Tesla (NASDAQ: TSLA) bull Ron Baron and his investment firm Baron Capital have been some of the biggest supporters of Elon Musk’s electric car company. Baron Capital, however, has sold 1.8 million TSLA shares over the past six months, Ron Baron said, due to portfolio concentration. The billionaire investor remains bullish on Tesla, revealing that his personal 1.1 million shares haven’t been sold, and none of them will be for at least a decade.
“In the past six months, we have sold about 1.7 million out of our 8 million shares that we held. We sold them between $450 and $900, an average of $666.70. So, we still own 75% of our stock, actually, more than 75%,” Baron told CNBC. Baron still maintains a $2,000 price target per share for ten years in the future, and believes it “could be light by $500 or $1,000.”
Interestingly, if Baron feels that Tesla is still going up, why would his firm decide to sell shares. Ultimately, it comes down to portfolio concentration, and Tesla’s meteoric rise in 2020, which saw the stock price surge over 700%, caused some accounts to become too heavily concentrated in Tesla stock. Portfolio diversity is important, especially for large fund managers, who are investing client’s money based on trust.
Baron Capital made the decision to sell because “it was up 20 times,” Baron said. “It became a very large percentage of some accounts.” Despite Baron Capital’s decision to sell for its clients, Ron Baron stated that his personal ownership stake in Tesla hasn’t budged, and it won’t for at least ten years.
“I happen to own 1,115,000 shares personally. I haven’t sold a single share, and I don’t expect to for ten years,” Baron added. “But, for clients, I sold 27% or 25% of their stock. I told Elon, ‘I was the last one in, I bought it for all my clients first.’ And in 2016, when I was totally filled on the accounts that I could buy for at our firm, I couldn’t convince other people to buy more, then I invested for in my firm into this company [Tesla], and I think I’m going to hold it for another ten years, at least.”
Baron said that Tesla holdings became more than 50% of two focused funds at Baron Capital and it became a risk management issue. Instead, Baron has invested in several other automotive companies, including Rivian, which is currently still a privately owned company, and Cruise, an autonomous vehicle company that is majority-owned by General Motors. Baron Capital bought more than 1.2 million shares in Janary for $10 million, he said.
While keeping some of the investments behind closed doors, Baron did say that several other EV startups are driving his speculation of the evergrowing market. However, he admits that not all of them will succeed. “If you think all these companies starting up are going to make it, I think it’s a dream. I think it’s astonishing they’re getting so much capital.”
Baron’s interview with CNBC is available below.
Disclosure: Joey Klender is a TSLA Shareholder.