Tesla founder and CEO Elon Musk continues to have the support of famed investor Ron Baron. | Source: REUTERS/Mike Blake
What is Ron Baron Thinking?
This comes as a bit of a surprise, because Ron Baron has a multi – decade history of prudent and diligent investments across all kinds of stocks.
Virtually every one of his funds has beaten both the S&P 500 and its respective benchmark index since inception. This is no small feat, especially considering several of the funds have topped the S&P 500 by 300 basis points or more.
I understand why Ron Baron invested in Tesla initially. He has always pursued an investment philosophy based on “sunrise industries”. These are industries that are at the beginning of a multi-decade lifecycle.
This contrasts with “sunset industries”, which are businesses that are fading into their twilight years. Polaroid was a good example of a sunset industry, as digital technology replaced film.
Why Stand Behind Elon Musk?
Yet there seems to be no logical reason why Ron Baron would be standing behind Elon Musk, regardless of what opportunities exist for Tesla, and considering Elon Musk’s behavior.
But even if you remove Elon Musk from the equation, and the slow rollout of competitors’ electric vehicles, Tesla is not the only game in town.
While other manufacturers have been slow to get into the game, eventually they are going to catch up. Eventually there will be plenty of competition in the electric vehicle space,