Video · 2026-07-24 · 1h 15m · 6 moments

Secrets From the Greatest Fund Manager of All Time | TCAF 252

✦ AI generated

GUEST Host GUEST Ron Baron GUEST Michael Baron

timeline · colored by role

Prediction◆

Elon Musk's SpaceX will become the most valuable company in the world — worth $20–$40 trillion — because it has unique, non-replicable compute and rocket infrastructure.

Ron Baron predicts SpaceX will be worth 20-30 times the IPO price within 10-15 years, reaching $20-40 trillion. He argues SpaceX's compute clusters are uniquely coherent and scarce, generating 3x the revenue of comparable capacity.

transcript

Ron Baron: I think it's going to be we think it's going to be 20 to 30 trillion dollar value at least $40 trillion. ... we think that in SpaceX we're going to make somewhere 20 times 30 times from the IPO price. 20 to 30 times next 10 to 15 years. ... we're getting almost 25 30 billion a month for something a year rather for something that cost us 25 or 30 billion to build. To show you how scarce it is, we're getting three times what CoreWeave would get for the same amount of compute. Three times. Why is that? Because we got it. No one else has it. And also our compute is different than other people's compute because it's coherent. Because it's all together.

explains mechanism · 1gives example · 2

Example

Baron Capital's due diligence process is four years of deep questioning — not about quarterly numbers, but about the CEO's character, mission, and ability to vertically integrate and dominate.

Michael Baron describes how the firm spent four years researching Tesla and Elon Musk before investing — not to predict near-term earnings, but to understand the mission, the person, and whether the company's vertical integration strategy would create an unassailable competitive advantage.

transcript

Michael Baron: We spent a lot of time with him, a lot of time with the management team. Took us around four years of of diligence on the company, diligence on on him, what makes him tick, what is he trying to achieve? ... And all of our questioning was really about that. You know, how do you become this much greater business and and what Elon's famous for doing both in Tesla now doing kind of the same similar playbook over at SpaceX. It's about vertical integration. So all the prior automobile companies was about outsourcing. ... If you really want to change the world, you need to do it yourself. You need to drive down costs as low as low as possible.

Data

Most stocks are value-destructive — the median stock loses 7% over its lifetime — so the ability to identify the few that compound is the entire skill of investing.

Citing Hendrik Bessembinder's research, the host establishes that 73% of stocks fail to beat the market and the median stock loses 7% over its lifetime. This frames why Baron's buy-and-hold approach is difficult but essential.

transcript

Host: Just 27% of stocks kept pace with the with the stock market. which is 27% of stocks meaning 73% lose versus T-bills only 42% of stocks over their lifetime beat treasuries only 48% delivered a positive lifetime return. So it's basically a coin flip of these companies are even going to make money for their shareholders over the time of their listing to the time they die or acquired or whatever. And then the median stock lost 7% over its entire lifetime. So most companies are trash and are not worth investing and certainly not buying and holding.

explains mechanism · 1

Mechanism

The key to investing is owning businesses long-term, not trading them — the brokerage industry's 'moving business' model destroys wealth.

Ron Baron explains that his early experience in the brokerage business taught him the industry profits from churn, not from client returns. The insight that made him a great investor was realizing he should be an owner, not a mover of stocks.

transcript

Ron Baron: I started in the business in the same way. The goal of the firm, the brokerage firm, they told us this is the first thing they told us. We're not in the storage business. We're in the moving business. So, if you were right on a stock almost by accident, the the first instinct is great, I'm going to get two and a half% commission to get out of this. ... I had this insight that I want to be an owner. I want to own businesses. That's the key.

explains mechanism · 3provides context · 1

Mechanism◆

Baron Capital can hold through severe drawdowns because they own the firm, cannot be fired, and are the largest investors in their own funds — giving them a time horizon others don't have.

Ron Baron explains that because he and his family own the business and are the largest investors in their own funds, they can't be fired for short-term underperformance. This structural advantage lets them hold positions through volatility that would force other managers to sell.

transcript

Ron Baron: We can't get fired. We own the business. So basically the way and we're the biggest investors in our in our funds and the money that we manage. We're the largest investors and so like 11 12% of the money we manage is ours ... Our time horizon is five or 10 years. Other guys are going to say, gee, I understand you're going to make all these billions of dollars of investments, but you know what? If I don't perform today, I'm going to get fired. I'm not going to be around for that in 10 years.

Claim

AI fears for data companies like FactSet and MSCI are overblown — proprietary data and embedded workflows make them AI enablers, not victims.

Ron Baron argues that software and data companies like FactSet, MSCI, and Gartner have proprietary data and relationships embedded in client workflows that cannot be replaced by LLMs. He sees the selloff in these stocks as a buying opportunity, noting that FactSet's new CEO from JPMorgan is transforming the business.

transcript

Ron Baron: The narrative is they're not going to exist any longer. ... We find companies that have something special that get well there's no way they're going to exist. That's all going to get replaced by by AI. ... He's describing to us how all of the services that he's providing are getting embedded in the workflow of the clients that can't be replaced. ... So basically he's talking about the data that he has, the relationships he has. ... When we have something that's a commodity type of service, then we give it to them for really low prices, but that gets us the entree to give them something that they really need for their business they can't get somewhere else.

Highlight slides

Spacex on track to become the world's most valuable company✦ from: Elon Musk's SpaceX will become the most valuable company in the world — worth $20–$40 trillion — because it has unique, non-replicable compute and rocket infrastructure.20–30x return from IPO within 10–15 years✦ from: Elon Musk's SpaceX will become the most valuable company in the world — worth $20–$40 trillion — because it has unique, non-replicable compute and rocket infrastructure.Spacex compute earns 3× the revenue of competitors✦ from: Elon Musk's SpaceX will become the most valuable company in the world — worth $20–$40 trillion — because it has unique, non-replicable compute and rocket infrastructure.Structural Advantage: Can't Be Fired✦ from: Baron Capital can hold through severe drawdowns because they own the firm, cannot be fired, and are the largest investors in their own funds — giving them a time horizon others don't have.Time Horizon Divergence✦ from: Baron Capital can hold through severe drawdowns because they own the firm, cannot be fired, and are the largest investors in their own funds — giving them a time horizon others don't have.Time horizon edge: 5–10 years vs. quarters✦ from: Baron Capital can hold through severe drawdowns because they own the firm, cannot be fired, and are the largest investors in their own funds — giving them a time horizon others don't have.

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