East 72, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio gross return of 8.9% was recorded by the fund for the fourth quarter of 2021 and was able to have a rolling twelve-month gross return of +18.9%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
East 72, in its Q4 2021 investor letter, mentioned Tesla, Inc. (NASDAQ: TSLA) and discussed its stance on the firm. Tesla, Inc. is a Palo Alto, California-based vehicle manufacturing company with a $999.8 billion market capitalization. TSLA delivered a -5.78% return since the beginning of the year, while its 12-month returns are up by 17.07%. The stock closed at $995.65 per share on January 19, 2022.
Here is what East 72 has to say about Tesla, Inc. in its Q4 2021 investor letter:
“However, our favourite short play of 2021, which added value in the past quarter (falling over 14%) was in the US ETF, ARK Innovation Fund (ARKK). ARKK is managed by ARK Investment Management (ARKIM) founded in 2014 by Cathie Wood, its (now) 66year old devout Christian portfolio manager. ARKIM focuses on investing in what it believes are the beneficiaries of disruption and innovation with a focus on AI, DNA sequencing, robotics, energy storage and blockchain technology3. ARKIM’s viewpoints are interesting but in my opinion, potentially have a habit of falling foul of Bill Gates’ famous comment that “we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten”. Moreover, this opinion is buttressed by ARKIM’s publication of various financial models to provide a backdrop for their extravagant Tesla valuations, which lack any kind of accounting credibility..
..ARKK’s biggest investment over this period has been Tesla, averaging around 10% of the fund. ARKK has been forced to sell Tesla shares, despite having a price target of US$3,000/share, mainly
because TSLA has appreciated by around 40% since the fund peak in mid-February 2021; the residual 90% of the portfolio is cumulatively down around 44% since 18 February 2021 (see some examples on attaching table). Whatever our view of TSLA, it has been a shining beacon in a sea of detritus for ARKK.”
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Our calculations show that Tesla, Inc. (NASDAQ: TSLA) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. TSLA was in 60 hedge fund portfolios at the end of the third quarter of 2021, compared to 60 funds in the previous quarter. Tesla, Inc. (NASDAQ: TSLA) delivered a 15.00% return in the past 3 months.
In December 2021, we also shared another hedge fund’s views on TSLA in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
