Billionaire investor and CEO of Baron Capital, Ron Baron, says he has given his company the green light to accumulate 10-figure value shares in SpaceX (SPCX).
In a call with other executives at Barron’s Capital, Barron’s He says That since SpaceX is looking to raise $70 billion from the public markets after its June 12 debut, he wants his investment firm to buy $1 billion worth of SPCX stock to avoid dilution.
“So we own about 1.25% of SpaceX. If you’re going to raise $70 billion, and I don’t want to understate myself, we need $1 billion.”
According to Barron’s, he expects huge demand for SpaceX from multiple sources, starting with big money managers who own little or none of Elon Musk’s technology company.
“And there are a lot of people managing huge funds, people with $2 trillion, $3 trillion, $1 trillion. They don’t have a share. And people with $7 or $8 trillion have less than they could afford. So there’s huge demand coming from people who don’t have enough and have to have more.”
With SpaceX’s expected inclusion in the Nasdaq 100 after adopting the “fast track” rule, the billionaire sees additional demand from passive investors.
“Then you also have these indices where passive investors have to invest in those indices, whether they want to or not. If they’re going to replicate an index, and you have a new company entering the index, they have to invest in it. So, you have demand coming from investors who don’t have any and are growing with a lot of capital, and they have to own it.”
And then, in addition to that, there are people who will try to replicate the index, and they have to own it as well. Then there are people like us who say, “Boy, I’ve never done anything like this in my life,” and I didn’t do it. Hence, they have to own it too.
SpaceX is targeting an IPO price of $135 at a valuation of $1.77 trillion.
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