Massif Capital, an investment management firm, published its first quarter 2021 investor letter – a copy of which can be downloaded here. The portfolio was highly volatile during the first quarter. A net return of 3.45% was reported by the fund for the Q1 of 2021. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Massif Capital, in their Q1 2021 investor letter, mentioned Chargepoint Holdings Inc. (NYSE: CHPT) and shared their insights on the company. Chargepoint Holdings Inc. is a Campbell, California-based electric vehicle infrastructure company that currently has a $6.5 billion market capitalization. Since the beginning of the year, CHPT delivered a -44.44% return, while its 12-month gains are impressively up by 129.59%. As of April 16, 2021, the stock closed at $22.27 per share.
Here is what Massif Capital has to say about Chargepoint Holdings Inc. in their Q1 2021 investor letter:
“We are far from a consensus on how best to build and operate EV charging infrastructure. Evidence for this is in the sheer diversity of business models that are being sold (mainly via SPACS) to an eager public looking to capture secular EV momentum. This is not an indictment of individual companies; we simply do not have any clarity on policy, consumer preferences, and the technology that will shape how a profitable business operates in the space. ChargePoint is the clear front-runner for the moment. It has a ~75% market share in North America, growing at a compounded annual rate of 60%. Their network is ~2x the size of Tesla’s in North America and ~5x as large globally. They have seen a 28x increase in customer spend over the last four years. ChargePoint is a vendor, not an operator, and is aiming to achieve a 1:1 upfront to reoccurring revenue ratio with a B2B sales model minimizing the capital expenditure required for scaling.
We like ChargePoint, but it is trading at over 100x 2025 earnings. Far too little real-world uncertainty is priced into their valuation. We think we will have several opportunities to enter an investment within the EV charging infrastructure industry with better pricing, decreased operational risk, or likely both in the future. There is a 94% correlation between all public companies in the EV charging landscape today; we read this as meaning there is no discernment between individual ventures’ prospects. It is a bet that EVs will grow, and thus EV charging infrastructure must grow. We agree with that assertion, but we are not interested in swimming in those waters at this stage.”
Our calculations show that Chargepoint Holdings Inc. (NYSE: CHPT) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. CHPT delivered a -46.25% return in the past 3 months.
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