Why did Wall Street icon Ron Baron invest $300 million into Tesla? Here's the real reason [Video]
How big does Wall Street investing icon Ron Baron believe Tesla can be? According to Investors Business Daily*, Ron Baron proclaimed: “I think there’s a very good chance that I could own this stock for 10, 15 or 20 years... I think this could be one of the largest companies in the U.S. and the whole world.” Baron's commentary sparked an upward surge in Tesla Motors [NASDAQ: TSLA] stock during the day of his interview: "Tesla stock ended 5.3% higher at 232.34... retaking its 50-day moving average for the first time in more than a month." Wow. This was pretty significant... so who is Ron Baron anyway?
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Full disclosure: I've invested in some of Baron's funds and actually considered them a bit stodgy as the firm will typically hold a stock for 4–5 years, sometimes as many as 10–15 years. Renowned mutual fund manager and investment icon Ron Baron of Baron Capital is well-known for his conservative, long-term approach to stock picking. He's been compared to Warren Buffett (both for his investing style and outstanding track record), and he's also previously forecasted that Tesla Motors (TSLA) investors will make 10 times their money over the next ten years.
With that said, his investing analysis (and advice) are greatly sought after by many on Wall Street. In addition, it's further reported that Baron said, "I go to Tesla every three or four months... I look at the factory and see how much is changing and talk to them on a regular basis. The competition is not anywhere." For context, Baron Capital purchased $300 million in Tesla stock, accumulating 1.5 million shares over about three years. Note: Baron did about a 30-minute interview on CNBC this week and we tracked down the specific segment where he discusses Tesla in detail...
And, Baron is not alone in his positive sentiment for Tesla. Other Wall Street analysts are also predicting a bright future for Tesla. Last week, according to Barron's, Wall Street analysts Rob Cihra and Edison Yu at Sterne Agee CRT write, "We initiate Tesla (TSLA) at BUY with our $300 price target based on a P/E of 17x and EV/EBITDA of 8x looking out to 2019E... we think that is the price for nearly open-ended growth in a technology innovator targeting trillion dollar auto and energy markets, where fundamental disruption is taking place in 1) electrification, 2) software/ autonomous driving and 3) on-demand transport."
This follows another Wall Street analyst, Bill Selesky at Argus who sees further upside for Tesla with an, "outlook for improved operational and financial performance, including rapidly accelerating earnings in 2017... it is poised for much stronger performance in the coming quarters... Looking ahead, we expect Tesla to meet or exceed its production targets and to achieve positive cash flow in FY16. We also look for a significant acceleration in non-GAAP earnings in 2017." Selesky reiterated his Buy rating with a $333 price target on the stock.
Only time will tell if Ron Baron and these other Wall Street analyst forecasts come to pass, but, nevertheless... it's still encouraging to see many who analyze Tesla Motors so positive about the electric vehicle company's outlook. We'll be sure keep you posted on TSLA news as it unfolds over the coming weeks.
*Source: Investors Business Daily