One of the more interesting bets made during this past quarter came from Bill Gates’ Foundation. During the company’s quarterly 13-F filing, the Gates Foundation noted a couple interesting new stakes investors have taken note of. Notably, Vroom (NASDAQ:VRM) and Carvana (NYSE:CVNA) were added, with the foundation adding around 2.5 million shares of beaten-down VRM stock during Q2.
Both Vroom and Carvana operate in the automotive retail business. However, unlike traditional auto retailers who sell cars on lots, these companies provide e-commerce platforms allowing for the end-to-end purchase of vehicles without leaving the comfort of one’s home.
Both businesses boomed during the pandemic. Restrictions led car buyers to seek out other means of getting their hands on some new wheels. However, with the economy now reopened, and surging auto prices (and car loan rates to boot), investors are noting worse-than-expected outlooks for these companies from here.
Let’s dive into what Bill Gates might see in Vroom and Carvana right now.
VRM Stock Surges on Gates Foundation Bet
Undoubtedly, this is one of the more intriguing investments I’ve seen during this 13-F filing season. Both Vroom and Carvana are pandemic darlings, with business models designed for a very specific consumer base. While this base was expanded during the pandemic, it appears most auto buyers have shifted their behaviors back to the old ways. Accordingly, on its face, these investments really are head-scratchers.
That said, Bill Gates is famous for his long-term investing style. His view may be that Vroom and Carvana provide the technology that will power the future of the U.S. auto industry. And as more shoppers switch to online options for their auto buying globally, this trend could catch on.
Maybe Gates will be right over the long term. He did get quite a steal with both stocks, which are down massively from their peaks. In any case, investors may want to dive deeper into these names on the back of a rather compelling investment from a renowned investor.
On the date of publication, Chris MacDonald 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 InvestorPlace.com Publishing Guidelines.
