Is Tesla (TSLA) Still a Worthy Investment?

Distillate Capital, an investment management firm, released its fourth quarter 2022 investor letter, a copy of the same can be downloaded here. At the end of the fourth quarter, Distillate’s U.S. FSV strategy declined 10.58% on a total return basis net of fees compared to a decline of 18.11% for the S&P 500 benchmark. Better relative performance for Distillate’s SMID QV strategy continued into 2022 with a decline of 8.64% on a total return net-of-fee basis, significantly ahead of a comparable decline of 20.49% for the Russell 2000 ETF and -14.67% for the Russell 2000 Value ETF. On the other hand, Distillate’s Intl. FSV strategy again lagged its MSCI ACWI Ex-US benchmark in 2022, while the Distillate’s U.S. FSV strategy’s free cash flow to market cap yield valuation of 7.2% compares very favorably to 5.1% for the same measure for the S&P 500. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

In its Q3 2022 investor letter, Distillate Capital mentioned Tesla, Inc. (NASDAQ:TSLA) and explained its insights for the company. Founded in 2003, Tesla, Inc. (NASDAQ:TSLA) is an Austin, Texas-based multinational automotive and clean energy company with a $454.3 billion market capitalization. Tesla, Inc. (NASDAQ:TSLA) delivered a 16.81% return since the beginning of the year, while its 12-month returns are down by -53.00%. The stock closed at $143.89 per share on January 24, 2023.

Here is what Distillate Capital has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q3 2022 investor letter:

“The fund’s relative outperformance occurred despite a nearly 2.5% headwind from being underweight the energy and utilities sectors where cash flow instability and leverage tend to limit our holdings domestically. By individual stock, the largest contributors to relative outperformance were unowned positions in Amazon and Tesla, Inc. (NASDAQ:TSLA) which declined around 50% and 65% during the year, respectively.”

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Our calculations show that Tesla, Inc. (NASDAQ:TSLA) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Tesla, Inc. (NASDAQ:TSLA) was in 88 hedge fund portfolios at the end of the second quarter of 2022, compared to 73 funds in the previous quarter. Tesla, Inc. (NASDAQ:TSLA) delivered a -35.31% return in the past 3 months.

In January 2023, we also shared another hedge fund’s views on Tesla, Inc. (NASDAQ:TSLA) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q4 2022 page.

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Disclosure: None. This article is originally published at Insider Monkey.