Both are relatively new holdings for Baron—within the past two years. So far, they’ve been flat, he said. But he predicted on “Squawk Box” that he could make 10 times his money on electric automaker Tesla in the next 10 years because “governments don’t want people to use energy, to use carbon fuels.”
“Right now, it costs about 75 cents the equivalent gallon in electricity. Of course, I think that 75 cents is going down,” he estimated—comparing the cost to gasoline, which averaged $2.20 a gallon in the past three weeks, according to the latest Lundberg survey. Due to falling oil prices, that does represent a 27-cent drop from the previous period and the lowest level since April 2009. Baron shook off questions that lower gas costs would hurt Tesla.
He said he just got a new Tesla. “You’ve driving this car and you pass gas stations and you realize you’re never going in again, except if you have to go to the bathroom.”
From the open road to the soccer field, Baron said he expects to make four or five times his money on Manchester United over the next four or five years.
The company provides the storied English club a platform to generate revenue from sponsorships, merchandising, product licensing, new media and mobile, broadcasting and matchday sales at the Old Trafford sports venue.
The reasons for his bullish prediction: “[Soccer] is the most popular television program in the world,” and live sports can’t be time shifted like most other programs.
Baron Capital currently has $26.8 billion in assets under management.
In the family of Baron funds, all of them in operation for at least five years have turned in double digit returns during that time period, expect for the Baron international Growth Fund, which was up just over 8 percent in the past five years.
“We have 450 investments, and the top 10 represent 18 percent of our assets,” Baron said—adding that besides Tesla and ManU, his 36 other investments over $200 million have seen “big increases.”
He attributes his success to a philosophy of seeking out great companies and holding on to them.
The stock market doubles every 10 years, Baron said—adding he sees no reason for that to stop. That’s about 6.2 percent a year and around 8 percent when dividends are added, he said.
The Baron Capital chairman and CEO formed the investment company that bears his name in 1982. The Dow Jones Industrial Average was at around 880 then and now trades at 17,737 as of Friday’s close.
He advises investors to refrain from trying to time the market.
For example, he said the years 2000 to 2008 were the toughest period for the stock market in U.S. history, with the market too high after 1999 and sinking way too low in the depths of the financial crisis during 2009 before rebounding.
“The economy doubles every 10 years. And the stock market and the economy are linked,” Baron said. “Sometimes the market is better, sometimes it’s worse. You can never know. You never can predict that in the short term.”