permission. I said, I'm committing that I will be the last person to sell. So I'm the last person to buy because no one else is going to buy a parent capital, and I'll be the last one to sell. I'm not gonna sell anything until all of the shares are sold by all of my clients. And the directors of Barns

Fun said, that makes it sounds reasonable. Uh, and it's fine to go do it, And so I did that, and uh it turned into way after a five or one split a million one shares. So uh, I told, uh, you know, so when the five hundred million two shares that we sold so far for clients I haven't sold a single share, fifty million became eight hundred fifty eight hundred sixty million or eight nine hundred millions something like that. Okay,

that's not too bad a return. Oh, pretty cool. And I think that there's three more times to come from that, and uh and then over ten years and so so very easy. The advantage that we have is that just hardly I don't know any people. I'm sure they must be out there, but I don't know people who are

investing for other. People said, I'm gonna make a ten ten year investment for a twenty year investment in a company, and as long as the fundamentals are as I expect him to be, stay with it, and I'm not going to worry about the price in the meantime. And you know so, so that's what I do. And as long

as the fundamentals for here the business fundamentals PROTESTA. From the time we invested in it in two thousand fourteen UH to last year, the business grew from two lays and eight h to twenty five billion dollars in sales. The stock price didn't change, went up and down, up and down, up and down, and then went up ten times to the stock price caught up to U to the business, and now the business is going to grow faster than the stock price over the next ten years.

I think, Wow, that's amazing. Let me let me throw you a curveball for our last question. You're ready for this? Ye? You You grew up in Asbury Park and years after you left, you were sort of unhappy because the Asbury Park football team ended up winning the state championship, but they were disqualified, and you were so unhappy about it. You bought trophies for the teams and got rings for all the players that were inscribed with undefeated on the field.

Tell us about that. I read the article in the New York Times that described that, and uh, I felt badly. I mean, when I went to high school, it was a minority high school. I mean it was black and white. Uh. And maybe it was about that. Maybe it was two thirds white and one third black, or maybe it was.

And there were two thousand kids there, and now there's a thousand kids when this happened, and it was virtually all minority, and uh, and the shining and it was eighteen or employment in Asbury Park, and the board walk was a mess, and I felt badly and and and so here are these kids. And there were two kids

who were ineligible and they played on the team. And uh, because that day they first, I think it was, they were they went eight and oh or nine and oh, and all of a sudden went we took away all the victories and went oh and nine. And so I said, oh my god, this is this is everything for this town. And so I said that maybe it's something I can do.

And it was this trophy case in the front of the school, uh, where he said, bought the trophies for and with the scores for every game that they had, and it's had undefeated on the field, and then every football player's name I had inscribed on there. And then I bought them rings that said undefeated on the field. And Springsteen UH read about it. And then he gave everyone, including me, baseball jackets, football jackets. It's said the same thing,

undefeated on the fields I got. I got Springsteen jacket

from that would be Bruce Springsteen of Asbury Park. I also have another story about Springsteen when when we when when I have my nineteen eighty we have our first child, Judy and I and we didn't have a weekend house, and we bought uh this this old house built in eighteen sixty on two and a half acres on Navasink River Road, nine Navastink River Road, uh and overlooking Rumson, overlooking the Navasink River and to the leftist so the ocean maybe sixty ft high and so and and it's

now eighty and we paid two fifty dollars board in the middle of these fifteen acre states. Bon Jovi was on the street and Uh Roger Pensky was on the streets. They had big houses. We had this tiny little house and uh with a with a with a dirt basement, and so we have it were two and a half years, three years, and now we have two children. We have Duty's dad living with us, and we have a nanny and we're bursting at the Season's house. The guy knocks on our door and says, uh, I'd like to buy

your house. And I said, well, it's not for sale, and uh, he says, well, how about for fos I said just a second. But it was the door to see Duty somebody wants to buy a house for four hunderzo dollars because she says sell it. So I opened the door and said, you just bought a house. And it turns out that this was a lawyer representing Springsteen. So he bought that house and he lived in it for he had a habit by he just gotten married and he needed to have it by Um I think

of it like December fifteenth or as well. He wanted to have it for a celebration in December uh, and so we sold it to him at the end of the summer and you know, no problem. And then uh. And then what he did afterwards is that uh. For I was an the borter harvest man and he which is a day school and my kids went to and he would give us regularly when when they would have these auctions, I would call him his agents, who turns

out now with the agents my friend. But I would call the agent and he would give us, uh, you know, record albums that would say he would autograph I would say R C. K. Rocket and then exclamation points Bruce Springsteen and I WoT auction for you know, hundred dollars to or whatever it was I would get, you know, get these these gifts, uh, that he would put out to raise money for Horseman. That's Ron, Thank you so much for being so generous with your time. We've been

speaking with Ron Barron, founder of Barren Capital. If you enjoy this conversation, well, be sure and check out any of the other four d previous interviews we've had over the past six years. You can find those at Apple, iTunes, Spotify, wherever you feed your podcast fix. We love your comments, feedback and suggestions. Right to us at m ib podcast at Bloomberg dot net. Gives a review on Apple iTunes. If you would like to get my free daily reads, you can sign up for that at rid Halts dot com.

Be sure and check out my weekly column at Bloomberg dot com slash Opinion. Follow me on Twitter at rit Halts. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Reggie Bazil is my audio engineer, Michael Boyle is my producer. Atika val Bron is our product manager. Michael Batnick is up my head of research. I'm Barry RIH Halts, and you've been listening to Master's in Business on Bloomberg Radio.