Baillie Gifford Is Doubling Down on NIO Stock

During a rousing performance in the broader equities sphere to start the Monday session, Chinese electric vehicle (EV) manufacturer Nio (NYSE:NIO) distinguished itself, flying over 8%. News broke that Baillie Gifford, one of the largest asset managers in Europe, increased its stake in the EV firm. Baillie Gifford has a history of supporting NIO stock, irrespective of outside headwinds.

As Fintel reported earlier today, the investment management firm filed a 13G/A form with the U.S. Securities and Exchange Commission (SEC). In the document, Baillie disclosed ownership of 121.35 million shares (under the “Sole Dispositive Power” line item) of NIO stock. This tally represents 7.97% of the EV maker.

According to Fintel, “[i]n their previous filing dated January 27, 2022 they reported 88,858,365 shares and 6.28% of the company, an increase in shares of 36.57% and an increase in total ownership of 1.69% (calculated as current – previous percent ownership).”

In the trailing year, NIO stock incurred a loss of roughly 52%. Although once offering one of the more promising narratives in the EV space, Nio suffered from multiple setbacks, including coronavirus-related shutdowns and erosion of consumer demand. Still, shares popped up nearly 25% on a year-to-date basis.

Baillie’s Belief in NIO Stock Contrasts With Institutional Peers

Conspicuously, Baillie’s bullishness toward NIO stock largely clashes with its major institutional peers. For instance, while Goldman Sachs (NYSE:GS) recently increased its ownership stake in the EV firm, over the last quarter, the financial giant decreased its portfolio allocation by 19.13%, per Fintel.

Further, Norges Bank — which owns a 0.86% stake in NIO stock – decreased its portfolio allocation by 35.26% in the last quarter. As well, Renaissance Technologies LLC and Legal & General Group PLC decreased their exposure to NIO by 38.08% and 19.87%, respectively, during the aforementioned period.

Aspex Management, an investment management firm based in Hong Kong, represented a notable holdout. During the last quarter, the firm increased its portfolio allocation in NIO stock by 110.29%.

Nevertheless, it’s likely that Baillie will be undeterred by other institutional players’ lack of belief in NIO stock. In late October last year, Reuters reported that the Edinburgh-based investment group purchased 50,039 shares of NIO. As well, the firm acquired 110,737 shares of Shanghai-headquartered e-commerce platform Pinduoduo (NASDAQ:PDD), affirming its China-bull reputation.

At the time, several money managers minimized their exposure to the world’s second-largest economy, ahead of the Communist Party’s twice-a-decade congress, Reuters noted.

Analysts Support the Bull Thesis

At the time of writing, data from TipRanks reveals that NIO stock commands a moderate buy consensus rating among covering analysts. Further, Wall Street’s experts’ average price target stands at $16.62, implying over 37% upside potential.

As well, hedge funds bolster the optimistic thesis for NIO stock, with TipRanks noting positive sentiment among this particular category of institutional investors.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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