Worm Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. Year-to-date through Q3 2020, the long/short equity strategy fund returned 171.64%, and the long-only strategy fund returned 125.43%, net of fees. Meanwhile, the S&P 500 Index returned 5.58% over the same period. You should check out Worm Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners this year.
In the said letter, Worm Capital highlighted a few stocks and Tesla Inc. (NASDAQ:TSLA) is one of them. Tesla Inc. (NASDAQ:TSLA) is an electric car company. Year-to-date, Tesla Inc. (NASDAQ:TSLA) stock gained 451.4% and on October 14th it had a closing price of $461.30. Here is what Worm Capital said:
“A good example of riding our winners this year is Tesla, which we have studied down to the cellchemistry level since 2015. In August, for instance, the bid for Tesla increased some 70%. Was this increase in bid itself a reason to sell our ownership, or even to trim? No. Tesla continues to be dramatically undervalued relative to its long-term, multi-year intrinsic value, in our view. As I have discussed in previous letters, I believe Tesla is perhaps the single best investment opportunity in the market today: It is a true disruptor competing in vast end markets (transportation, trucking, energy storage) that are each worth trillions of dollars of potential market cap.
By 2025, I expect Tesla to be trading at multiples of where it’s currently priced today. Of course, month-to-month or even quarter-to-quarter we may see the prices bounce around, but we don’t attempt to time the market. As a rule, industry juggernauts in their early stages tend to be more volatile. That’s why we think in terms of years and not days: It gives us the flexibility of opportunity to make multiples on our invested capital.”
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Last week, we published an article revealing that Tesla Inc. (NASDAQ:TSLA) missed Q3 2020 deliveries guidance.
In Q2 2020, the number of bullish hedge fund positions on Tesla Inc. (NASDAQ:TSLA) stock increased by about 3% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Tesla’s growth potential. Our calculations showed that Tesla Inc. (NASDAQ:TSLA) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 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. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
