They Beat All US Stock Funds Since 2003 | Michael Baron on the AI Winners Investors Miss

Michael Baron of Baron Capital explains his case for AI beneficiaries beyond the biggest tech stocks, including software companies the market fears will be disrupted. He joins Matt Zeigler and Justin Carbonneau to discuss how competitive advantages, management quality, and a long investment horizon shape the firm's growth portfolios.Baron Capital's co-president and portfolio manager walks through the firm's investments in Tesla and SpaceX, from vertical integration and autonomous driving to reusable rockets, Starlink, and the potential for AI infrastructure in space. He also explains why proprietary data may strengthen some software businesses, how the firm manages positions as winners grow, and what would make him sell. The conversation closes with lessons from Ron Baron on curiosity, primary research, and building conviction.Topics covered:Finding growth opportunities across technology, financial services, real estate, and consumer businessesWhy Michael Baron believes some apparent AI losers could become beneficiariesProprietary data and the investment cases for Shopify, Guidewire, FactSet, MSCI, and GartnerTesla's evolution, energy business, and the potential economics of autonomy and softwareSpaceX's reusable rockets, Starlink, and Michael Baron's vision for AI infrastructure in spaceValuing businesses over a long horizon and assessing reliance on key leadersLessons from Ron Baron and the importance of management relationships during market stressLetting winners run while managing concentration, leverage, and portfolio correlationsDistinguishing portfolio trims from selling when a competitive advantage deterioratesWhy Michael Baron believes AI will increase the importance of investment judgmentLearn more about Baron Capital:https://www.baroncapitalgroup.com/Chapters:00:00 Michael Baron on finding growth beyond technology04:16 AI disruption and the opportunity in software10:54 Tesla, Elon Musk, and vertical integration18:33 Long-term valuation and key-person risk23:28 SpaceX, Starlink, and AI infrastructure in space34:11 Lessons from Ron Baron and the firm's future40:08 Evaluating management and competitive advantages47:11 Time as an edge and managing growing positions54:11 When to trim a position and when to sell58:11 Curiosity, primary research, and convictionLearn more about the Excess Returns podcast network:https://excessreturns.coNo information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.