By Gregory Zuckerman
Ron Baron is in a slump. He's counting on his friend Elon Musk to lift him out of it.
The 83-year-old celebrity investor's largest fund is down for the year. Baron Capital's other funds are also lagging, with one down over 10% so far in 2026. The firm's funds have fallen in size as some clients have left.
Baron's prospects could brighten if SpaceX shares soar next month in what's expected to be the biggest-ever stock-market debut.
Baron invested in SpaceX in 2017 when it was valued at less than $22 billion. The rocket-and-satellite company accounted for almost 30% of his largest fund as of last month, while Tesla represented nearly 19% -- unusually heavy concentrations that are testaments to Baron's faith in Musk. Baron has also made huge investments in other Musk companies.
Baron and Musk forged a bond in 2022 as Musk struggled to raise cash to buy X, then known as Twitter. Baron called to offer him $100 million -- $65 million from two of his mutual funds and $35 million of personal cash.
"Really?!" Musk responded.
Musk recalled the exchange in a video interview at Baron's annual investor conference last year, where he shared his appreciation for Baron.
"I do regard you as a true and trusted friend," Musk said, according to a recording of the event, which was held at New York's Lincoln Center and featured performances by Pink and Shania Twain.
Right away, Baron Capital had to reduce the value of its X investment, but his firm's investment has more than doubled in value to over $700 million.
Baron's enthusiasm for all things Musk is something of a surprise. Baron was long known for his skepticism of tech stocks, a stance that helped him avoid pain from the 2000 dot-com meltdown. But Musk inspires a cultlike following, even among veterans. Baron's fandom is such that in conversations with clients and others, he often invokes "we" when discussing SpaceX's ambitions, which include colonizing Mars.
Baron's annual conferences, which have featured performances by celebrities including Elton John, Paul McCartney and Lady Gaga, demonstrate his devotion to Musk. Door prizes have included Tesla Model Y electric vehicles, and Tesla's Optimus humanoid robot has been on display.
Despite the glitz and association with Musk, Baron has seen an exodus of investors as actively managed mutual funds fall out of favor. Baron's firm, based near the Plaza Hotel in Midtown Manhattan, manages $43.9 billion in mutual funds and ETFs, the firm says. That's down from a peak of $52 billion in October 2021, according to Morningstar.
Baron declined to comment.
Baron grew up in Asbury Park, the New Jersey beach town made famous by Bruce Springsteen. He caddied and did other local jobs, saving $1,000 for college. He put the money in shares of a local bank, growing the sum to $1,700, enough to pay for most of his first year at Bucknell University, where he studied chemistry.
"Wow. That was easy. I want to do that," he later recalled thinking.
Baron became a financial analyst in 1970, eventually starting his own investment firm. His risk aversion seemed like a liability during the exuberance of the 1990s. Then the dot-com crash in 2000 put his fund on the map.
In subsequent years, Baron searched for small companies he could hold for a decade or longer, and for executives he could bet on, such as Jay Pritzker, Hyatt Hotels's co-founder.
He made news for personal moves too, such as spending more than $100 million for a 40-acre plot of land in the Hamptons to build a sprawling family compound, landing him on the New York Post's Page Six gossip column.
In 2010, Baron met Musk when the Tesla CEO came to pitch the electric-car company's initial public offering. At first, Baron showed his trademark skepticism and turned down the opportunity, concerned it would be hard for Tesla to make headway. He changed his mind in 2014 and over the next two years purchased $400 million of its shares. Baron Capital has told investors its funds have made more than $6 billion on the investment.
Then in 2017, Baron invested in SpaceX. Behind the move: Baron's belief that reusable rockets would gain market share, and a view that much of the world's population lacked access to reliable internet service, giving the company's Starlink service a ripe opportunity, he has told shareholders.
This year, SpaceX appreciated 24.5% in the first quarter, Baron told shareholders. At that time, the company was valued at $1.25 trillion, and the stake of the Baron Partners Fund -- Baron Capital's largest fund -- was valued at $3.89 billion, giving the fund billions in paper profits.
SpaceX's valuation after the IPO is expected to reach $1.5 trillion or more, suggesting Baron could see additional gains.
The Baron Partners Fund has nevertheless fallen about 1.6% so far this year through May 22, compared with a gain of 5.6% for the Russell 1000 Growth index, its closest benchmark, according to Morningstar. It has underperformed the index over the past five years, but outperformed the index and most funds over 10 years.
The decline this year is in part due to a drop in Tesla shares and declines for some other stocks.
The firm says the Baron Partners Fund has performed better over the years compared with its preferred benchmark, the Russell 3000 Growth Index.
"A successful SpaceX IPO and subsequent performance could change things quickly [for the fund] given the large weighting," says Adam Sabban, an associate director at Morningstar. "Most managers would have trimmed their position, but he's gone for it."
Baron wouldn't be the only big winner on Wall Street if SpaceX soars. Mutual-fund investor Cathie Wood, who has fielded criticism for her aggressive buying of tech and other stocks, has 17% of her ARK Venture Fund's net assets in SpaceX as of March 31. SpaceX has been the fund's largest holding for some time, her firm says. The fund is up nearly 8% so far this year, though May 22.
Baron believes Musk and his companies will deliver still more gains.
Overall, Baron's funds hold over $6 billion of SpaceX shares, as of April 30, their largest holding and 29.6% of all assets. Tesla is second, at 18.7% of assets.
At his investor conference last year, Baron expressed his excitement over yet another of Musk's grand ambitions -- Tesla's plan to eventually roll out billions of humanoid robots to relieve people of mundane tasks at home and work. He also gushed about Musk's accomplishments.
"There's no one who has changed our lives more than Elon," Baron said.
Write to Gregory Zuckerman at Gregory.Zuckerman@wsj.com
(END) Dow Jones Newswires
May 27, 2026 11:55 ET (15:55 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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