The South Korean fintech firm, Qraft Technologies, a SoftBank-backed investment powerhouse, has made a significant strategic move, dramatically increasing its investment in Tesla Inc. (TSLA). This bold decision comes on the heels of a nearly 40% surge in Tesla’s stock price during November, a remarkable recovery following a less-than-impressive Robotaxi event in October. The move underscores the volatile nature of the market and the anticipation surrounding the incoming Trump administration’s economic policies.
Qraft, managing approximately $50 million across three exchange-traded funds (ETFs), employs AI-driven strategies to rebalance its portfolio monthly. Their flagship ETF, AMOM, leverages a momentum-factor investing approach, focusing on stocks demonstrating strong recent performance. In December, AMOM significantly increased its Tesla holdings from 6.55% to 7.95%, a clear vote of confidence in the electric vehicle giant’s future growth, as reported by Barron’s.
This strategic shift by Qraft aligns directly with the anticipated policies under Donald Trump’s presidency. With Elon Musk expected to play a key role in a government cost-cutting initiative, AMOM’s investment in Tesla is not an isolated incident. The fund has simultaneously adjusted its portfolio to include a range of other stocks anticipated to benefit from the anticipated Trump-era economic policies – often referred to as “Trump trades.” This includes new positions in prominent firms like Blackstone Inc. (BX), KKR & Co. (KKR), Texas Pacific Land Corp. (TPL), and Vistra Corp (VST), all sectors expected to thrive under a potential deregulation and tax-cut environment.
The impact is evident: AMOM’s performance speaks for itself. As of November’s close, the ETF boasted a remarkable 38% return for 2024, slightly outperforming the iShares US Momentum ETF. Meanwhile, Qraft’s QRFT fund, following a more defensive strategy, mirrored the S&P 500’s 26% rise, showcasing the firm’s diversified approach to managing risk and capitalizing on market opportunities.
Tesla’s stock recently hit the $400 mark in overnight trading on Robinhood, prompting CEO Elon Musk to taunt short-sellers. This underscores the volatile nature of the stock and the unwavering confidence some investors hold in Tesla’s long-term potential. The anticipated economic landscape under the Trump administration, with potential tax cuts and deregulation, is poised to significantly benefit energy, oil, and gas sectors. As Yogesh Kansal, chief business officer at Appreciate, points out, these measures could translate to higher corporate earnings and further fuel market rallies. However, potential downsides exist. Increased labor costs due to potential immigration policies and tariffs could offset some of these gains, ultimately affecting profitability and consequently, stock prices.
Qraft’s significant move into Tesla and other “Trump trades” signals a calculated bet on the potential market shifts under the new administration. This strategic repositioning provides a fascinating case study in the interplay between political expectations, technological innovation, and investment strategies within the rapidly evolving financial landscape.
