Investor Ron Baron has increased his stake in Tesla Motors Inc (NASDAQ:TSLA) and like’s what he sees in the electronic automotive manufacturer.
“We view Tesla as a ‘once in a lifetime’ disruptor to the car industry and believe this justifies its premium valuation,” the investor letter, reviewed by ValueWalk, said.
Ron Baron’s confidence level improved in Tesla Motors Inc (NASDAQ:TSLA)
During the past quarter Ron Baron’s level confidence improved in Tesla Motors Inc (NASDAQ:TSLA)’s “superior engineering and design, which we believe will lead to mass market appeal,” he said in an investor letter reviewed by ValueWalk.
While Tesla reported what the firm considered to be strong results in the first quarter, the letter noted investor reaction was negative and Baron took the opportunity to add to our positions when the stock price dropped in early May.
“Tesla continues to make progress with battery cost reduction and regulatory approvals to sell its cars directly to consumers,” the letter said. “Both of these developments were viewed positively toward quarter end.
Ron Baron impressed withTesla Motors Inc (NASDAQ:TSLA)’s accouncement opening up intellectual property to third parties
Ron Baron was particularly impressed not just with the earnings announcement, but something that happened right afterwards. This is when Tesla announced it was opening up all its intellectual property to third parties in order to induce the electrification of the auto industry. To date, the industry is dominated by smaller firms.
“Tesla is confident in its ability to out-innovate its competitors due to its most formidable competitive advantage – people,” the report noted. “As of today we believe Tesla is the only original car equipment manufacturer that is able to hire talent away from top tier technology companies. The ability to keep this talent busy and engaged for the greater good, with consistent execution and commercial success, will, we believe, build Tesla Motors Inc (NASDAQ:TSLA)’s moats for years to come.”
Baron often says “we invest in people.” Tesla invests in people, too, the investor letter notes, and this is one of the keys to their success.
Ron Baron markets Baron funds, which boasts over 700,000 investors with near $16 billion in assets under management. Baron founded Baron Capital in 1982 and the firm has a long term time horizon with stocks, often holding for 4 to 5 years time, but sometimes keeping holdings for 10 to 15 years.