Baillie Gifford: our latest views on Tesla and Elon Musk

TL;DR

Bailey Gifford, a high-profile backer of Tesla, has reduced its position in the company due to valuation concerns and falling share prices. However, they still believe in Tesla's role in addressing climate change and the growth potential of the electric vehicle market. Additionally, Bailey Gifford is optimistic about Moderna's innovative mRNA technology and its potential to revolutionize the healthcare industry.

Transcript

foreign manager of the Bailey Gifford positive change fund Lee thank you for coming into the studio thank you for having me Bailey Gifford is a high profile backer of Tesla and your fund is no exception it's about four percent of the portfolio but it used to be more so have you been selling shares in Tesla or is this reduction in your position just... Read More

Key Insights

• 🧘 Bailey Gifford has been reducing its position in Tesla due to both valuation concerns and falling share prices.
• 🚙 They still believe in Tesla's role in addressing climate change and the growth potential of the electric vehicle market.
• ♋ Bailey Gifford is optimistic about Moderna's mRNA technology and its potential to revolutionize the healthcare industry, particularly in the development of personalized cancer vaccines.
• ✳️ Geopolitical risks, particularly in relation to Taiwan, are a concern for Bailey Gifford's investments in semiconductor companies.
• 😃 The fund avoids big technology companies due to concerns about their societal impacts and lack of alignment with their impact philosophy.
• 💱 Bailey Gifford sees increasing awareness of climate change as a reason to be hopeful, as it will drive investment in renewable energy and benefit companies focused on positive change.
• 🌍 Geopolitical tensions, particularly in Europe and Taiwan, pose a significant risk in the investment landscape.

Questions & Answers

Q: Why has Bailey Gifford been reducing its position in Tesla?

Bailey Gifford has been selling shares in Tesla due to a combination of valuation concerns and falling share prices. They took the opportunity to reduce their Tesla holdings earlier in the year when they felt the valuation was demanding.

Q: Why does Bailey Gifford still believe in Tesla and consider it a top 10 position?

Bailey Gifford sees Tesla playing a crucial role in addressing climate change by electrifying transportation and enabling more people to drive electric vehicles. They also highlight Tesla's contribution to energy storage through battery technology. Additionally, they have confidence in Tesla's profitability and competitive advantage.

Q: How does Bailey Gifford evaluate Tesla's ESG rating and its inclusion in their Positive Change Fund?

Bailey Gifford analyzes Tesla's ESG factors, including the battery supply chain and worker treatment. They have engaged with the company's board on governance issues and ultimately invest in Tesla because they believe in the environmental benefits of its products.

Q: Is Bailey Gifford concerned about Elon Musk's involvement in Twitter and its potential impact on Tesla?

Bailey Gifford is concerned that Elon Musk's involvement in Twitter could be a distraction and potentially more significant than anticipated. They plan to engage with the company on this issue and actively monitor the situation.

Q: Why does Bailey Gifford have a significant investment in Moderna?

Bailey Gifford likes Moderna due to its strong position in mRNA technology, which has the potential to revolutionize the production of treatments and therapeutics. They are impressed by Moderna's execution with the COVID vaccine and its long-term prospects.

Q: What medical challenges and diseases could Moderna potentially solve in the next decade?

Moderna is targeting various infectious and respiratory diseases. They aim to develop a better flu vaccine and advance personalized cancer vaccines. If successful, this could have a transformative impact on Moderna's bottom line and the healthcare industry.

Q: How does Bailey Gifford consider geopolitical risks when investing in semiconductor companies linked to Taiwan?

Bailey Gifford acknowledges the geopolitical risks associated with Taiwan and China. They incorporate this risk when evaluating the fundamentals of companies like TSMC and focus on their competitive advantage and long-term growth prospects.

Q: Why does Bailey Gifford avoid big technology companies like Apple, Google, Microsoft, and Facebook?

Bailey Gifford has concerns about the societal impacts of big tech platforms, such as social media addiction and polarization. They prefer to invest in companies that align better with their impact philosophy and address social and environmental challenges.

Summary & Key Takeaways

• Bailey Gifford has been reducing its position in Tesla due to valuation concerns and falling share prices, but still believes in Tesla's role in addressing climate change and the growth potential of electric vehicles.

• Bailey Gifford is optimistic about Moderna's mRNA technology, citing its ability to produce treatments and therapeutics faster, including the development of a personalized cancer vaccine.

• Geopolitical risks, particularly in relation to Taiwan, are a concern for Bailey Gifford's investments in semiconductor companies like ASML and TSMC.

• The fund avoids big technology companies like Apple, Google, Microsoft, and Facebook due to concerns about their impact on society and lack of alignment with their impact philosophy.