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Monday, December 6, 2021

Billionaire investor Ron Baron’s firm sold 1.8 million Tesla shares despite saying price will hit $2,000

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Billionaire investor Ron Baron sold 1.8 million shares of Tesla for clients since August despite believing the stock will increase to $2,000 over the next 10 years.

Baron, a longstanding Tesla shareholder, told CNBC’s “Squawk Box” on Thursday that his namesake firm sold the shares because they were becoming too large a percentage of some portfolios.

“It was painful selling every single share,” he said, adding that he personally has not sold any of his more than 1.1 million shares of the electric car maker. He said “risk mitigation” was appropriate for his clients regarding the sale of their shares of Tesla.

Baron Capital held more than 6.1 million Tesla shares as of Feb. 28. They were purchased at an average cost of $42.34 per share. The firm reported selling 1.8 million shares of Tesla from August through February. Baron told CNBC that 1.7 million of those shares were sold in the last six months. About 1.2 million of those shares were sold at $400 to $900 a share, according to the company.

Shares of Tesla are up 338% in the past year to $653.20 a share. Its market cap is about $619.2 billion.

Baron said he plans to retain his shares for “10 years at least,” saying he told Tesla CEO Elon Musk that he “would be the last out.”

“We’re looking for a lot more,” Baron said. “I think in 10 years our target is $2,000 a share.”

In June, Baron told CNBC he believed that “there’s 10 times more to go” on the upside on Tesla stock. Shares have since shot higher. Then in October, Baron predicted that Tesla would eventually become a $2 trillion company.

Baron has diversified his investments regarding electric and autonomous vehicles outside of Tesla. Most notably, he said his firm is an investor in privately held EV start-up Rivian – an upcoming rival to Tesla – as well as Cruise, an autonomous vehicle company that’s majority-owned by General Motors. Baron said his firm purchased more than 1.2 million shares of Cruise for $10 million in January.

Without naming any companies, Baron said he’s speculative of other EV start-ups. Several other companies have or are planning to go public through reverse mergers with special purpose acquisition companies.

“If you think all these companies starting up are going to make it, I think it’s a dream,” Baron said. “I think it’s astonishing they’re getting so much capital.”

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