Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” first quarter 2024 investor letter. A copy of the same can be downloaded here. The US stock market started 2024 optimistically. In the first quarter, the fund returned 8.29% (gross) and 8.09% (net) compared to 11.41% for the Russell 1000 Growth Index and 10.56% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Polen Focus Growth Strategy featured stocks like Tesla, Inc. (NASDAQ:TSLA) in its Q1 2024 investor letter. Headquartered in Austin, Texas, Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, and sells fully electric vehicles and energy generation and storage systems. On April 18, 2024, Tesla, Inc. (NASDAQ:TSLA) stock closed at $149.93 per share. One-month return of Tesla, Inc. (NASDAQ:TSLA) was 13.24%, and its shares lost 8.01% of their value over the last 52 weeks. Tesla, Inc. (NASDAQ:TSLA) has a market capitalization of $477.496 billion.
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its first quarter 2024 investor letter:
“The 9% growth we estimate for the Index includes the hefty weightings in high-growth names like NVIDIA and Tesla, Inc. (NASDAQ:TSLA). Tesla’s narrative wasn’t just about being a great electric vehicle manufacturer. The way we see it, the narrative included Tesla becoming a fully autonomous fleet of electric vehicles (“Robotaxi”) soon, the charging platform for all E.V.s soon, an AI play, a global solar utility company soon, a future subscription business, and more. When we research Tesla, we see a differentiated auto business and the potential for many of these interesting “options” to be realized over a long enough period. However, the timing and true viability of many of these options are still unknown and often take much longer than many hope. To justify today’s valuation, even after the recent pullback, we see a company that needs to crack the mass market with a $25,000 or less model at acceptable margins. Yet, the company hasn’t articulated a clear path to getting there. Interest rates have risen, and competition in China has intensified, tempering demand for its existing, higher[1]priced cars. Valuation has become more difficult to justify at these levels. We feel the reality of these dynamics has finally started to settle into Tesla stock prices, and we look forward to seeing a more reasonable valuation that reflects the existing product portfolio and any future offerings that demonstrate a very clear path to near-term commercialization.
We aim to invest in what we view as more predictable, highly competitively advantaged growth businesses that can drive the earnings growth we require to deliver long-term returns in line with our long-term mid-teens track record. We do not want or need to make heroic assumptions. Even over the highly unusual last five years that featured lumpy returns from year to year, we delivered mid-teens annualized gross returns—right in line with our historical average—driven by over 20% portfolio weighted-average earnings per share growth. We calculate that the earnings growth of the Russell 1000 Growth Index has been less than half that of our Portfolio over the same period.
As noted, Apple and Tesla, which we do not own but are large Index weights, underperformed and were relative contributors to our performance. It seems possible that market participants are finally seeing the economic reality of those businesses versus the hopeful narratives.”
25 Most In Demand Cars Heading into 2024
Tesla, Inc. (NASDAQ:TSLA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Tesla, Inc. (NASDAQ:TSLA) was held by 82 hedge fund portfolios, compared to 81 in the previous quarter, according to our database.
We previously discussed Tesla, Inc. (NASDAQ:TSLA) in another article, where we shared the list of stocks receiving price-target cut from analysts. In addition, please check out our hedge fund investor letters Q1 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.