Thread by @garyblack00

As a growth mgr, I look for three ways to generate alpha (excess risk-adj returns):
1/ Acceleration
2/ Catalysts
3/ Non-consensus bets
Some pms say finding stocks that trade at less than intrinsic value generates alpha, but absent one of the above, stocks can stay cheap forever.

2/Acceleration - If the market concludes that a 20% grower will now grow at 30% because of a new product, tech breakthrough or TAM expansion, the market will re-rate (increase the P/E of) the 20% grower to that of a 30% grower, and investors get both P/E expansion and higher EPS.

3/ Catalysts - Generally vols, earnings, new products, corp events like stock splits, M&A/buyouts, S&P inclusion, new govt policy, etc. These events don’t always add value, but often shine a spotlight on the difference between price (what you pay) and value (what it’s worth).

4/ Non-consensus bets - This requires research: knowing the drivers of a business, size of TAM and moat, and building a qtrly and multi-yr model. If you’re confident that consensus is wrong (vols, earnings, mkt share, margins), and actuals beat consensus, you can generate alpha.

5/ $TSLA has all three potential alpha generators: Vol growth is accelerating from 40% to 50%+ as Y goes global and TSLA launches CyTrk/Semi/M2.

Catalysts are always present but have been less potent of late since TSLA tends to run in front of catalysts, then sells on the news.

6/ Non-consensus bets have been the most potent alpha generator because analysts covering $TSLA are lame, viewing TSLA more like an auto comp than as a disruptive tech force like $AAPL iPhone. If EV penetr’n continues to soar and TSLA EV share holds, this alpha source remains💰.