Baillie Gifford, a large-scale investment management firm in the UK, published its “Long Term Global Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of 13.59% was recorded by the fund for the second quarter of 2021, compared to the 7.53% return of its MSCI ACWI benchmark. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Baillie Gifford, the fund mentioned Tesla, Inc. (NASDAQ: TSLA), and discussed its stance on the firm. Tesla, Inc. is a Palo Alto, California-based electric car company, that currently has a $680.3 billion market capitalization. TSLA delivered a -2.62% return since the beginning of the year, while its 12-month returns are up by 140.15%. The stock closed at $687.20 per share on July 30, 2021.
Here is what Baillie Gifford has to say about Tesla, Inc. in its Q2 2021 investor letter:
“As many countries enjoy a relaxation of Covid restrictions, Mr Market is focussed on short-term beneficiaries of ‘the pleasure after the plague’. There are interesting parallels with the Roaring 20s here, but to our minds, they extend beyond post-pandemic hedonism. Much of the new wealth created in the 1920s was patchily distributed and accompanied by a pervasive sense that the older generation had let down younger people. In 1920, John F. Carter, an irate 23-year-old wrote “the older generation had certainly pretty well ruined this world before passing it on to us. We have been forced to live in an atmosphere of ‘tomorrow we die,’ and so, naturally, we drank and were merry.”
In the field of energy meanwhile, Tesla has begun a pioneering shift away from using cobalt within its batteries. Its lithium iron phosphate (LFP) technology (already used in flagship energy storage products) could underpin not just the automotive ambitions but also the ramp up of Tesla’s grid-scale energy storage offering which will be key to accelerating the demise of dirty peaker plants.”
Based on our calculations, Tesla, Inc. (NASDAQ: TSLA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TSLA was in 62 hedge fund portfolios at the end of the first quarter of 2021, compared to 68 funds in the fourth quarter of 2020. Tesla, Inc. (NASDAQ: TSLA) delivered a -3.13% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.