Top fund manager: Forget Tesla, these automakers are set to 'win the game'

Published Tue, Mar 16 202110:51 AM EDTUpdated Tue, Mar 16 202111:27 AM EDT

Fund manager Per Lekander has named a number of automaker stocks that he says are poised to "win the game," as the global energy transition gathers pace. Lekander, whose Lansdowne Energy Dynamics Fund won "best sector specialist" at this year's Investors Choice Awards, told CNBC Tuesday that 2020 was the year that the world "woke up" to the speed of the transition toward clean energy. Tesla became the poster child of this trade as its share price skyrocketed more than 700% over the course of 2020. Lekander, however, is short Tesla and says "it's becoming more and more apparent" that there are alternative stocks for investors to consider. Here are some of his picks: " Volkswagen is not a bad story," he said, arguing in favor of more traditional automaker stocks. The fund manager also likes Daimler . He said that although "pure plays" on the green transition were the standout performers last year, 2021 would be a "comeback for the incumbents." "The big companies, the auto companies, the engineering companies, so many of the utilities have woken up, and I think that is the story of 2021, that these guys are not screwed," Lekander said. "They have a future, and they are actually going to win this game, whereas I think pure plays are going to struggle." Lekander, who is long VW, said he was "enormously positive" on German autos in particular this year. "That is probably one of my ideas here, that whenever you have a bubble, you also have an anti-bubble, and I think the bubble of Tesla created the anti-bubble of high quality incumbents, and these companies are now getting out of that anti-bubble," he added. Volkswagen's EV plans His comments come as Volkswagen on Monday announced an ambitious expansion to its plans in the electric vehicle market , with CEO Herbert Diess telling CNBC Tuesday that the next 15 years "will see a total turnover of the industry." Investors reacted positively as shares of the world's second-largest automaker rallied. However, Lekander is backing its compatriot Daimler , despite VW being slightly ahead in the EV race, on account of the value in the former's impending breakup of its businesses. Breakup potential Daimler announced in early February that it would spin off its truck unit in a bid to slimline its business to focus on electric and luxury cars. The move by the Mercedes-Benz owner followed the example of other German firms such as Siemens , with investors keen to see broad conglomerates broken up and focus sharpened. Lekander said he backed this trend. "There is no question that the big auto companies, and I think it is more specific on the German ones — the VW and Daimler — the breakup value is multiples of what the current valuation is," he said. As of Tuesday afternoon in Europe, Daimler was trading at just above 71 euros per share, yet Lekander projected that its breakup value would exceed 200 euros per share. He suggested that this is less likely to happen in the case of VW, although he argued that it still has "completely the wrong valuation" and would outperform the likes of Tesla from here.

Sprinter Van being assembled at the Mercedes-Benz Vans plant, in Ladson, S.C.

Meghan Reeder | CNBC

Fund manager Per Lekander has named a number of automaker stocks that he says are poised to "win the game," as the global energy transition gathers pace.

Lekander, whose Lansdowne Energy Dynamics Fund won "best sector specialist" at this year's Investors Choice Awards, told CNBC Tuesday that 2020 was the year that the world "woke up" to the speed of the transition toward clean energy.

Tesla became the poster child of this trade as its share price skyrocketed more than 700% over the course of 2020.

Lekander, however, is short Tesla and says "it's becoming more and more apparent" that there are alternative stocks for investors to consider. Here are some of his picks: