Remember when I walked into that den of bears at the Vail hedge fund ideas conference and some of the smartest dudes in the room were openly dismissive of my idea of buying Tesla TSLA. I think we (re-) learned one of the most important lessons on Wall Street with Tesla over the last few months that we’ve owned it — we have to be willing to go against the crowd with our investments.
I’m certainly not going to be all I-told-you-so about Tesla here — as a matter of fact, this latest trash-talking tweet from Elon Musk bothers me, because he should NOT be worried about the shorts. The shorts will buy this stock back some day if the company can earn a few tens of billions of dollars in the next few years like Elon supposedly expects it to.
Back to the topic at hand, hated stocks, here’s part of what I wrote back in June when TSLA was below $220 a share in an ugly downtrend and I’d just gotten back from presenting the Tesla idea in Vail:
“Almost every question I got was slanted/biased bearish. I certainly listened to and respected the people at the ideas conference, many of whom are clearly brilliant people and gave compelling presentations. But there was undoubtedly a consensus of TSLA bears/shorts in that room. That’s not necessarily a bad thing, of course, and one of the guys quoted Warren Buffett to me after my presentation when I’d noted the consensus, “You [can] pay a very high price in the stock market for a cheery consensus.”
The 17-year old son of the host of the conference sat in on my presentation and asked me the best question I got — “How can you think that you’re going to be right about TSLA when all these smart guys in the room think the opposite?” I told him that it’s not easy being an independent thinker and having the guts to believe in your own analysis. And frankly, if you think about it, the only way to outperform the people in that room is to believe in your own analysis and to do things differently than all of them. Clearly, there’s risk in TSLA. But there’s also tremendous potential upside.
That upside is mostly based upon the fact that the company is now selling by far the best product to a mass market. And when that starts happening, it’s usually a good time to invest in that stock.”
When you trust your own analysis, it can free you from staring at the charts of your stocks (but it doesn’t free you from worrying about your stocks of course). And when you can find one of those rare situations when you have found an investment that looks incredibly attractive and nobody else wants it (or they hate it) that is usually the best time to get aggressive on that investment.
Believe it or not, I’m looking into trying to buy some WeWork here — why? Because nobody else wants, not even the guys who can get a commission from getting me access to the equity. I’m digging into the financials before making a move, but I can’t remember the last time a multi-ten billion market cap company was this hated — oh yes, I can, it was Tesla in June.
Of all of our existing longs right now, I think the most hated in order of most-hated to disliked are probably:
Slack (WORK) – All recent IPOs that Softbank is involved in are being trashed right now and Slack hasn’t hardly had an uptick since it came public a couple months ago. The stock looks attractive here and might be a no-brainer closer to $15.
Uber (UBER) – Softbank-tainted, this is another recent IPO that nobody wants. The stock’s bounced a little of late or I’d say it was hated even more.
Netflix (NFLX) – It was truly hated when we snuck in and started buying this stock at $250ish a few weeks ago. But most people who wanted to sell this stock because of the coming “threat” from Disney and HBO and all the other new streaming services have probably already done so. And I’m not sure I can remember the last time I talked to a Wall Street analyst who liked NFLX.
Twitter (TWTR) – The stock is down some 30% from its recent highs a couple weeks ago but it would take a little more time and more selling pressure before this stock would be considered as hated at Slack.
Qualcomm (QCOM) – Despite the recent pop of nearly 20%, this stock is still under-owned and nobody seems to care about its potential to make tens of billions on 5G, IoT, etc.
Boeing (BA) – With the crashes caused by this company’s aggressive pursuit of profits and corner-cutting and regulatory capturing, I can see how this stock is disliked. It’s not truly hated though, and is still widely owned.
I’m sure we can debate about what the least-loved stocks we own are right now. Tesla probably still belongs near the top of the above list, even after it’s big rally here.
See you at the chat.