SpaceX's IPO Could Be the Biggest in a Decade. Here's How to Get Exposure Right Now.
Key Points
The Baron Partners Fund is a solid idea for investors seeking SpaceX exposure before the IPO.
This mutual fund allocates a significant portion of its portfolio to the satellite company.
The fund is an “ode” to Elon Musk.
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The SpaceX initial public offering (IPO), which is likely to smash records, is expected to come to market in the months ahead, as a road show and investor event are scheduled for the first half of June.
Predictably, some investors can't contain their enthusiasm and want to know how to get involved in SpaceX stock before it's available to the broader investment community. The Baron Partners Fund (NASDAQMUTFUND: BPTRX) is the answer. With this product, market participants are investing in a mutual fund rather than an exchange-traded fund (ETF).
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This mutual fund has a big stake in SpaceX. Image source: Getty Images.
The $10.39 billion Baron Partners Fund, launched in January 1992, is a credible avenue for exposure to SpaceX for several reasons. First, there's the obvious, that being the mutual fund's 33% allocation to Elon Musk's rocket and satellite company, SpaceX, making it by far the largest holding in the fund.
Second, many of the ETFs holding SpaceX shares are new, small in terms of assets, or hold only small stakes in SpaceX. That doesn't make them bad ETFs per se, but some market participants find comfort in older, larger ETFs, and for those seeking robust SpaceX exposure, it's hard to top the Baron Partners Fund.
For investors who are fans of market history, this mutual fund's massive stake in SpaceX isn't an accident. Baron Capital founder Ron Baron has long been a fan and friend of Musk. The money manager invested $400 million in Tesla in 2014, and as of last year, that stake, across various funds, was profitable to the tune of $8 billion. It just so happens that the electric vehicle stock accounts for 20.4% of the Baron Partners Fund portfolio, making it the second-largest holding behind SpaceX.
As for Baron and SpaceX, the asset manager began investing in the space company in 2017, taking a $1.3 billion stake. That position generated $4 billion in profits as of last year.
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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