In investing, past performance is no guarantee of future results. But if you’re hoping to grow your money over the long term, there’s plenty to learn from investing pros who have built lengthy and impressive track records.
Earlier this year, analysts at investment research firm Morningstar identified the three mutual funds that have delivered the best performance over the 25 years that ended in 2025. The winner: Baron Opportunity Fund, which turned in a 13% annualized return. For reference, the S&P 500, a benchmark for the broad U.S. stock market, logged a 6.8% annualized return over the same period.
This month marks manager Michael Lippert’s 20th year at the helm of the fund, though he’s quick to share credit for Opportunity’s outperformance, crediting the ethos at the firm, led by billionaire growth investor Ron Baron, as well as the work done by the team of analysts who help him choose investments for the fund’s portfolio.
Still, over the past quarter century, Lippert’s strategy of identifying and investing in fast-growing companies benefitting from disruptive and innovative technological advances had put his fund ahead of virtually all others.
Lippert recently spoke with CNBC Make It about his approach to picking stocks, lessons from his career and his advice for young investors. Be sure to consult with your own financial professional before making any major moves in your portfolio.
CNBC Make It: You and your team spend all day evaluating businesses. Which are the ones you look to add to your portfolio?
Lippert: We’re really focused on companies that can grow for a long time.
They have durability, sustainability of outsized growth because there’s a big total addressable market that they could address. They have differentiated products or services, what we call competitive advantages, such that they’re going to capture a large market share of whatever that opportunity is, and they have the type of business model that can turn long-term revenue growth into significant profit or free cash flow growth.
Where does long-term growth happen? How do you find it?
It’s about relying on a team of really smart industry and sub-industry analysts so that we know industry themes, changes and trends that are happening — the ones that we think are intact and sustainable.
Sometimes I use the S-curve that everyone learns about in business school for this example. There are plenty of things that are here and exciting — NFTs, different things — and they never quite inflect. But once a big trend inflects, it can last for a very, very long time.
In my career, we’ve had the internet, the first massive trend — we’re now 30 years into the internet. We had mobile, then we had cloud computing. And now we’re in the AI age.
We look at these trends, these themes, these big changes, where we think that S-curve could last for what we would call a business generation — maybe 10 to 20 years. Long-term investing for us is five years at a time. We constantly roll that, so we’re always thinking at least five years into the future.
What attributes do you tend to see among the companies that emerge as winners of these trends?
The best companies that we found, they don’t only do one thing. The best companies don’t just have one S-curve. They stack multiple S-curves on top of each other.
The greatest companies in the world, every single one of the “Mag Seven,” started off doing something different than what they’re doing today. Apple started out with computers, then it was the iPhone. Google was search. Now we have YouTube [and other business lines]. Amazon was books, selling everything.
What’s one of the big winners that you think was exemplary of your process?
We started doing work on Nvidia in 2017. Our first investment was in 2018 and the whole world was looking at Nvidia at the time as a video game chip company. And if you remember, it was a somewhat volatile stock, because video game chips back then were also used for bitcoin mining.
Our analyst, Guy Tartakovsky, and I were thinking about the data center opportunity, which today is associated with AI, and how Nvidia [graphics processing units] would be positioned in data center applications, not just in gaming. A whole team of us visited [Nvidia CEO] Jensen Huang in the fall of 2018.
[Huang] literally spent hours at the whiteboard teaching us about AI and machine learning, [including] why their architecture that was initially built for graphics would work for applications that he believed data centers would be using. And why he would win, and why it wasn’t just the chips, but it was their ecosystem and all the different libraries, all the things that have honestly led them to win in AI. And we made an investment.
Obviously you’ve picked some losing investments, too. How do you deal with your misses?
Over my history, I’ve had lots of mistakes. One book that was really impactful for me was called “Startup Nation.” It’s about innovation in Israel, and why they have a lot more innovation than they should have at their size. And one of the things they track back to is, in Israel, you have to go to the army, literally, before you go to college. [In the Israeli army] they do an after-action report on every single mission, whether it’s successful or it doesn’t work. And particularly when it doesn’t work, they really look at it to know why.
So I already had that as part of my process, but I can’t tell you many times I’ve sent around quotes from that book [to] my team to say, “Hey, look, if we made a mistake, it’s fine. We’re going to make mistakes. Let’s not push it aside. Let’s look at it. What can we learn from this mistake? What can we take away from it about our analysis of an industry, about our process, whatever it is, and how do we iterate and constantly get better?”
When you’re constantly looking for the next big thing, how do you separate the real trends from hype?
Fact-based investing. Look for the facts — what’s real, not what’s hype when it comes to the world we live in today, the world of social media.
When it comes to the world of AI, if you go on X, you’ll get yourself spinning. You’ll have somebody telling you that Nvidia is the greatest company in the world that can never be disrupted. And you’ll have someone else say, “No, they’re done. Nvidia is a great short.” And you’ll have that for every single company.
The other thing I always say is, step back for a second. Does it make sense? Does it make sense that blockchain technology is going to completely disrupt the payment system? Does it make sense when you know how blockchain works, and really, is it going to disrupt human beings that can take their MasterCard or Visa out, when all of us that love our rewards? Are we going to give those up?
What’s your best piece of advice for younger, long-term investors?
Investing is easier than short-term trading. Find a company that you think is special, you can articulate why it’s special and different, why it should grow for a long time.
And when it comes to long-term investing, the way we think about it at Baron Capital [is] every quarter, every new product release is a step-by-step in some line of data, facts, evidence. If you have a number of points on that curve, you just got to point the next one, the next one, the next one. It’s a hell of a lot easier than trying to figure what’s going on on any given day. What next tariff is going to come out? Which company is going to make which announcement, which podcaster is going to say what?
We live in a world today that, you have lots and lots of tools. You may not have Baron researchers, but you do have ChatGPT or Gemini. You can say, “What did XYZ company report last quarter? What are their new products?” And unless it’s a business-to-business product, you could test their product out. You can use it. Does it make sense that this company is going to be a fast-growing company and do it for a long time? That’s what I would do.
This interview has been condensed and edited for clarity.
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