Billionaire Tesla bull Ron Baron recently sold about a quarter of his company’s stake in the electric-car maker — but not, he claims, because he thinks the stock is too pricey.
Baron told CNBC that his firm dumped 1.8 million of its 8 million Tesla shares in recent months at an average price of around $660 apiece, slightly higher than where the stock was trading Thursday.
Despite trimming his stake, Baron thinks Tesla’s share price will hit $2,000 a decade from now even though it’s recently faced questions about the safety of its vehicles and its $1.5 billion investment in bitcoin.
“It was painful selling every single share,” Baron told CNBC Thursday. “Their prospects are brighter than they’ve ever been. I think it’s much more likely they’ll be able to go from 500,000 cars a year to 20 million.”
The 77-year-old money manager said he made the sales as a “risk mitigation” tactic because Tesla had grown to account for more than half the assets in two of the funds he manages.
His firm, Baron Capital, held 6.1 million Tesla shares at the end of February that it bought for $42.34 apiece, according to CNBC — just about 6 percent of the stock’s Wednesday closing price.
Tesla shares have surged more than 300 percent over the past year but have tumbled roughly 24 percent since the company announced its blockbuster bitcoin purchase in early February.
The Silicon Valley giant has also faced vehicle recalls in China and the US and reportedly halted some production at its California plant for two weeks amid a computer chip shortage that’s hit automakers around the world.
But Baron says he’s still confident in Tesla’s growth despite the Elon Musk-led automaker falling slightly short of its goal to deliver 500,000 cars last year. He said he hasn’t sold any of the more than 1.1 million Tesla shares that he owns personally and doesn’t plan to any time soon.
“I think I’m going to hold it another 10 years at least,” he told CNBC. “I told Elon that I would be the last out.”
Baron also confirmed that he’s invested in Rivian, a privately held Tesla rival that’s developing an electric pickup truck and SUV, along with Cruise, a GM-owned autonomous vehicle startup.
But he suggested that investors are likely to be disappointed in many of the electric-car makers that are trying to get off the ground.
“If you think all these companies starting up are going to make it, I think it’s a dream,” he said.