Tesla has become a business powerhouse since it started in 2003. The company, led by Elon Musk, is the top company in the EV marketplace and gets a lot of attention from its unconventional leader. It had a great run in 2021 for Q1 and Q2, earning more than $22 billion. This made a wide range of investors buy into Tesla. From fund managers to independent investors, the stock was popping up in portfolios across the world. However, there is one fund manager who didn’t think this was a good idea.
Dennis Lynch, who also goes by Marshall Lynch, is the head of Morgan Stanley Counterpoint Global. When looking into Tesla, he found that it was considered a “cool” company and is well-known for its technology. However, he didn’t think that meant it would earn a good return. He found it too good to be true, and he sold off the Tesla stock he had. Meanwhile, fund managers around the world are doing the opposite and buying it up.
Dennis Lynch Beginnings
Originally from Rumson New Jersey, Dennis Lynch (Marshall) earned a BA in government from Hamilton College and his MBA from Columbia University. He became a sell-side analyst for J.P. Morgan Securities. Then, in 1998, he joined Morgan Stanley as the head of small and mid-cap growth investing. Today, he is the co-manager of the Morgan Stanley Institutional Reception Fund, worth $2 billion. In 2020, this fund had a 150% return.
Selling Tesla Shares
Dennis, or Marshall Lynch, has spent his career looking for innovative, disruptive companies and investing in some risky ones. He is also a cryptocurrency supporter, fully supporting new technologies and opportunities that are less than traditional. However, he has cut Tesla out of his portfolio and has been vocal about it. He had Tesla shares for about three years, and he did get some return from the stock. But, after a lot of number crunching, he removed Tesla from his funds.
With 27 years of experience in the industry, Dennis Lynch has extensive experience and has used that experience to assess that Tesla is too risky. He found that EVs are a risky bet, as the EV companies generally have a lot of debt and have a limited market. There is also no leader in the EV market. Tesla gets plenty of attention, but other EV companies are more proven.
The popularity of Elon Musk and the many promises that the company made may not translate to real sales, Lynch believes. The company also needs a great deal of financing. It goes through money too rapidly and is always in need of more cash. This can put the business in a bad position. For Dennis Lynch, short-term returns came in, but it didn’t make sense as a long-term investment.
Fund Managers and Tesla
Many fund managers have a different view of Tesla and are adding it to portfolios. They believe that consumers are increasingly accepting EVs, and deliveries of Teslas have increased five times in the last five years. They believe that the company’s autonomous technology is solid and will be the first company with a car that is completely autonomous. Because Tesla is now in the S&P 500, fund managers are more aware of its progress. The company is also the highest-valued car company in the world. Its fast growth rate has also made it attractive to many fund managers.