Nikola Stock Is Paying Off for ValueAct and Jeff Ubben
Sustainable investing requires patience and a fair bit of imagination.
Look at Jeff Ubben’s investment in upstart startup Nikola (ticker: NKLA), the fuel-cell and battery-powered truck maker that went public via a backdoor listing this month.
Ubben, chairman and founder of ValueAct, invested in the company when it was private through the ValueAct Spring Fund, a sustainability-focused fund launched in early 2018. The hedgie sits on Nikola’s board and owns an aggregate 5.6% stake through ValueAct.
So far, the investment appears to have paid off. Three months ago, he told CNBC that Nikola would be a $100 billion company. It’s already a quarter of the way there, thanks to a surge in the past two weeks.
Ubben and ValueAct did not respond to requests for comment.
Exuberance for Nikola isn’t complete. It’s the sixth-largest short among auto makers. Shorting is the act of borrowing a stock in a company and selling those shares, with the hope that the price will drop. Then it will be cheaper to buy the stock to return to the lender.
Nikola recently commanded a 243.6% borrow fee, as there aren’t enough shares to lend out to meet demand, according to data provider S3 Partners. And there’s reason to be skeptical: Nikola expects no sales this year, but hopes to top $1 billion in sales in 2023.
Belief is a powerful force. Just three years ago, Ubben told this reporter: “It’s going to take an activist” to make sustainable investing grow.
Ubben appears to be on the mark for now, but will Nikola hold up for the long haul?