In all his years as an investor, Outsider is hard-pressed to think of a stock that has caused a greater division through the buy side than Tesla. There seems to be a clear demarcation between those who pay tribute and burn incense (as well as, ‘ahem’, other substances) at the Altar of Elon
Musk, and those who believe him to be nothing more than a stargazing (or Mars-gazing) charlatan.
While Tesla has sold off since CEO Elon Musk’s infamous tweet in August about taking the company private, shares in the company started last week with a strong rebound thanks to a surprise settlement with the US Securities and Exchange Commission, which allowed Musk to keep his
CEO role, and a report that the company was “very close” to turning a profit.
But the evidence of the aforementioned division becomes apparent when listening to Australia-based international equities managers. Sydney-based hedge fund Nanuk Asset Management told the Australian Financial Review earlier in the year that there were far more attractive investments than Tesla if you wanted to capitalise on the inevitable adoption of electric cars.
On the other hand, Outsider recently attended a presentation from T. Rowe Price, who appeared to be firm believers in both Tesla and the vision of Mr Musk. (As at end December 2017, Tesla was one of the top five holdings in the manager’s Global Equity strategy.)
Also, billionaire fund manager Ron Baron painted a rosy picture for Tesla in an interview with CNBC last week, saying he believed Tesla has more than a 50-50 chance of reaching US$1 trillion in revenue by 2030. “I think this is going to be the biggest car company,” he said.
So, with so many conflicting viewpoints and confronted with the question of whether to invest in the dreams of an eccentric, often erratic billionaire, Outsider simply heeds the advice of British Jamaican reggae band Musical Youth and “passes the dutchie on the left-hand side”.