ClearBridge Investments, an investment management company, released its “ClearBridge Small Cap Value Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. Despite strong performance from healthcare holdings, the Strategy lagged its benchmark, the Russell 2000 Value Index, due to headwinds in the materials and industrial sectors. While investors continued to focus on a limited number of AI beneficiaries and bitcoin plays, the rest of the market was hit by the economic slowdown and a higher-for-longer interest rate expectation. This made the second quarter particularly difficult to navigate for small-cap stocks. In addition, please check the fund’s top five holdings to know its best picks in 2024.
ClearBridge Small Cap Value Strategy highlighted stocks like Tesla, Inc. (NASDAQ:TSLA), in the second quarter 2024 investor letter. Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems. The one-month return of Tesla, Inc. (NASDAQ:TSLA) was 24.60%, and its shares gained 4.32% of their value over the last 52 weeks. On September 20, 2024, Tesla, Inc. (NASDAQ:TSLA) stock closed at $257.02 per share with a market capitalization of $821.086 billion.
ClearBridge Small Cap Value Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“The strength in the stock market adds significantly to that enormous transfer of wealth, which one could argue is good for shareholders. But is it causal? That is, did the stock market do well because CEOs got large stock grants? Are the CEOs just the lucky recipients of a windfall when the market goes up and their employees perform well? Or do they require huge grants to do their jobs that no one else could possibly do as effectively?
Tesla, Inc. (NASDAQ:TSLA), and most of its shareholders, certainly think the latter is true. In 2018, Tesla’s board of directors crafted a pay package for CEO Elon Musk that would award him 12 tranches of 10-year, fixed-price options on 1% of company stock for every $50 billion in market cap the stock added. In total, the options would be for 304 million shares of the company at $23.34 a share. He would receive no other compensation, until or unless the board decided otherwise. Shareholders approved that pay package, and the stock added all that market cap and more, giving Musk the right to buy 10% of the company for $50 billion less than it was worth, adding to his existing 13% stake. Minority shareholders sued, and a court sided with them and expunged the package in January 2024. “The process leading to the approval of Musk’s compensation plan was deeply flawed,” ruled Judge Kathaleen McCormik of the Delaware Court of Chancery as part of a 200-page decision. It seemed like a long-awaited check on excessive compensation to one individual for the achievements of an entire company….” (Click here to read the full article)
Tesla, Inc. (NASDAQ:TSLA) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 85 hedge fund portfolios held Tesla, Inc. (NASDAQ:TSLA) at the end of the second quarter which was 74 in the previous quarter. While we acknowledge the potential of Tesla, Inc. (NASDAQ:TSLA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Tesla, Inc. (NASDAQ:TSLA) and shared the list of best most active stocks to invest in. Tesla, Inc. (NASDAQ:TSLA) boosted the performance of Baron Fund in Q2 2024. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.