Some quotes from the article:
The frenetic rally in Tesla has also buoyed money management groups such as Cathy Wood’s Ark Invest and Baillie Gifford, which have bet heavily on the electric carmaker. But there is a flipside. Its gains have left a huge and growing blot on the performance of many other investors with only negligible or modest positions in Tesla relative to its big heft in their benchmarks — or “underweight” in market jargon — due to what many see as its wildly inflated valuation.
“Managers that have been underweight Tesla have certainly been punished,” says Drew Dickson, chief investment officer at Albert Bridge Capital. “It’s been a sizeable driver of underperformance for many. You have to wonder whether a lot of them are now holding it simply due to fears they’re going to lag.”
Prominent bears keep falling by the wayside. Michael Burry, the hedge fund manager made famous by author Michael Lewis in The Big Short and portrayed by Christian Bale in the film of the same name, last year called Tesla’s stock price “ridiculous” and revealed that he was shorting it. But in October he said he had ended the trade and closed out the short position.
“There is a huge, recursive ‘tail wagging the dog’ nature to the valuation of a lot of things these days,” says Dickson. “I’m unwavering in my belief that ultimately the fundamentals are what matters. But over the past few years I can see that the short and intermediate term is far more dominated by flow, momentum, memes and appetites.”
He recalls the financial analyst Ben Graham’s adage that the stock market is a voting machine in the short run, but a weighing machine in the longer run. “In the current environment, I think we’re spending a lot more time voting,” says Dickson.
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