Tesla Bull Ron Baron & Education Secretary Linda McMahon 3/11/25
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Hi, I'm CNBC producer Katie Kramer. Here's what's coming up today on Squawk Pod. Markets in major sell-off mode. Investors worried about the state of the economy and the world's richest losing some zeros on their balances. You know, if you hate billionaires, this is a great day. Legendary investor Ron Barron is our special guest. During volatility, the founder of Barron Funds stays unruffled.

It makes people very unsettled right now, all the things that are happening so quickly. I think they're intentional. I think that the government, you had Musk, incredibly consequential person, advising the president. And I think that all the things they say that make the market go up or down,

Tesla in particular suffering some major downs, but the longtime Tesla bull is still betting on Elon despite his focus on Doge. - I would hope that he would be a little less visible, but he feels that this is the way he's gonna get things done. And he's been getting, he's uncovering unbelievable things.

Plus, unwinding bureaucracy in education. Good idea, says the sitting bureaucrat. I think we're going to see improvements in our scores when we get the bureaucracy of the Department of Education out of the way. A conversation with the brand new U.S. Secretary of Education, Linda McMahon. It's Tuesday, March 11th, 2025. Squawk Pod begins right now. Stand back, keep by in three, two, one. Cue, please.

Good morning, everybody, and welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. Yesterday was a day of superlatives for the market. None of them, though, were good. The Dow and the S&P 500 had their worst days since December 18th, and believe it or not, they were the relative outperformers.

They were down 2 and 2.7% respectively. It was the tech stocks, though, that were the biggest losers. NASDAQ down by 4%. That was its worst performance since September of 2022. Apple was the worst performer on the NASDAQ and on the S&P 500, by the way. It's now more than 13.5% from its all-time high. The NASDAQ 100 dropped by 3.8%, and it's now 12.5% from its all-time highs. And the fear was palpable yesterday.

You just had to look at the VIX to see. The VIX was up by 25 percent at one point. It hit almost 30. That's its highest reading since August. A lot more questions about the prospects for the economy, pressuring both treasuries and oil prices. If you look at yields this morning, they're down once again. They were down yesterday pretty sharply. The 10-year is now at 4.2 percent. The two-year is at 389. And you had WTI falling to just about $66 a barrel. That's the lowest price since September.

Meantime, let's talk about Tesla because it is now falling more than 15% in yesterday's market sell-off. Its worst day in more than four years. The stock has lost more than 50% of its value since it hit a high in mid-December, a loss of $800 billion in market cap, responding to a post on X highlighting some of the worst days for Tesla's stock since it went public. Elon Musk said it will be fine long-term. In an interview on Fox Business Channel, Musk said that he's running his business with

quote, great difficulty. May get a little bit of a pick me up today. Earlier this morning, President Trump posting on his social network, I'm going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk. A truly great

American. I thought he had to drive around in the Beast. I don't know if he's allowed to drive. Is he allowed to even drive himself? I think when you're not when you're president, not when you're president, right? But some of the Musk's biggest Wall Street backers have been feeling the pain. Ron Barron's Barron Partners Fund, which counts Tesla as its biggest holding, is down 16 percent this month. And of course, we're going to be speaking with Ron. It's an interview you do not want to miss.

The yeah. Yeah. I mean, the billionaires have been doing well, that's for sure. But at this point, if you want to add up the math on the losses in the Nasdaq, which were substantial, I had a problem calling it a historic loss. The Dow was down two percent yesterday. Yep.

In 1987, I was sitting at my desk at EF Hutton, 22.6%. So let's relax. I mean, not minimizing what's happening here, but... No, but if you start to add up the losses, you're now looking at... No, I know, but nothing's historic. Nothing is historic. Yeah. Even close. I did. Oh, you did? Okay.

Tesla's, not on purpose, not on purpose. I didn't catch it quickly. Tesla's, but you know, if it bleeds, it leads, right? I don't have a problem with that. And the losses have started to build up. No, no, it is concerning and you never, you get a, are we allowed to say dead cat now? Because we've got rid of the wokeness? Dead rock is still better. There was a time we wouldn't even say dead roach because some people like roaches. They're very tasty.

they are and lots of protein uh... but a dead rock that this is the way it's looking here doesn't look like anything that's not a balance that's exactly what they are in fact we're not even a good thing to stop and would tell you that it still has time to move lower those who don't care yeah i don't say that's not about the hundred times i say last sold with the defense was the southern bottom last last week last week last week is that he said yeah but he does he's crazy short-term call and no one said nobody else with stick their neck out and say no

Tesla's 15% decline. Let's talk about how much...

You know, if you hate billionaires, this is a great day. Yesterday's decline making Elon Musk by far the worst performer on the day when it came to loss in net worth. According to the Bloomberg Billionaires Index, his fortune shrank by more than $130 billion, but being able to lose $130 billion. That's what I was thinking yesterday when I saw it. I would love the ability to do that. Remember, Boone Pickens wrote a book, The First Billion's the Hardest, after losing a billion dollars. But the ability to lose money like that and still feel like, yeah, okay, things are pretty great.

How about Oracle? They had results, too. Larry Ellison, Amazon's Jeff Bezos, NVIDIA's Jensen Wang, and Dell's Michael Dell all lost more than $20 billion apiece. Oh, and this is this year. But there were some winners yesterday. Susquehanna International co-founder Jeff Yass and Berkshire Hathaway's Warren Buffett both added more than $10 billion on paper. Jack Ma, Bill Gates, and Mark Zuckerberg also.

And the House is expected to vote this afternoon on a continuing resolution to fund the government that's ahead of a possible shutdown at the end of the week if lawmakers can't get a deal. And the House Rules Committee voting yesterday to advance the six-month funding package. House Speaker Mike Johnson.

and telling reporters he feels good about it passing. Sources also tell NBC News President Trump and top aides have been calling undecided Republicans and urging them to support the continuing resolution. But at a press conference yesterday, House Minority Leader Hakeem Jeffries instructed the board collective of House Democrats to not support the bill, but we'll see.

The Republican bill dramatically cuts health care, nutritional assistance for children and families, and veterans benefits. It is not something we could ever support. House Democrats will not be complicit in the Republican effort to hurt the American people.

Because there are about 12 Senate Democrats, or about 12 Democrats that we're talking about in Trump areas that might actually vote for this. Because you could be accused of, you know, normally the Democrats love to say the government, the Republicans love to shut the government down. This time they could be opening themselves up to that charge. Senate Democrats are also largely condemning it.

Two Democratic lawmakers did introduce their own funding bill that would keep the lights on in D.C. through April 11th. It could serve as a backup if the GOP bill failed. I will say yesterday morning we were tired because of daylight savings time. Man, did I appreciate the light last night. Oh, because it was 65 degrees. We were outside with the kids late. Life is back.

I had a similar experience. Yeah? Yeah. Going to the Upper East Side to get a haircut, there was no traffic. I love this congestion pricing. It's really a good idea. Why not? Do I not like the lanes, the fast lanes? But you know who I feel like?

An entitled, privileged one percenter. I've got enough to pay for the congestion pricing and for the fast lanes. But everybody else, all the little people, I mean, I feel horrible. I feel horrible that I like congestion. I don't. I feel horrible that I don't like congestion. That's not even the way to think about it.

You're gonna tell me, you always tell me how to think about things and it's always wrong. No. Go ahead. Then I won't, then I won't. Okay, please, please give me. Part of the problem for those in New York City, which you need to get people to move around in the city. Right now, the problem with the congestion actually reduces productivity because people cannot move around. Trucks can't move around. Stuff can't get delivered. Because they could pay it. What'd you say? They can pay it.

What are you talking about? He's arguing. No, he means he meant before congestion. Before congestion pricing. Now they had an actual problem in the city. Plus, we had a revenue problem. And by the way, as a result, less people were going on the subways. And that meant that people weren't getting around. I have ADHD. So you like congestion pricing or you don't like it? Oh, yes, I like it. But you don't feel like a fat cat? No, I think. No, I. Well, you feel like you're helping everyone.

Ultimately, actually, I do. I know this may sound crazy to you, but ultimately, I do. I felt guilty. I don't feel guilty because I hope we're going to make the subway system better. Yeah. She feels guilty. I like it, but I feel guilty about it. We were buzzing right up Madison Avenue. All right. Enough on our congestion pricing. Teas will be next.

Coming up next on SquawkPod, the great stock decline of Tesla. Down 15% in a day. Down 45% in 2025 so far. Down more than that since President Trump took office in January. But Tesla's longtime bull and shareholder is still bullish. Investor Ron Barron maps out the EV self-driving, Musk-driven future. Hey.

I think that over the next 10 years in SpaceX we can make 10 times. Elon thinks we're going to make 30 times. In Tesla, I think we're going to make from where it was a trillion one, I was thinking we would make four times over the next 10 years. I think we're going to make more than that now from these prices.

Tesla makes up 32% of one of Barron's funds, and that fund is down more than 16% in the last month. Plus, we'll get the Musk backers' advice on CEOs in politics right after this. Net credit is here to say yes to a personal loan or line of credit when other lenders say no. Apply in minutes and get a decision as soon as the same day. If approved, applications are typically funded the next business day or sooner.

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Weight loss with Factor Keto based on a randomized controlled clinical trial. Results will vary depending on diet and exercise. You're listening to Squawk Pod from CNBC. Here's Becky Quick. All right, welcome back, everybody. Tesla is coming off its worst trading day since 2020, falling 15% in yesterday's session. That stock is down now more than 50% from its all-time high that was reached in December. Still, if you're looking for the last year, it's up 25%, so it has been a pretty volatile stock.

Joining us right now is longtime Tesla bull Ron Barron. He is Barron Capital's chairman and CEO. He's been, again, a longtime investor, not just in Tesla, but in many other Elon Musk companies. And Ron, thanks for coming in today. Thanks for inviting me. Let me ask you very quickly right now how you're feeling about the overall markets. You're a value investor. When stocks come down, prices come down, sometimes value investors get pretty excited. How do you feel about things? It makes people very unsettled right now, all the things that are happening so quickly.

I think they're intentional. I think that the government, you had Musk, incredibly consequential person, advising the president. And I think that all the things they say that make the market go up or down, you shouldn't think that those are by...

you know, by miscommunication or error. They're all intentional. Not intentional to drive the stock market down, to get to a different place for the economy. Well, everything. I think it might even be intentional to try to slow down the economy, get rid of inflation. First term president, the first thing you do is try to do things that are going to be unattractive to your constituents, you know, if you're running for election. But you do it now, get it out of the way, and then a year and a half from now, then things will look better.

A year from now, things will look better. But stock prices, I've been saying for a little while now, I can't believe how cheap they are. Those are the things that we're looking at. So you're on a buying spree right now? I didn't say I was on a buying spree. I just said I can't believe how cheap things are. I own a lot of things. I'm a long-term investor. You know, it's interesting. I listened to your analyst this morning on television, and you were talking to him about Tesla. Gene Munster. Gene Munster. And you were asking him, great shirts he has all the time, I guess, but you were asking him about...

what he thought about Tesla. And he said, well, for a four, what was it, a four-week horizon? A four-week horizon. So that was his mindset, a four-week horizon. I think he did say for a four-week, you could see some volatility, but longer term, he was a fan.

If you're a trader, I would not own them for the next month until they report that. Which means you'd sell them? Is that what you're saying? You'd sell them? Well, yeah, I would not own them. The trick in selling them, if you're a trader, yeah, I would sell it for if you want to play it like week to week. All the pain that we're having in 2025 does set up 26 for a gain. And that's why I continue to own the stock personally.

Yeah, but I mean, it was focusing on four weeks. And basically, you know, I met Elon in 2010 and it took me four years before I invested anything. And between 2014 and 16, invested $400 million and we made six, $7 billion on that. And then we invested in SpaceX in 2017 on at a billion one, that's now worth about four and a half billion. I think that over the next 10 years,

In SpaceX we can make 10 times. Elon thinks we're going to make 30 times.

uh in in tesla i think we're going to make from where it was a trillion one i was thinking we would make four times over the next 10 years i think we're going to make more than that now from these prices ron so there's two issues i think going on with tesla right now i'm curious where you where you land there's the fundamental issue which is just what's happening in the economy how many people are going to buy cars at least the products that we know about today right um when you think robo taxis

develop when you think new cars come out, all of that kind of stuff. That's the actual fundamentals of the business. And then there's the multiple question, which is really a market psychology question to some degree. I mean, they're related, hopefully, but there's sort of, as I look at it, sort of two issues. There's multiple, which are multiples are coming down and everything.

But then there's the actual fundamentals of the business. So you're thinking a year out, it's a lot better. And my question to you is, what happens in a year from now to the fundamentals of the business? Meaning, are they selling more cars? Do you think that they're going to launch new models that we're going to see? Do you think the Robotaxi product actually does launch and it's material to the business during that period? What's the sort of catalyst? So, fundamentals.

So I want to get one thing straight, though, first of all, that we're investors in people for the long term. Question everything. Don't take anything for granted. Investing for the long term is exceptional. It takes time. We look out years. Own it. We own things. We don't buy and sell things. And as far as the fundamentals go, so I want to make sure we talk about other people, too, other than Elon. I'm not talking about Elon. I'm talking about the business. Major guy. So his...

business and you wouldn't have a business without him you wouldn't have EVs without him you wouldn't have autonomous driving without him you wouldn't have the internet follow every inch of the planet without him you wouldn't have rockets that you can use over without him I'm an unbelievable engineer

And the fundamentals of the business, this is an inflection point right now. The last time I was on, the stock price was 160. And I was telling you that I thought that this was a really interesting time to buy because the robo, the software was working way more when they have cars

You have to have a $150,000, $200,000 car. Our car is a $35,000 car and it's software. It's software and cameras. And so it's going to drive just like a person and probably better, way better than a person. Each new series of introductions is dramatically better than the last one. So fundamentals, the changes.

is that so historically what we did is we what tesla did is they built a facility in china they bought this junky place that bank that was bankrupted by toyota and uh and general motors in california and all the union workers were fired hear that joe biden all the union workers were fired

And then every single one lost their jobs. And then we take over this plant and they go look at it for the first time after he buys this thing for a distressed price. They spent a billion dollars on it. It cost us 20 or $30 million to buy it. And then they go to see it and Elon says, yeah, let's go look at this place we bought. And it's a huge facility, five million square feet. And they can't get into it. They finally get inside and they go with one of his friends from college who's a director and they open the door and they look inside and it's dark and dark.

and it's drugs and prostitution and it's crazy stuff inside of that place. And they look around and it's incredibly dark and Elon's looking around and he says, "Well, what we're gonna do is we take off the roof here, we're gonna make it all white and we have the production line running there." And so they learn how to build it. And it was making four or 500,000 cars a year, 600,000 cars. Then they go out and they build a facility in Shanghai.

And it cost them $7 billion to build it for a million cars. And that factory was making $15,000 in profit a car. Investing $7 billion, making $15 billion a year. And then price cut after price cut after price cut. Chinese are incredible competitors. I don't understand how American car companies will survive, except for Tesla.

I'm going too long. No, no, no. Let me just ask you. But anyway, the fundamentals are changing. Instead of making $5,000 or $6,000 or $7,000 a car, you're going to robo cars. And every time they have a million cars that they make, that they keep, that are $30,000 a piece that last a million miles--

those cars are going to generate 50,000 revenue miles a year. So before the motto was they're making $7,000 in profit a car, $6,000 in profit a car, a million in cars. Now all of a sudden you're keeping the cars and making them robo-taxis. What that means is that if you do 50,000 miles a year for a car, those cars will generate 50,000 revenue miles, will generate $30,000 or $40,000 or $50,000 in profit per year.

Per car. So every time you have a million cars, you're adding 30 or 40 or 50 billion dollars to 30 or 40 or 50 billion dollars to profits per year for a million cars. You have been a longtime believer in Tesla, a longtime believer in Elon Musk, and you've been right.

The numbers that you've kind of come on here and talked about, we've headed a trillion dollars and over. The market cap is now back at $715 billion. But market cap was above a trillion dollars. You had said $2 trillion when people thought it was crazy. It doesn't look so crazy anymore. A lot of the things you've said have all happened, and it's because you've been a believer in Elon Musk. I would add that there's a third consideration in the stock market right now, though, too, and that's that Elon Musk has gotten so...

associated with donald trump and with republicans and with make america great again that it has led to blow back in some areas in in europe sales are down forty five percent in some areas uh... there have been in cases of vandalism even terrorism against cyber against the cyber trucks against tesla cars against some of the factories that are out there that's a push back in that

i think of warren buffett used to say that just because he is the c_e_o_ that doesn't mean he has to check his political beliefs at the door that's what he always said and he was always pretty outspoken on things but several years ago many years ago he changed his mind on that said he was going to keep his political beliefs a little more to himself because he didn't want the

impact of people who disagreed with him to come back on Berkshire. Do you think that this is helpful to the stock with what he's doing right now? Does it concern you that he's spending more time at Doge than he is at Tesla? So my advice has always been to avoid politics. I don't like talking to you guys about politics. I don't think corporate executives

I don't think that's the best use, but he believes this is really important for our country. So remember, ChatGBT? That was founded by him. And he put up the money for it in a nonprofit organization. That's worth $350 billion. He walked away from that because he wasn't convinced. In fact, he was convinced the opposite, that this was going to be bad for humanity.

humanity. He was working about humanity. So he gave up his interest in chat GBT, although they offered it to him again. But he does not care for the person who's running it, Sam Altman. So he doesn't trust him. So basically, I don't think it's a great thing to alienate half the

population. On the other hand, he believes that digitization and autonomy is going to be driving the future and he thinks we're on the verge of having an era of incredible abundance. Incredible abundance. So he's setting it up for that. And then in addition to that, what he believes is that in order for the planet Earth to survive, that America has to be militarily strong.

And the only way you could be militarily strong is you have to be, you can't be financially weak. So what he's trying to do is set it up so that you'll be financially strong and then you can be militarily strong and that's gonna protect the planet, he believes. And I agree with that. So I think there's...

I would hope that he would be a little less visible, but he feels that this is the way he's going to get things done. And he's been getting, he's been uncovering unbelievable things. And I think we'll be successful. How often should you expect SpaceX to have these issues? And you see the celebration from the Elon haters. It's sick, but they actually chortle and sort of laugh.

about the two recent incidents. Elon, he's right, rockets are hard, but this is all, there was a time in Elon's life where he would've,

If a launch had failed, he would have been bankrupt. I think he's recounted that story before. Three different times. Yeah, so this happens. Sleeping on the floor. Are things going along fine with SpaceX? I ask about that regularly. I ask about succession. I ask about how the management is going and whether he's showing up.

And he is showing up. I mean, unbelievable that he's doing all the things he has in Washington. And I was talking with someone who is a financial executive at SpaceX, I guess last week. And she was telling me that when there's an issue with something like Starship, which isn't working yet, but making incredible progress,

and there might be three meetings a week he's in every one of the meetings and then when it's a Falcon that's doing great so he's there for a short time and if it's a you know you know Starlink or or a star you know defending of our country he's there for those meetings too but he's there all the time I said so so you're a financial person what are you doing there and so she says well what we do is we give him a deck and

And he goes through the deck, presumably, but maybe he doesn't because maybe he knows all this stuff already. And we ask questions, so why are you in this meeting? You're a financial person. Well, I'm there because we give him the options. This is what this is going to be. This is one solution. And she says, I'm the one who figures out how much everything's going to cost.

He shows up at all these meetings and everyone tells me the same thing. He is more charged up about his business now than he's ever been. And all these new, when you talk about the fundamentals, there are all these new products that are coming out right now, right now, the middle of the year, you're going to start seeing new products, new refreshes. When you talk about Europe sales being down 40 or 50%,

They don't have any cars. They're not making them. They're not making them because they're going from the Model Y, which is the best-selling car on the planet, a million and two cars a year, to not making them. And so how are you going to have up, up, up,

when the car that's driving your business isn't being made. And so that's what's happening. And you're starting to make them now in the refresh model. And as you see pictures of people saying, man, this is a great, incredible car. And then in addition to that, you talk about full self-driving. Man, you won't believe what this is like. I mean, you have to... So Joe, you like Porsches or something? Go get one of these cars. I'll get you a test drive. I will have a... A Taycan? I will...

Do you have a Taycan? No, no, no. No, I do not. Okay, I will have a car brought to your house. You want me to get an EV? I want you to... What, an X? You want an X? Like a plaid? You like the X? Get the plaid S. I do like those. I want a black one if you're offering. I'm not offering it to you, but I will have you get a test ride. And the way they get the most sales is they get people who have test rides. You know, it's really funny. I had a battery in my key that wore out.

And so we're in Florida, I have one in Florida. And so Judy says, "Well, you gotta change it." I said, "I'm not gonna change it. "Why don't we have someone else do that for me?" "No, we're gonna change it." So we call up in West Palm Beach. - I do that. - We call up in West Palm Beach, drive over there. And then as we go in, there's two young men sitting behind computers. And one of them says,

Ron Baron. You're Ron Baron? Wow. Can I have a selfie with you? Sure. And then he does that and then the person next to him says, you're Ron Baron? Wow. I got to call my manager. And the manager comes over and he says, Ron, you changed my life. You changed my life. Why?

I say, "Well, because I talked to you seven years ago and you convinced me that this was a great place that I should be working." And in fact, most people who are in my business, what they do is that their goal in life is to make as much money as they can

as fast as they can so they don't have to do it anymore and they can do something else. That's what they want to do. They make as much money as they can, as quickly as they can. Now, what our goal has been is to change people's lives, change the people's lives of people who work with us and change our clients' lives. Changing lives, that's our mission. Can I ask you a different question? About a month ago, you were a, at least, named backer of Elon's bid to buy OpenAI.

And I'm curious in that, in the context of that bid, what work you did to try to create the valuation of OpenAI, how you came to $97 billion. How did that come about? - It was a small personal investment. We hadn't done enough work to really do investment on behalf of our clients.

And the idea behind it is that their estate, this is from a charity. So charities have to get the highest price for their interests if they're going to sell them. And this is a bid for control of this company from the charity that owned it, that controls it.

And the idea is that we think that there's most likely be interesting discovery if you go behind the wall and look at the, you know, to see if there are any, to see conflicts. Right. And there's state attorneys generals that are involved. And look at this right now, a number of them, because they're charged with making sure the charities get the highest price, the best value for it. You can't, if you're...

You can't, I can't deal with my charity, with my foundation. I can't deal directly any way, shape or form. Neither can people who are running this company deal with a charitable organization. They are charged with being fiduciaries for the charity. So I think that when it comes out, that'll be fine. Or, you know, we think already that Grok, which is owned by, you know,

by us is going to be very shortly better than ChatGBT. And ChatGBT right now is being valued for $350 billion. Grok is valued for $50 billion. Can I ask a question about the bid for OpenAI? I mean, the critique of that bid was that it wasn't a bona fide bid, that it was an effort to create discovery or to help in the context of the lawsuit against OpenAI. And then what I understand was it was with the

The bid was withdrawn because there was a view that it actually was going to undermine the case, given what the judge said. I'm not, I haven't followed, I have $5 million invested. Okay. I, you know, I haven't followed it that closely. I was interested when they described it to me initially. I thought that, you know, that it wasn't right what was being done. Right. And I thought that, you know, he started it, as I said, in the first place.

So here's someone who's being accused of profiteering and he started this for humanity, right? And,

So it's not a huge study that I've done on this, but I thought it was interesting the way that it was described to me. And I think that it was a common... But it wasn't Barron Capital then? No, not Barron Capital. It was Ron Barron. Ron Barron. Okay. Maybe it was Barron Capital. I think it was Barron Capital. Yeah, maybe it was Barron Capital. Yes, it was. Okay. Thank you. No, no. So it would have been the shareholders of Barron Capital. I mean, it would have been... My family.

Oh, not the people who invested in Barron Capital, the firm? No, they invest in mutual funds. My family owns Barron Capital. Understood. Ron, very quickly, you did sell more shares of Tesla in the second quarter last year, 1.7 million shares roughly, 1.8 maybe.

That's the second time I recall of you selling shares. I remember you joined us back in 2021, in March of 2021, after you had sold about a similar percentage. At the time, you said it wasn't that you didn't love Tesla, but it was getting to be too big of a position in your funds. Was this the same story in the second quarter? Same story in the second quarter, and we sold maybe 5% more last month. So I think we probably have somewhere around...

two thirds of the stock that we bought in 2014 to 16. And so everyone, I didn't sell any personally.

And so everyone has to deal with certain clientele. And I deal with the critiques of my clientele for how large the positions are. And if they get very large, I mean, right now, Testa represents... It's about 30% in one of the funds. I think it's around, yeah, in Barron Partners Fund, it's about 12%.

of the firm assets and SpaceX is about 9%. So about 20% of assets. So structured portfolios, that the interesting,

So QQQ, Bloomberg, says that there's only two mutual funds in the United States that have beaten QQQ. It's 2,600 in the last 15 years. Barron Partners Fund is number one. Philadelphia Growth Fund is number two. And other 2,600, no one else has come close.

And so the, you know, so I have shareholders in our mutual funds and when a position gets real large, like Tesla has become, our cost is 11 or $12 a share, then they say, well, you know, how can you have such a large position? And, you know, I made an exception

after we bought as many shares as we did for clients between 14 and 16 and no one else wanted to buy stock, that I went to the board of our funds. I said, "I wouldn't buy any more stock, but I have to buy this stock. I'm not taking any corporate opportunity.

All of the other funds I have already invested, but my deal with you, if you let me do it, and I said I wouldn't, but if you let me do it, then what I'll do is just make Sparing Capital financially stronger. I'm buying it for them, not for me. And in addition to that, I'm the last in, I'll be the last out. So I won't sell a single share personally until I sell all the shares for clients. And that's what I've done. So even though we've sold...

maybe a third of our stock for clients that have not sold a single share personally. - Ron, do you think the bloom is off the rose at all for the EV transition, or at least for the mandates by whether it's states or the federal government to hasten the transition? And does that matter with Tesla since there's so many other things? - Well, you know, once you get to scale, nobody can compete. The Chinese feel that there's only one competitor. - Everyone's gonna wanna elect their cars. - Yes, everyone.

And except if you're gonna be a car collector, like if I collected the car that I had in high school and kept it, that would be-- - That was a Model T. - No, it wasn't. It was a Triumph TR. - It was a joke. That would have been 19 whatever. - 1964. - Right, that would have been like 19-- - But this was a red, so I was a lifeguard. I hurt myself and so I got disability for 600 hours

And I took the $600 and my father took me to someplace in New Jersey and I bought a Jews red triumph. - You were a lifeguard too. Did you know this corn pop fellow? - Who? - No, go ahead. - Yeah. - That's a Biden joke. - I was a lifeguard in the daytime and then I worked in the emergency room. I worked nine to five as a lifeguard and 11 to seven emergency room in a red bank hospital.

Let me ask you orderly about awful job. I wrapped body you save nine bought and that mine nine people - I never saved the person That's not what that's typical. Yeah, except for Joe save nine Run let me ask you what else you're buying right now. What do you like? What do you see in the broader market? So I'm not allowed to say when I'm buying because into a quarter and

But I would point out that there's so many companies that we've invested in whose stock prices haven't performed over the past year. It's remarkable. So if you look at Buffett's record,

one third of the years of 50 or 60 years, one third of those years, he underperformed the S&P. One third of the time. How come? And but he's massively outperformed over the long term. How come? He's not trying to be the market. He's just trying to invest in special companies. The market could go up or down, but he's basing his performance on how well the businesses do. That's the same for us. So for us, 97% beat the markets, top 20% and 57% top 5% in American Partners Fund.

And so the way I think about the investment structure of a portfolio is that you make the most money in the riskiest part of your portfolio. And that might be, you know, the SpaceX's and the Tesla's that might be 20 or 25 or 30% of the portfolio. Then 50 or 60% of the portfolio

in companies that are relative to book value, relative to cash flow, relative to EBITDA, you know, whatever. And there could be financial companies, there could be real estate companies, there can be healthcare companies, there can be industrial companies. So that's the bulk, double digit growth,

And then and then maybe 15 20 percent of your investment of our investment are invested in companies That are hurting their current earnings stocks go up and down as you see every day They beat they lose they miss the stocks go up and down and what we do is we're investing companies that all the time are Expending their money spending their profits so they could become larger in the future I was talking to our firm the other day and I was saying that it's like I

when you're building a hotel. When the hotel is being built,

you're not making any money what's being built, but everybody wants to buy the hotel when it opens. And so basically what we're doing is we're buying the hotel while it's being built because of the fundamental research we're doing on the businesses. And the idea behind it is that we are able to do that and people trust us to do that because our long-term record is so strong. They say, "Oh, I see, they've done it before like this. This is why they've invested in these companies where they haven't made any money for two or three years.

because something's happening in those businesses that's gonna make them go up a lot. For example, in Vail. So Vail has, I don't know, 41 resorts. And in Australia, and now they're looking at different places. Now they're going to Europe.

People in Europe, the business is three times as big as it is in the United States. Three times as big. In the United States, you buy a resort, you own the resort. You go to Europe, one guy owns the ski lifts, one guy owns the glaciers, one guy owns the restaurants, one guy owns the ski patrol, and one guy owns the base village. So what we're doing

in Vail is that we're going there and telling them, look, we have these ski passes that'll bring more people to you. And in addition to that, we'll be able to get investors to spend a billion dollars in building a base village. This is just starting. So people would say, gee, how could you invest in something that's not gonna pay off for many years? That's what the Vail is. You look at Hyatt. So I've been an investor in Hyatt Corporation since

in the Pritzker family since the 1970s when Jay was the first important executive to help me in business. And Hyatt, so handshake guy, whatever he says, whatever he says, anything he says, good or bad for him when the deal closes, that's his word, that's what he does. And so he goes public, goes private and then goes public at 35 or $40 a share with Goldman Sachs

I don't know, 10 years ago, five years ago, eight years ago. And we're one of the largest investors on that purchase. The stock then, there were 190 million shares outstanding. He was basically going public so his family and Tom's family could sell stock and he was buying it. And basically there were 180 or 190 million shares outstanding when he went public.

and he now has less than 100 million shares outstanding. 180, 109, and the stock has gone from 35 to 130. Actually 150 recently, now it's 130. Compared to all the other hotel companies, it's unbelievably cheap. MSCI, which I wrote about in this quarterly report, Henry Fernandez has been here a number of times. He has arguably the most, he was just in the Middle East. I was writing about this in my quarterly letter

And he is arguably the most important person, the most important person company determining financial markets worldwide. You wanna be a public market that attracts other investors, you have to follow his rules. He makes the rules. And so basically the people, Arch Capital, how do we go from two or $3

in an insurance company in 2001 to $100 a share, 30 times their money. In MSCI, Henry Fernandez, $18 to 30 to 18 to 600.

And so it's about betting on these people that build these businesses. So across the board, I look at our portfolio and if we don't have a positive flow and have a negative flow, and I have to sell something, I can't tell you how like it rips out my heart. But we've gone from $100 million managing in 1992 to 45 billion in December. And we made our clients 40 and ourselves 49 billion in profits.

So 45 billion of profits, realized and unrealized, and 49 billion of, I'm sorry, 49 billion of profits and 45 billion of AUM. Made more profits than we have AUM. We always appreciate you coming in, Ron. Thank you very much for being here. Thank you. I'm sorry I didn't give you enough chance to ask more questions. I will next time. Thank you very much. We appreciate it, Ron.

Next on Squawk Pod, the road to unwinding the Department of Education. The U.S. Cabinet Secretary in charge, Linda McMahon, says the bureaucracy, like the office she sits in, interferes with success in the classroom. The Department of Education was actually voted on in 1979 and then came into activity in 1980. And since that time, we've spent a trillion dollars on education in our states, and our results have not showed that.

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Serious allergic reactions and severe eczema-like skin reactions may occur. Learn more at 1-844-COSENTIX or cosentix.com. Ask your dermatologist about Cosentix. This is Squawk Pod. Up in Andrew, cue. You're watching Squawk Box on CNBC. I'm Andrew Ross, working along with Joe Kernan and Becky Quick. The Department of Education is sending letters to 60 universities, including Columbia, Brown, Cornell, Stanford.

Harvard, Princeton, Yale and Stanford. Now, the letters warn of potential enforcement actions if the schools being investigated do not fulfill their obligation to protect Jewish students on campus under the Title VI of the Civil Rights Act. Joining us right now from Washington, D.C. this morning is Education Secretary Linda McMahon. Good morning to you. We very much appreciate you being here. Lots to discuss about this particular component of all of it, plus about 100 other things that I know you're working on.

But I think I would start with this. In terms of the decision to send these letters, what you need to hear back from these universities, and how you make the distinction, if you do, between peaceful protests and the First Amendment and freedom of speech on one side, and protecting students from either violence or other things on the other.

Well, I think just by the way you have framed this, that the distinction is clear.

You do have peaceful protests. No one is arguing that that's not a right. The First Amendment right clearly should be on campus. Campuses and universities should be about open debate and discussion. What they should not be about is violence, attacking other students, attacking faculty to put forth, you know, their anti-Semitic views. These are attacks on Jewish students, Jewish faculty. That cannot be allowed. And the president has been incredibly clear that he is not going to tolerate violence

that kind of attacks on campuses and that he will defund those universities. And so we took that action against Columbia last Thursday. I happened to meet with the president of Columbia, sat with her, talked to her about the programs that she needed to put in place. And she's on board with doing that. She's only been there six months. She's very committed.

to eliminating anti-Semitic attacks on campus. And I felt good after our conversation, but at the same time, we really put some teeth behind the threats and took away, along with three other agencies,

you know the funding uh some of the funding that is going to colombia and and to really show that the president is really serious about this we you know every student that goes to campus from parents point of view to the students point of view deserves to believe that they are in a safe environment for education uh and not a political environment where there's danger to themselves secretary that that is actually where i think people then raise this question and you know universities um

I think a lot of folks would agree should be places where they should be able to have meaningful debate. At the same time, over the last several years, there's been a perspective that universities should also be, you didn't use the phrase, but quote unquote safe spaces. You've heard that phrase before, safe spaces. And this idea that certain types of language and certain types of speech, therefore, in

intimidate other students and how you think on a very practical basis those considerations should be considered or thought about at all if they should. Well I can tell you I'm really speaking mostly as we're discussing today about what we have seen on campuses especially since October 7th with the Hamas attacks. I mean there was an overwhelming

open anti-Semitic attacks on many campuses across the country. And we kept seeing them at Columbia. And one of the things that I talked to the president about was the president of Columbia, Dr. Armstrong, was that it seemed to be systemic, that she really had to look at faculty and what they were teaching. Were they encouraging riots? Were they encouraging unrest?

that students had to be vetted that were coming in from foreign countries. Are these students who are going to be looking to participate in riots? Are there outside agitators that come on campus? This is not a freedom of speech issue. This is a safety and civil rights issue.

And when you have the unrest on campus, that prevents other students from going to their classes. And I mean, they've paid to be in their classes and to learn. But yet they're afraid to walk on campus and to go to class. That's what we have to do. It's conflating two things. The the safe space idea that we had where certain professors were fired for misgendering classes.

someone in their safe space. And then a professor that actually causes violence where someone could actually be hurt or lose their life isn't even disciplined. So I don't even see how that's even in the same realm of discussion. I mean, I think we're coming around lately

to where we can really decide what is an actual danger to students versus some perceived mini-aggression that I hope we're moving beyond that, Madam Secretary. Well, I think the points that I've been making, we have been reacting to actual violence on campus. I mean, when you see students at Columbia, we're locked down.

you know, into, I believe it was a library and not, they couldn't come out to protect them. And students banging and hitting on the glass and being actually afraid to step out. I mean, that's a very different thing than a safe space, I think. All for 80 grand a year. You're right. 120 grand a year. You're right, that is conflating. You're right, that is conflating very, very different things. Madam Secretary, and you may argue this is a conflation, but it's a complicated question. How do you think about that

and some of the considerations around things that are happening in Colombia and the violence that we're discussing in that context with something like January 6th. Or the summer riots where 25 people actually did die and no one did any time, basically. A lot of those J6 people did years already before.

Andrew, right? Well, I can tell you my focus is as the secretary of education. So I am focusing on colleges, universities, K through 12 schools. And that's where we're really putting our focus. The president has been very clear that he wants to make sure that the recent scores that we have seen with our students, when high school students graduating, only 30 percent of them can read with proficiency. That means 70 percent can't.

When we look at eighth graders who are not proficient in math or reading, we have to do something about this in our country. And we are spending more per pupil than any other country. And we have the lowest results for that. We're doing something wrong. And clearly we want to take the bureaucracy out of the Department of Education and make sure that our states are prepared to have the tools that they need and best practices to really teach their students. Let's let teachers teach

You know, I think teaching is one of the most noble professions that there is. And I think our teachers need to be paid and supported, protected and allowed to teach in schools and not be bogged down by red tape and let them teach, because when they do, they understand their classrooms. The best teaching is that closest to the students. And I think we're going to see improvements in our scores when we get the bureaucracy of the Department of Education out of the way.

Secretary McMahon, what you just described for K-12 education is pretty different than what you're doing with the college-level funding at this point. On the colleges, I completely understand why you would want to press a federal imperative and make sure things are not getting out of control, that federal money is not being spent that way. But if you turn all the money back over to the states, does that mean the federal government will have no say in what happens in K-12, that it's completely up to the states?

Well, here's the thing. Congress actually appropriates the money that goes to states. You know, for Title I, for our IDEA programs, which are for handicapped and disabled students, you know, and a great deal of that funding is appropriated. Right now, the Department of Education in some ways has a pass through for that money. A lot of the grants

that are being approved by the Department of Education and sent to states have a lot of strings, a lot of bureaucracy attached to it. So we've talked to a lot of governors. If you look at Kim Reynolds in Iowa, if you look at Governor DeSantis in Florida, programs in Texas and Louisiana, we have really seen scores come up on the recent NAEP scores, which are national tests, because those governors have put in place things like school choice, allowing teachers to teach

and they have used their grant money in very good ways. But if we can get that money, and governors have talked to us about it, if more of the money comes in with less bureaucracy and strings attached, they know how to spend the money. They know how to fund the programs in their states so that federal money would continue to flow in. We're not talking about decreasing the funding that has been appropriated by Congress. Right. Secretary, what is the timeline to dismantle the Department of Education in your mind?

Well, certainly the president has given a directive that he would like to see it sooner rather than later. But there are things that are constrained by Congress. And clearly this would take 60 votes, you know, in the Senate to do this. That's not an easy task. But, you know, to dismantle a department and to make sure, as I mentioned before, that states have the right tools.

and are aware of best practices and how do we provide them with the kind of research that they need. And I think some of that research is very well being used to inform them. So it takes a while to unwind it. It's not going to be next week, but certainly we are proceeding as expeditiously as possible.

And Secretary, would your perspective be that then the money would get sent from Treasury to the states? Would there be any oversight on a federal level to the states? Or is the idea actually that that's not necessary? I ask because I think one of the reasons the Department of Education was created was because there was a view that it wasn't clear that every state necessarily had all of the wherewithal necessarily to distribute the money and to distribute it in an equitable way and things of that sort.

Well, if you think about the fact the Department of Education was actually voted on in 1979 and then came into activity in 1980. And since that time, we have spent a trillion dollars on education in our states. And our results have not showed that our scores have been continuing to go down. So we're clearly not doing something right.

But we want to make sure that states do continue to get the funding. Look, some governors are going to do better than other governors. Some states now are ahead of other states because of the programs they're putting in place. But we just think there's too much bureaucracy right now between the federal appropriations and funding and what the states can do in their local levels. Madam Secretary, we always appreciate talking to you. We hope we have an opportunity to do it again very soon. And we thank you.

Still want to talk about student debt forgiveness and everything else. So come on back. Thank you. I look forward to that. You're never getting sick and you're never getting 60. So it just seems like more negotiating to try. You know, it's probably still going to be around, but I want it to be much better. The question is, could it be smaller? You could actually move some of the grant making to Treasury. Right. You want to take that component out of it.

but you're never going to get 60. i i like the point that she made though that the education research that they put together is something that the states rely on and they want to make sure that they continue to fund that right best practices for things

That is SquawkPod for today. Thanks for listening. SquawkBox is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. Get the best of our TV show right into your ears when you follow SquawkPod wherever you get your podcasts. And hey, tell us what you think. You can rate or write a brief review of SquawkPod right on Apple Podcasts. That's it. We'll meet you right back here tomorrow.

We are clear. Thanks, guys.

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