Last Updated on Feb 15, 2022 by James W
Dennis Lynch, who also answers to the name Marshall Lynch, has always done things a bit differently than other stock pickers. As Head of Morgan Stanley Counterpart Global, he has chosen to forgo investing in Tesla even as the reality of electric vehicles comes closer to fruition. The Rumson New Jersey native feels that Tesla is a risky choice for most investors.
What is Tesla?
Elon Musk founded Tesla back in 2003 in California. He relocated the company to Texas shortly after the coronavirus pandemic started in 2020. Tesla released its first electric car to the public in 2006, and it has maintained a dominating presence in the market from the beginning.
Musk, described as a genius by some and utterly unconventional by others, led the company to a record $22.35 billion in the first two quarters of 2021. Other fund managers and everyday investors are rushing to add Tesla to their portfolio. Dennis Lynch is not one of them, although he was at one time.
Dennis Lynch (Marshall) on Why He Dropped His Tesla Stock
Dennis Lynch built his career at Morgan Stanley by scoping out early disruptors and innovators and daring to invest in risky stocks. For example, he is fully on board with investing in cryptocurrency and believes the market is going places that people cannot imagine yet. The fact that a company produces unconventional products does not bother him at all, which leaves many to wonder why he no longer invests in Tesla. Here are his top four reasons:
- Tesla is not a market leader, despite getting the most attention from the press. According to Dennis Lynch, other businesses in the electric vehicle industry have better track records than Tesla but little publicity. The industry has gotten so large over the last several years that Dennis is willing to bet other companies will pull ahead of Tesla. He points to BMW and Honda as examples.
- Tesla requires too much financing and goes through the money it receives too quickly, which has Musk and other company leaders always looking for new financing. The way Dennis Lynch sees it, Tesla is too reliant on the whims of outside lenders to have as much control over its growth as it should.
- Elon Musk may be unorthodox, but no one can argue that he is not ambitious. However, the Morgan Stanley lead investor feels there is such a thing as being too ambitious. He does not see Musk or Tesla as a whole as being able to keep promises on a long-term basis.
- Electronic vehicles are still a risky investment, although Tesla released the first one more than 15 years ago. Because these companies tend to operate with a lot of debt, investors take on greater risks than they do with other types of stocks. Another factor to consider is that most people require dealer financing to purchase an electric vehicle. This fact could limit market share in the long run.
About Dennis Lynch
Dennis P. Lynch, Jr. (Marshall) grew up in Rumson, New Jersey, and graduated from the local high school. He graduated from Hamilton College in 1993 with a bachelor’s degree in government. He returned to school a few years later to earn his MBA in finance from Columbia University Business School.
Dennis accepted employment with Morgan Stanley in 1998. His first position was Head of Small and Mid-Cap Growth Investing. Before this, Dennis Lynch worked as a sell-side analyst for J.P. Morgan Securities. Thanks to his management, the Morgan Stanley Institutional Reception Fund saw a 150 percent increase in 2020, a year many other securities firms posted losses due to the pandemic.
