Nikola Corporation (NKLA) : A Great Pretender?

Bireme Capital, an investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 47.1% was recorded by the fund for the year end 2020, outperforming its S&P500 benchmark that delivered an 18.3% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Bireme Capital, in their Q4 2020 investor letter, said that companies like Nikola Corporation (NASDAQ: NKLA) are everywhere in today’s overly credulous marketplace. Bireme Capital identifies Nikola Corporation as one of the companies they treat as great pretenders, because its history is full of deception and vaporware. Nikola Corporation is a motor company that offers electric and hydrogen electric powertrains.  The company currently has a $6.3 billion market cap. Since the beginning of the year, NKLA delivered a 5.05% return and settled at $16.03 per share at the closing of March 4, 2021.

Here is what Bireme Capital has to say about Nikola Corporation in their Q4 2020 investor letter:

“Nikola Corporation (NKLA) is a poor-man’s facsimile of Tesla. Even the name is a blatant ripo: both are named aer the inventor Nikola Tesla. NKLA is a pre-revenue company founded in 2014 that has yet to bring a product to market, despite the promotion of a dizzying array of concepts:

Nikola Badger: pickup with both fuel-cell and electric variants
Nikola One: fuel-cell commercial semi-truck
Nikola Two: fuel-cell commercial semi-truck
Nikola Tre: electric commercial semi-truck
Nikola NZT: electric four-wheel drive utility vehicle
Nikola Reckless: electric military grade o-highway vehicle
Nikola WAV: electric watersports vehicle

As far as we can tell from their latest investor communications, only the Nikola Tre Commercial semitruck is still in development.

As far as we can tell from their latest investor communications, only the Nikola Tre Commercial semitruck is still in development. NKLA’s history is full of deception and vaporware. They showed a video of the Nikola One in motion; they later admitted that it didn’t work and was just rolling down a hill. NKA’s founder Trevor Milton resigned in disgrace aer Hindenburg Research published a report calling NKLA an “intricate fraud.” NKLA is currently under investigation by both the SEC and DoJ. Partnerships with GM, Republic Services and BP have been canceled. Nevertheless, the company sports an $8b market cap, because “electric vehicles.” Though pretenders are particularly ubiquitous in the bubbly EV industry, pretenders are to be found in many other industries as well.”

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In December 2020, we published an article about why Worm Capital is avoiding Nikola Corp (NKLA). NKLA delivered a 16.67% return in the past 12 months.

Our calculations show that Nikola Corporation (NASDAQ: NKLA) 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, Nikola Corp. was in 18 hedge fund portfolios, compared to 17 funds in the third quarter.

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.