As of April, Gavin Baker's Atreides Fund held approximately $2.5 billion worth of stock in SpaceX, achieving a 19% return on investment this year.
Gavin Baker's name appears twice on the list of investors poised to reap billions from their stakes in SpaceX. His first investment in Elon Musk's aerospace company came in 2015 while he was at Fidelity Investments, a time when the company's future was uncertain, marked by significant launch failures and no successful rocket landings.
In 2019, Baker left Fidelity to found his own hedge fund, Atreides Capital Management. He remained a steadfast believer in Musk's ambitious vision, consistently increasing his holdings in the company even as most Wall Street institutions paid it little attention.
Now, both Baker and the original Fidelity investment are on the cusp of a massive payoff. Fidelity entered when the company was valued at around $10 billion; Baker's subsequent investments came as the valuation reached approximately $30 billion. With the company's upcoming public listing next month, its estimated market capitalization could soar to $1.5 trillion or more.
In a recent investment podcast, Baker stated, "Musk has always delivered for investors. He treats this venture as an unbreakable commitment."
SpaceX has filed its IPO registration statement, advancing the listing process. This public offering is expected to generate immense wealth and liquidity for venture capital firms and stock-picking investors. The filing reveals that Antonio Gracias, President of Valor Equity Partners, a long-term shareholder and board member, controls funds collectively holding 7.3% of the Class A common shares.
Other potential beneficiaries of the IPO include Google, the venture firm Founders Fund, Ron Baron's Baron Capital, and hedge funds like Darsana Capital Partners and D1 Capital Partners.
A Dartmouth College graduate, Baker was an avid skier in his youth and even worked cleaning rooms at a mountain lodge in Utah. He joined Fidelity as an analyst in 1999.
He was an early and staunch investor in NVIDIA, with CEO Jensen Huang acknowledging him in a March keynote as the company's first major institutional backer. Baker was also among the first mutual fund managers to make significant pre-IPO investments in startups, with holdings in companies like Meta Platforms and Uber before they went public. Not all bets paid off, however, as seen with his investment in the shared office space company WeWork.
In 2015, Fidelity, alongside Google, participated in a $1 billion funding round for SpaceX. Unlike typical startups, the company had no immediate plans for an IPO at the time. For Fidelity's mutual funds, which allow daily investor redemptions, holding long-term, illiquid private company shares posed significant risk.
Sources indicate Fidelity received a $100 million allocation in that round. Managers of funds like the Contrafund and Blue Chip Growth Fund followed Baker's lead. While Baker's OTC Portfolio invested a smaller dollar amount than the Contrafund, SpaceX represented a larger percentage of that fund's total assets.
The investment did not immediately prove its worth. Months after the 2015 funding, a Falcon 9 rocket carrying a cargo spacecraft suffered a catastrophic failure shortly after launch, with debris falling into the Atlantic Ocean, forcing a suspension of subsequent missions. Later that year, however, a Falcon 9 rocket achieved its first controlled landing and recovery, a breakthrough in reusable rocket technology that significantly brightened the company's prospects.
In subsequent funding rounds, Baker's funds and Fidelity's products continued to increase their stakes, also acquiring shares from current and former employees. Sources report the OTC Portfolio ultimately invested $560,000. By April, that stake was valued at approximately $2 billion, representing 4.7% of the fund's net assets.
Baker left Fidelity in 2017 following an investigation into workplace misconduct, with a spokesperson describing the departure as amicable. In 2019, he founded the Atreides Fund and promptly purchased more SpaceX shares, allocating a quarter of the fund's venture capital pool to the company. He later also invested in xAI, the artificial intelligence company founded by Musk.
According to prior reports, the fund's public-private investment portfolio returned 47% last year, driven by valuation increases in SpaceX and xAI. This year, following an all-stock merger transaction between the two entities, the Atreides Fund received additional SpaceX shares.
As of April, the fund's SpaceX holdings were worth about $2.5 billion, up 19% year-to-date. This position constitutes over one-fifth of the fund's total $11 billion in assets under management.
Beyond the upcoming IPO, other public listings have boosted the fund's performance this year. Baker has been a consistent investor in the AI chip company Cerebras Systems. Last fall, he co-led a funding round with Fidelity that valued the company at $8 billion. This month, Cerebras went public, achieving a market capitalization exceeding $66 billion on its first trading day.
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