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Core Fund Update 9

April 21, 2024
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Wiko Steyn
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Wiko Steyn

#19 of 20 Stocks Added

 

We are unaware of any company where the stocks valuation has been more debated than that of Tesla. Almost every day there is a fierce battle between Tesla bears and bulls. Tesla has been in the back of our minds ever since we started the Core Fund. They are after all the exemplification of a growing industry leader. Yet we found it difficult to pull the trigger and add it to our Core Fund. It certainly helped that their share price has been cut in half from the all-time high, but still why did we struggle to add it and what finally convinced us?

Elon Musk. Love him or hate him, it is clear that this man is not only extremely ambitious but he also knows how to run a business. The hesitation was probably because of the valuation and maybe the polarising views that we see on social media and financial websites every day. One enlightening fact is that most bear arguments are centred around nothing else but Tesla's valuation and if the history of big tech has taught us anything, it is that an expensive stock can continue to surge higher, as long as they continue to grow earnings power. Breaking down the financial metrics of Tesla (not only staring at the P/E, like some investors) we see higher FCF margins, a great balance sheet and strong growth compared to its peers which might justify its premium valuation, well to a certain extent. 

There are plenty of articles available on the competitive advantages of Tesla, and why they are not only an EV company, so we will not reiterate what has already been covered. For any potential Tesla investor, it comes down to the following questions: Do you believe in Teslas vision and what are their chances of succeeding?


Portfolio Update Summary

After it looked like the market might start to stage a recovery, the inflation data came in red hot at the end of last week and stocks crumbled. We added to Illumina, MercadoLibre, Adobe and Nvidia on share price weakness.

  • Buy $250 TSLA at $641.66
  • Buy $250 ILMN at $188.17
  • Buy $250 MELI  at $604.95
  • Buy $250 ADBE at $371.65
  • Buy $250 NVDA at $156.89


 

Disclosure

This article is not financial advice and is based on the opinion of the author. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products. The $20K in the Core Fund is not real money and only a demonstration of a typical portfolio. This is an actively managed portfolio, where we will buy and sell positions as we deem fit without any regard for taxation. Remember, all selling of stocks triggers a tax event in most countries and it is the investors personal responsibility to always remain tax compliant.

 


 


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