3 booming stock billionaires sold in Q3

You wouldn’t know how crazy 2020 has been just by looking at benchmark year performance S&P 500. Including dividends, the widely followed index produced low double-digit returns. This comes after losing 34% of its value in less than five weeks during the first trimester.

But not everyone is excited about the new eight-month-old equity bull market. While many successful fund managers have invested in innovative, high-growth companies, recent Form 13F filings with the Securities and Exchange Commission (SEC) show billionaires have skyrocketed three stocks in the third. trimester.

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Tesla Motors

You might be surprised to learn that the hottest auto inventory on the planet, You’re here (NASDAQ: TSLA), was one of the best-selling stocks in the third quarter. According to WhaleWisdom.com, 13F depositors sold a total of 87 million shares in the third quarter from the sequential quarter, reducing their total holdings by 18.2%. This included Renaissance Technologies of Jim Simons, which sold almost all of its 5.5 million share stake, and Two Sigma Investments, which lost 75% of its previous stake.

With hindsight, these sales did not bear fruit. The announcement of Tesla’s inclusion in the S&P 500 raised its market capitalization to over $ 500 billion. Then again, these billionaire fund managers may have a valid point with their skepticism.

There is no doubt that electric vehicles (EVs) are the future of the auto industry, and Tesla has clearly benefited from being a first-mover. Still, there are some serious questions to be answered for a company valued at over half a trillion dollars.

For example, Tesla has yet to demonstrate that it can produce a profit under generally accepted accounting principles (GAAP) entirely by selling electric vehicles. The company made nominal quarterly profits that exceeded Wall Street expectations, but was helped by selling hundreds of millions of dollars in emissions credits to other automakers.

It’s also unclear whether Tesla can maintain its competitive edge as virtually every other major automaker invests billions of dollars in the development of electric vehicles, battery technology, and autonomous driving. My personal expectation is that the edge of Tesla’s battery will drop significantly over time.

Even pioneering CEO Elon Musk can be a handicap at times. Musk has occasionally drawn the wrath of the SEC. It is also known for its over-promises and under-deliveries when unveiling new products or technologies. That’s not to say that Tesla won’t ultimately launch groundbreaking products and services, to the point of pointing out that Musk’s timeline for bringing these products to market is rarely, if ever, met.

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Modern

Clinical stage drug developer Modern (NASDAQ: ARNM) is another company billionaires chose to sell in Q3 – and it’s a move they likely regret, with shares up 700% from the start of the year through November 30. shares (6.7%) from the second quarter of 2020. Renaissance Technologies gave up its entire stake of 315,400 shares and Millennium Management of Israel Englander sold 87% of its stake (476,153 shares).

The buzz behind Moderna is the company’s 2019 coronavirus disease (COVID-19) mRNA-1273 vaccine candidate. In an interim analysis of a Phase 3 study involving more than 30,000 Americans, Moderna’s vaccine demonstrated 94.5% efficacy, which was well above researchers’ expectations. With such high vaccine efficacy, there is a real chance of ending the COVID-19 pandemic within the next year, assuming regulatory approvals are granted in the United States and abroad.

Yet there are also plenty of reasons to believe that COVID-19 vaccine stocks like Moderna have entered bubble or euphoric territory.

On the one hand, vaccine developers are currently being evaluated as if the efficacy remains high, the distribution will go off without a hitch, and people will gladly receive the vaccine. Yet history shows that not all vaccines succeed in clinical trials, that issues of equitable distribution are common, and that many people wait or refuse to be vaccinated. A September survey by the Pew Research Center found that only 51% of those surveyed would definitely or likely receive a vaccine if it was available.

The other problem is that Moderna’s annual revenue from mRNA-1273 is expected to be $ 4 billion. Biotech stocks are typically valued between 3 and 6 times their peak sales. Moderna’s is currently valued at around 13 to 15 times peak sales. This makes it, in my opinion, one of the most overvalued biotech stocks.

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The Trade Desk

Finally, The Trade Desk (NASDAQ: TTD) had billionaire fund managers heading for exit in the third quarter. This fast-growing software as a service (SaaS) stock saw overall ownership of 13F drop 2.3 million shares, or 6.9%, from the sequential quarter. The most notable sale came from Jeff Yass’ Susquehanna International, which reduced its stake in The Trade Desk by 38% (253,190 shares).

The billionaires who sold The Trade Desk are probably kicking each other. Shares of the company are now up 247% from the start of the year through November.

However, unlike Tesla and Moderna, The Trade Desk can potentially retain its ultra-premium pricing. It may seem surprising. The whole premise of the company revolves around the ability of companies to create, manage and optimize advertising campaigns on a cloud platform, and COVID-19 has crushed the advertising. Yet the Trade Desk has a story on its side.

You see, periods of economic contraction and recessions are usually measured in months. Economic expansions and bull markets, on the other hand, often last for years. It’s a simple numbers game that benefits long-term investors. We are in the midst of an economic recovery, so we might consider a multi-year expansion in digital ad spend.

Trade Desk’s cloud-based advertising solutions also appear to be entering multiple content channels. Mobile audio and video spending increased by around 70% compared to the previous year period, with smart TV spending more than doubling. Trade Desk clients clearly appreciate the platform’s ease of use, analysis and price transparency.

The Trade Desk may never be a cheap stock, but it has demonstrated a competitive advantage worthy of its premium valuation.