Summary List Placement
Baillie Gifford, a 113-year-old asset manager tucked away in Edinburgh, Scotland, transformed into a technology-investing juggernaut in recent years after taking early stakes in firms, such as Alibaba, Google, and Facebook.
Tesla (TSLA) is one of the $445 billion asset manager’s biggest bets, making Baillie Gifford a household name as one of the electric automaker’s largest external investors and biggest backers. For years it was Tesla’s biggest institutional shareholder, a designation it only recently lost after regulatory reasons forced it to pare its position.
Now, in 2021, Baillie Gifford remains bullish on Tesla’s prospects, even as it further trims its position and takes profits following a more than 840% stock surge since the start of 2020.
Tom Slater — the firm’s head of US equities and decision-maker on long term growth portfolios — spoke recently at series of webinars, providing insight into his strategies for the funds he co-manages: the £19.4 billion ($27 billion) Scottish Mortgage Investment Trust and the £7.1 billion ($9.9 billion) American fund. James Anderson, co-manager of the Scottish Mortgage Investment Trust and a partner at the firm, weighed in as well.
The duo spoke about why they’re still bullish on Tesla, why they’ve aggressively pared holdings in past successful tech investments, and opined on Tesla’s recent $1.5 billion bitcoin purchase.
Slater remains bullish on Tesla as it pertains to the US domestic environment.
Speaking on the American fund, Slater said they bought into Tesla when they didn’t just have an interesting concept, but they had a “fantastic product, which was getting rave reviews” and had demonstrated scalability.
Slater said for new entrants the challenge will be scaling production. While for the incumbents, he believes the pace of progress is glacial.
Incumbents can see the potential demand and have been warned about the shift to electric vehicles, Slater said, yet the structure of the business model and nature of incentives makes it difficult for them to respond and he sees no evidence of them changing.
“So why do we have a significant holding in Tesla? Because I think they’re the most important company in the world for driving us towards a sustainable energy future,” Slater said. “And with that comes a huge opportunity. Why is it less than a year ago? Because the capitalization was $150 billion a year ago today, and today $750 billion in mid-February.”
He continued: “So you keep that discipline upside from here and reflect that in holding sizes, but you don’t give up on something that has a massive opportunity which looks increasingly likely to materialise.”
Going beyond Tesla, Slater, discussing the Scottish Mortgage Investment Trust, said China has become particularly noteworthy for its pipeline of ideas in the private market. He and his colleagues see potential challengers forming in China as dramatic technological progress takes place.
“Of course Tesla way underperformed Nio last year, so perhaps we should be asking Mr. Musk why they’re doing so badly… I’m going to by the way!” said James Anderson, co-manager of the Scottish Mortgage Investment Trust.
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Source:: Business Insider