Millionaire Israel Englander Slashes Millennium's Holding in Rivian by an Overwhelming 95% and Shifts Focus to This Preferred Electric Vehicle Share Belonging to Cathie Wood
Millionaire hedge fund manager, Izzy Englander, steers Millennium Management as its chairman and CEO. During the September quarter, Millennium's decisions regarding electric vehicle (EV) stocks caught the eyes of many investors, though not necessarily in the way you might expect.
Guess who's not the focus of Millennium's latest moves in the EV sector? You're right – not Elon Musk's Tesla. After examining Millennium's most recent 13F filing, it appears Englander and his team made some notable adjustments to the fund's EV holdings.
First off, Millennium marked a significant reduction in its investment in Rivian Automotive, selling almost 5 million shares during the third quarter. Concurrently, the firm decided to back another EV player – Archer Aviation, an electric vehicle takeoff and landing (eVTOL) manufacturer.
Curious about the factors that might have influenced these decisions? Let's dive in and see if there is any logic behind swapping Rivian for Archer.
Why Ditch Rivian Stock?
Over the past few years, Rivian's narrative has resembled that of Tesla during its early days, facing ups and downs in production and delivery numbers. Despite the efforts by management to tackle manufacturing challenges and cut costs, it still seems like each solution is merely a short-term fix rather than a long-term solution to generate sustainable profits.
As a result, Rivian has struggled to scale its operation profitably. Rivian's unit economics, as illustrated in the table below, demonstrate a concerning trend with no signs of improvement:
| Quarter | Gross Profit per Delivered Vehicle || --- | --- || Q1 2024 | -$39,840 || Q2 2024 | -$39,220 || Q3 2024 | -$39,130 |
The financials indicate that Rivian is losing money on every vehicle it delivers, which begs the question – how do they turn the tide?
One potential challenge for Rivian is President-elect Donald Trump's rumored intentions to scale back EV tax credits as part of the Inflation Reduction Act. Given that EVs are already relatively expensive, reducing or eliminating these incentives could further disincentivize consumers, putting more pressure on Rivian as it falls behind other EV manufacturers.
Enter Archer Aviation
Millennium placed a bet on Archer Aviation during the third quarter, acquiring nearly 3.25 million shares. But before diving into the details of Archer, let's clarify what this company is all about – it's developing electric air taxis.
One unique aspect of Archer's eVTOL vehicles is their potential impact on reducing traffic congestion in densely populated cities. Several large organizations, such as the U.S. military, have demonstrated interest in Archer's offerings. Archer's purchase order book currently totals over $6 billion, featuring clients like United Airlines, Airforce Work Project, Future Flight Global, and numerous others.
Despite Archer's promising future and existing order book, there are a couple of concerns to keep in mind. Firstly, Archer is yet to generate any revenue. Shares of the company have spiked by 54% in 2024, reaching a market capitalization of $4.1 billion based on the value of its purchase orders. Although the allure of Archer as an investment alternative may be strong for some, I remain skeptical until the company begins commercializing its flying taxis.
Millennium is a significant player in the investment world with a diverse portfolio, so its decision to invest in Archer Aviation may be driven by a perceived risk-reward opportunity. The Archer position represents a minor fraction (less than 0.1%) of Millennium's overall portfolio.
In conclusion, Millennium's decision to trim its Rivian stake and invest in Archer Aviation is nerve-wracking, given Rivian's struggles with profitability and Archer's lack of commercial revenue. If you are considering investing in either of these EV companies, it's essential to weigh the pros and cons carefully to make an informed decision.
Despite Millennium's significant reduction in investment in Rivian Automotive due to concerns over its profitability and sustained losses per delivered vehicle, the finance mogul didn't shy away from investing in the EV sector. Instead, they chose to invest in rising star Archer Aviation, an electric vehicle takeoff and landing (eVTOL) manufacturer, emphasizing the firm's continuous interest in opportunities within the finance and investing realm of the electric vehicle industry.
