Baron Funds Q3 2025 Letter From Ron

“Those that sow in tears will reap with sounds of pleasure.” – Psalm 126. Rabbi Ari S. Lorge. Central Synagogue. New York Metropolis. October 2, 2025. Yom Kippur. 5786.

Rabbi Ari S. Lorge at New York Metropolis’s Central Synagogue noticed there are greater than 150 psalms within the Jewish Bible. These historic poems, in response to the Rabbi’s at all times thought-provoking commentary, can present steerage to people below nearly all circumstances.

Sitting in Central Synagogue’s congregation on the morning of October 2, 2025, Yom Kippur 5786, my ideas have been elsewhere. I used to be fixated upon Baron Capital’s Mission to “Change Lives”… of its shoppers and workers by ensuring they’re higher educated in finance and are extra financially safe. This although I used to be alleged to be deep in prayer.

My ideas have been interrupted when Rabbi Lorge started to debate Psalm 126. That psalm appeared to me to stipulate the rationale for investing in folks… and development companies for the long run that profit society and future generations… to construct legacy. Not the short-term tactical concerns of most buyers designed to “reap what you sow.”

Themes and ideas I deem most related to investing… investing for the long run in development companies and other people… I typically attribute to sermons by Central’s rabbis. Particularly sermons on Yom Kippur. Like this yr. 5786. Rabbi Ari Lorge understands that the therapeutic prayer from Psalm 126, “Those that sow in tears will reap with sounds of pleasure,” is just not meant to counsel that those that plant seeds will at all times profit in a yr, or in some cases throughout their lifetimes, from their arduous work. The Rabbi notes that to enhance lives of society requires a reorientation from a “harvest mentality” to a “planting mentality.” In my thoughts, meaning those that plant, could not essentially be the technology that advantages from harvesting. Our Agency’s orientation is to spend money on companies that penalize present profitability as a way to improve their aggressive benefits and development prospects sooner or later.

Rabbi Lorge noticed that on this planet by which we reside, it’s typically believed that “you reap what you sow.” In different phrases, should you toil, you need to profit financially from that labor… that yr. After all, because the Rabbi theorizes, meaning “smart select to spend money on tasks that promise the quickest outcomes.” The harvest mindset works nicely if we’re pleased with the established order however will trigger us to fail if the article is to vary lives of our societies.

Contemplate Elon Musk. Discuss “Altering Lives!!!” With out his unbelievable engineering and management expertise… good ideas to enhance life and well being on Planet Earth… prodigious potential to lift capital and persuade governments and establishments to assist these concepts… and not too long ago introduced partnership with NVIDIA and Saudi Arabia… and investing his income to create enterprise alternatives that won’t scale and attain important profitability for a number of years… our lives could be dramatically totally different.

Rockets that may be reflown again and again can obtain the bottom price to orbit… quickly cheaper than airline flights on Planet Earth… a low earth orbit broadband communications satellite tv for pc community… electrical automobiles… orbital knowledge facilities with low price cooling and energy served by SpaceX… satellites to guard our homeland… large satellites to seize vitality from our solar… robots a lot smarter than people that may carry out duties the remainder of us need to keep away from… and to carry out them higher than humankind… and who is aware of what else he’ll conjure… What is evident? Elon and others like him, nobody is strictly like him, in fact, will change the course of human historical past.

In response to Rabbi Lorge, we’re in a “season of disorientation.” The place it’s potential to realize what’s seemingly unattainable… the Rabbi suggests a mindset of “unreasonable hope.”

“Each time you come on,you carry readability, enthusiasm,and a stage of thoughtfulnessthat genuinely helps peopleunderstand the worldthey’re investing in. It is whyviewers lean in when youtalk and why we at all times lookforward to having you.”

Andrew Ross Sorkin. Co-Host CNBC’sSquawk Field. November 15, 2025.

I apologize for the late publishing of this letter. Making ready for a sole half hour interview on CNBC’s Squawk Field with anchors Becky Fast, Andrew Ross Sorkin, and Joe Kernen previous our thirty second annual convention required extra prep time this yr than regular. Once I seem on Squawk Field … typically two or thrice a yr… I define factors I need to focus on earlier than showing reside. This yr there was a lot to debate and making ready to be the only real visitor on Squawk Field was time consuming. Time spent making ready for that CNBC look… and a reside broadcast interview with Elon after lunch… and my keynote speech in midafternoon delayed this letter. My speech adopted “shock” lunchtime performances by nation singer Shania Twain… comic Sebastian Maniscalco… and Broadway stars Kelli O’Hara and Sutton Foster, and P!nk on the finish of the day. You don’t have any concept how arduous it’s for me to work on my afternoon presentation throughout lunch reasonably than watch the performances by spectacular artists I selected… Yet another factor, all bills of the day together with performers, three Tesla door prizes, scream truck ice cream, and swag are paid by Baron Capital… not by you!

One other much more demanding effort than prepping for CNBC was writing and modifying what I thought-about my most essential convention speech so far, “Altering Lives.” That Mission assertion really took three months to draft!!! … and I used to be nonetheless “modifying” whereas I used to be delivering the speech that afternoon!!! Modifying is usually not as arduous as drafting. Speeches simply should be bullet factors, not prolonged explanations and require ruthless reducing. My writing coach, whose principal enterprise is writing political speeches, encourages me to be direct and get rid of sentences, paragraphs and ideas. His finest recommendation? “Ron, I’ve by no means watched an viewers depart a speech no matter how great telling one another, ‘Wow, what an important speech. … if solely it have been 5 minutes longer…’ ” My goal is 20 to 25 minutes.

Lastly, making ready for a one-hour broadcast interview with Elon that afternoon… though I anticipated the dialog to be enjoyable… made it arduous for me to sleep for a number of days. That is as a result of Elon’s companies by which now we have invested have “modified our lives”… Tesla with its FSD… full self-driving EV vehicles… monumental quick rising vitality storage industrial batteries and, quickly, Optimus robots… SpaceX with its re-flyable rockets and Starlink satellites that present broadband to each sq. inch on our planet… and who is aware of what else like knowledge facilities in area to save lots of cooling and vitality prices and large satellites that seize vitality from the solar to make use of on Planet Earth… and X.AI knowledge middle with GROK Ai foundational mannequin… have been all sophisticated… and rising very quickly… and I had 15 years of digital notes to review and distill into an hour-long interview!!!

“Quicker than a rushing bullet” was the phrase used within the Superman tv sequence of my youth. That is how briskly Elon is rising his companies… and persevering with so as to add components that embed his {hardware} and companies deeper into workflow and lives of his prospects… really “altering lives” is how we consider him.

A number of occasions after Elon opened a brand new manufacturing unit… or carried out progressive manufacturing traces or manufacturing processes… till the manufacturing unit or manufacturing traces using these processes scaled and achieved outstanding outcomes, he slept on the ground of his manufacturing unit… for weeks or months. Elon has been telling us for years that what’s most essential as a producer of expertise {hardware} is to give attention to “the machine that makes the machine.” Which he thinks is extra essential than specializing in the product! Give attention to essentially the most environment friendly manufacturing processes will end in the very best product design in his opinion. Along with his consideration to all particulars of producing processes… he’s proud to name himself a “provide chain man” when few regarded that as essential. This allowed him to resolve provide disruptions through the previous few years when others struggled with these points. If you develop into a buyer of Elon’s, which most of us will, it is going to be apparent that he has achieved these objectives.

You shouldn’t really feel sorry for me for the time I spent making ready for my dialog with Elon. It was extremely stimulating to assessment and take up all Elon and I and his executives have spoken about since assembly him in 2010. Or for Elon both in his efforts to “change lives” for the remainder of us. Elon’s companies’ mission has morphed to “sustainable abundance” for humankind who inhabit Planet Earth. That is from “sustainable vitality.” Mine is to “Change Lives” of our shoppers and workers by making them financially safe. Elon has been the most important contributor to our effort incomes us about $13 billion income… 25% of our $52 billion realized and unrealized features as far as of 10/31/2025… and we count on to earn a minimum of 5 occasions extra by 2035. No assure clearly… however that is the goal. We managed solely $100 million in 1992… in comparison with $44 billion at current. We’ve clearly been very fortunate.

Squawk Field’s Becky Fast instructed me final yr that when she was interviewing an superior midwestern investor, who has been investing even longer than I’ve, she talked about to him that she had interviewed me every week in the past. His response? “I actually admire how Ron tries to show people investing ideas… and enterprise possession… not inventory buying and selling.”

Elon posted my dialogue with him on the “Altering Lives” Baron Funding Convention that afternoon on X. It obtained 35 million views!!! Man, o man. That man has Star energy. It is no marvel that Gwynne Shotwell, SpaceX CEO, refers to him as StarMan. Michael Dell posted as nicely and acquired 1.5 million views. Most feedback have been complimentary to Elon.

Three years in the past, when Elon introduced he meant to buy Twitter, he was roundly criticized. Baron had already made $7 billion in features in Tesla and SpaceX. I then known as him to debate that buy. When he described the rationale, which offered him a possibility as a result of Twitter knowledge to construct the Grok AI basis mannequin… and big knowledge facilities, along with its town-center operate, I instructed him we wish to make investments $100 million in that acquisition. His response? “Actually? This can take some time to work out however I am assured it should.” Over the subsequent two years we invested an incremental $235 million in X.AI financings, which then acquired Twitter which had been restructured and renamed “X.” As of November 20, 2025, our $335 million funding has a present worth of $1.4 billion!!!! Fairly neat for a enterprise for which Elon obtained a lot criticism.

“I do regard you as true buddy. The check of friendship is who helps you when chips are down and occasions are powerful and everyone seems to be towards you. That is an actual buddy… and that is you Ron.” – Elon Musk. thirty second Annual Baron Funding Convention. November 14, 2025.

We met Elon Musk in 2010 when he and his bankers visited us throughout Tesla’s IPO roadshow. We selected to not make investments at the moment. Though Elon impressed us as an immensely gifted engineer/physicist/ government, we have been skeptical that he would achieve success introducing electrical automobiles. This was as a result of highly effective and politically sturdy teams together with automobile sellers… inner combustion engine car producers… carbon vitality companies… unions… and politicians stood in opposition to Tesla. Regardless, since we thought-about Elon a singular chief, we continued to analysis, examine, and go to each companies.

When Tesla’s Mannequin S sedan gained huge acceptance from 2014-2016, we made our principal investments in Tesla. We’ve been investing in SpaceX from 2017 by means of as we speak. After we started to spend money on SpaceX, that enterprise had not but landed and reflown its Falcon 9 rocket…though it will inside a yr.

Elon has clearly achieved an heroic job of managing companies that now supply an enormous number of services. As a result of now we have been following the progress of those exponentially rising companies with open-ended alternatives intently for greater than fifteen years. We’ve collected notes that if printed from my digital pocket book could be a number of inches thick. Which is why it so tough to arrange for less than a one-hour interview with him.

“I actually loved your latest interview with Elon Musk. Congrats in your wonderful foresight and persistence backing Elon and all his endeavors.” – Lead portfolio supervisor world development funds at one of many largest U.S. monetary companies. November 16, 2025.

“Once I took over managing the workforce that runs world development funds 27 years in the past, you have been variety sufficient to have lunch with me. I appreciated it then and would like to have lunch with you once more. I believe you’re in all probability the one precise long-term investor left standing! You could have set a beautiful instance for our business.”

“WOW!!! Merely wow. Deepest congratulations on one other phenomenal convention. The place else can one spend time with Optimus, Harley from Shopify, and Sutton Foster??? Solely at Baron Funds’ annual occasion.” – Lynn Martin. President New York Inventory Trade.

“I can’t wait to host you on December 15 for the bell for Baron First Ideas ETF itemizing on NYSE. Will probably be my honor to share a podium.”

In latest weeks, I discovered myself reflecting on that sermon drawn from Psalm 126, a textual content that has accompanied the Jewish folks by means of centuries of uncertainty and renewal. The psalm accommodates a line many people know nicely: “Those that sow in tears will reap with sounds of pleasure.” The essence of Psalm 126 is delayed gratification, generational considering, unwavering perception within the compounding of effort… which can be the essence of long-term investing.

Respectfully,

Ron BaronCEO

Authentic Publish

Editor’s Be aware: The abstract bullets for this text have been chosen by Looking for Alpha editors.

Editor’s Be aware: This text covers a number of microcap shares. Please concentrate on the dangers related to these shares.