Here’s Why Baron Opportunity Fund Sold its QuantumScape Corp. (QS) Position

Baron Funds, an asset management firm, published its “Baron Opportunity Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 0.88% was delivered by the fund’s institutional shares for the Q1 of 2021, below both its S&P 500 and Russell 3000 Growth Index that delivered a 6.17% and 1.19% returns respectively for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Baron Opportunity Fund, in their Q1 2021 investor letter, mentioned QuantumScape Corporation (NYSE: QS), and shared their insights on the company. QuantumScape Corporation is a San Jose, California-based solid state lithium metal batteries development stage company that currently has a $14.2 billion market capitalization. Since the beginning of the year, QS delivered a -56.73% return, while its 3-month return are down by -13.68%. As of April 30, 2021, the stock closed at $36.54 per share.

Here is what Baron Opportunity Fund has to say about QuantumScape Corporation in their Q1 2021 investor letter:

QuantumScape Corporation is an early-stage developer of solid-state battery technology for electric vehicles aimed at improving key aspects of batteries, including safety, charging times, energy density, and cost. The company went public via a SPAC in November. After rapid appreciation, the stock came under pressure when the company raised additional capital to help accelerate its commercialization process. We exited our small position, as described below.

We sold QuantumScape Corporation, an early-stage solid-state electric vehicle battery innovator, because it was an undersized position with an ambitious valuation. We will continue to monitor QuantumScape’s developments and may revisit the company as an investment at a future point in time. “

Our calculations show that QuantumScape Corporation (NYSE: QS) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, QuantumScape Corporation was in 35 hedge fund portfolios, compared to 14 funds in the third quarter. QS delivered a -25.99% return in the past month.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.