This month we looked at companies on Openfolio in order to determine their relative popularity. Popularity means what percentage of Openfolio members own a stock. For example, Facebook (FB) with relative popularity at ~12% means that ~12% of members, or about 1 out of 8 people on Openfolio, own at least a share of FB stock.
Companies typically follow a loose positive correlation, i.e. the bigger they are the more popular they are as an investment (generally). These companies will tow the line on the Big/Popular scale. Where it gets interesting is when we look at divergent selections, as in 1) Really big companies that aren’t popular and 2) Relatively tiny companies that are super popular. What emerges? Tesla Motors (TSLA) vs. Exxon Mobile (XOM), AKA Clean Electric Cars vs. Big Oil.
Tesla, the electric auto maker, is 10 times smaller than Exxon, the oil and gas corporation. But, Tesla is 5 times more popular as a investment, or over 50x more popular when adjusted for size!
Why? The young love TSLA
As you may have guessed, younger investors own TSLA while older (but far fewer) investors own XOM.
So what happened with all these younger investors that own Tesla? In hindsight they did really well this year. Keep in mind that is in hindsight.
But is there upside to being unpopular?
Maybe. Stocks with high retail ownership tend to be more volatile. Popular companies – just like celebrities – need to deal with the fickle nature of public opinion. Just look at the big swings in TSLA in the chart above, it can lose or gain up to 10% in a day. Also, an unpopular company doesn’t imply a bad investment. Warren Buffett and Benjamin Graham have said that an unpopular but good company (i.e. steady future cash flows) can be a great value purchase. In fact, 3.5% of Berkshire Hathaway’s portfolio is in Exxon https://openfolio.com/manager/berkshirehathaway/#user_holdings
Climate change matters to retail investors
And this may have a big impact on the performance of a company’s stock. This popularity data implies that in the ongoing discussion on climate change, investors do vote with their wallets. It also implies that popular interest in green energy (and related technologies) remains at all time highs. Gallup data below also corroborates that younger generations are more concerned about climate change.
For more, check out Openfolio!