In this article, we discuss billionaire Nicholas Pritzker’s Tao Capital’s top 3 stock ideas. For Pritzker’s investment philosophy and his portfolio moves, please see Billionaire Nicholas Pritzker’s Tao Capital’s Best Stock Ideas.
3. Tesla Inc (NASDAQ: TSLA)
Tesla is one of the most favorite stocks of billionaire Nicholas Pritzker. He is an early investor of electric vehicle maker. Nicholas Pritzker had invested in Tesla in 2006 when the electric car maker had conducted the third fundraising round of $40 million. Tao Capital held 91738 shares of Tesla at the end of the fourth quarter, according to the latest filing. This represents a decline of 26% from the previous quarter. Tesla stock price soared almost 700% in 2020 amid investors’ confidence in improving fundamentals for electric cars.
Tesla’s robust operational and financial performance added to investor’s positive sentiments. The company has generated profits in the past six successive quarters. Tesla expects to generate 50% vehicle delivery growth in the years ahead. Several analysts, including Wedbush’s Dan Ives, expect Tesla to top 1 million deliveries by 2022 and reach 5 million deliveries annually in the next ten years. On the other hand, Tesla is aggressively opening new factories around the world to increase its production capabilities.
Baron Opportunity Fund, which returned 23.02% for the fourth quarter, highlighted a few stocks including Tesla in the Q4 investor letter. Here is what Baron Opportunity Fund stated:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, and energy storage solutions. The stock increased on strong financial results, including profitability that exceeded market forecasts and strong growth across different geographies and vehicle programs. Indeed, in the third quarter, Tesla delivered almost 140,000 total vehicles – with strong unit level economics of 27.7% GAAP automotive gross profit margins – and another quarter of GAAP profitability and strong free cash flow (almost $1.4 billion). Recently, Tesla announced a record of over 180,000 total vehicle deliveries for the fourth quarter, effectively hitting its goal of 500,000 deliveries for the calendar year, a projection given before the COVID pandemic. In addition, we believe newly released full selfdriving functionality should yield further improvements in unit economics and open exciting new growth opportunities. Lastly, Tesla joined the S&P 500 Index, a meaningful milestone that significantly expands the potential shareholder base.”
2. Uber Technologies Inc (NYSE: UBER)
Uber Technologies Inc (NYSE: UBER) is ranked second in the list of billionaire Nicholas Pritzker’s Tao Capital’s best stock ideas. Nicholas Pritzker had invested in Uber well before its debut on the New York stock exchange. Tao Capital held 107242 shares of Uber Technologies at the end of the fourth quarter, down 42% from the previous quarter. Uber stock price soared close to 200% in the last twelve months and shares are up 15% year to date. The COVID-19 vaccine distribution efforts worldwide and economic recovery added to investors’ sentiments in the past few months.
In their Q4 investor letter, Miller Value Partners stated reasons for their big investment in Uber Technologies. Here’s what the firm said:
“It was a busy quarter for Uber Technologies (UBER) who took off in the quarter following the passing of Proposition 22, their ballot initiative that allows them to classify their drivers as independent contractors and not employees. The company also reported 3Q results that was largely in-line with expectations. Adjusted net revenues of $2.81B was slightly below expectations of $2.82B with EBITDA of -$625M coming in slightly worse than expectations for -$623M. The company reiterated their expectation that they will reach EBITDA profitability at some point in 2021, as their Eats business continues to see strong growth as the pandemic continues. The company announced the sale of ATG, their self-driving car unit, to Aurora for $4B, while investing $400M in the business and holding a 26% share of the combined entity. This was followed by the announcement of the company selling Uber Elevate, their air taxi business, to Joby Aviation with Uber investing an additional $75M in Joby. The company’s acquisition of Postmates closed in the quarter and Mexico’s antitrust regulators approved Uber’s acquisition of Cornershop, the Latin American grocery delivery company. The company also announced a joint venture with SK Telecom, to create a South Korean taxi-share company investing $150M in the start-up.”
1. Twist Bioscience Corp (NASDAQ: TWST)
Billionaire Nicholas Pritzker is also among the early investors of Twist Bioscience Corp (NASDAQ: TWST). He first invested in Twist Bioscience in 2015 and added to his stake in the following years. The company debuted on NASDAQ in 2018 with a share price of around $14. Its stock price is currently trading around $144 after hitting the $214 mark early this year. Nicholas Pritzker has capitalized on the significant TWST share price rally during the pandemic year. He sold 10% of his stake in TWST during the fourth quarter of 2020. Despite that Twist Bioscience is the largest stock holding of Tao Capital stock portfolio at the end of Q4, accounting for 38.4% of the overall portfolio.
Twist Bioscience generated revenue of $28 million in the December quarter, up 64% from the year-ago period. The company received orders of around $33.6 million for the first quarter of 2021 compared to $24.8 million for the same period of fiscal 2020. The company also plans to expand its manufacturing and commercial capabilities in 2021. For that, it is building a new 110,000-square-foot facility outside of Portland, Oregon in Wilsonville, which is expected to become operational in 2022.
Twist Bioscience Corporation was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020 compared to 21 hedge funds positions in the previous quarter.
You can also take a peek at Tiger Cub Billionaire Stephen Mandel’s Top 10 Stock Picks and David Einhorn’s Top 10 Stock Picks.