LRT Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A return of -6.71% was recorded by the LRT Economic Moat strategy for the month of November 2021, extending its 12-month returns to +23.06%. Year-to-date, LRT Capital was able to post a gain of +17.91%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
LRT Capital Management, in its Q3 2021 investor letter, mentioned Rivian Automotive, Inc. (NASDAQ: RIVN) and discussed its stance on the firm. Rivian Automotive, Inc. is an Irvine, California-based electric vehicle automaker and automotive technology company with a $101.2 billion market capitalization. RIVN delivered a 2.34% return for the past 5 days and it closed at $114.66 per share on December 10, 2021.
Here is what LRT Capital Management has to say about Rivian Automotive, Inc. in its Q3 2021 investor letter:
“In the hit TV series “Silicon Valley” fictitious character Russ Hanneman tells Richard, the young software entrepreneur who is trying to figure out how to make money at his new company: “No. If you go after revenue people will ask how much and it will never be enough. The company that was the 100x’er, 1,000x’er becomes the 2x dog. But if you have no revenue, you can say you are pre-revenue. You’re a potential pure play. It’s not about how much you earn. It’s about what you’re worth. And who’s worth most? Companies that lose money.”
Russ was right. Rivian (RIVN) is a budding new electric car company that earlier this month was valued at $150 billion dollars. The company has generated $0 from selling electric vehicles (EV) over its lifetime.
Compare Rivian to Applied Materials (AMAT), a semiconductor equipment supply company that specializes in the “frontend” (primarily patterning) of the semiconductor manufacturing process. The company makes products that are critical to making modern computer chips. It has a market cap of approximately $145 billion dollars. It, also, generated $0 from selling EVs over its lifetime. However, Applied Materials generated $21 billion in revenue and $5.1 billion in net income over the past twelve months alone in its semiconductor equipment business. Since a company that sells no EVs is worth $150 billion, then Applied Materials semiconductor business is being valued at a negative $5 billion dollars.
We are being only slight facetious here. Clearly the market is forward looking and pricing Rivian on the expectation that the company will generate huge revenues in the future. But are these expectations realistic? Or are investors playing a dangerous game of the greater fool?…” (Click here to see the full text)
Copyright: microolga / 123RF Stock Photo
Based on our calculations, Rivian Automotive, Inc. (NASDAQ: RIVN) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Rivian Automotive, Inc. (NASDAQ: RIVN) delivered a -30.88% return for the past month.
You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q3 page.
Disclosure: None. This article is originally published at Insider Monkey.
