Investing

This Stock Is Up 303% Since Trump's Election: Did You Already Miss The Year's Best Investment?

Rich Duprey

Published: November 12, 2024 1:08 pm

Donald Trump’s election win last week ignited a match under the stock market, sending the S&P 500 above the 6,000-point level for the first time ever. 

As investors try to suss out which industries and which stocks will benefit most from a Trump presidency, one stock has already become the clear winner: Destiny Tech100 (NYSE:DXYZ), a closed-end exchange-traded fund. The ETF’s shares have already quadrupled in value since last Tuesday and they continue to run higher, making it the top stock so far.

Yet with Destiny Tech100’s shares up 309% as of this writing, did you miss out on what will be the best investment to buy or is there more room to run?

24/7 Wall St. Insights:

• Recently IPO’d ETF Destiny Tech100 (DXYZ) has quadrupled in value since Trump’s electoral victory due to SpaceX accounting for well more than a third of its portfolio.
• Despite the phenomenal runup, investors would still do well to go slow jumping on board as DXYZ is a closed-end fund, which offers more challenges than regular ETFs or mutual funds.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

An ETF with a difference

Closed-end funds (CEF) aren’t the same as traditional ETFs or mutual funds. While their investments are overseen by an investment manager and shares are traded on a stock exchange following an initial public offering, funds don’t flow into CEFs when investors buy them, and don’t flow out when investors sell. 

Neither does the fund issue or redeem shares daily. It is the initial money raised at the IPO that is used by the portfolio managers to invest in target companies.

Destiny Tech100 went public earlier this year with the promise to give small retail investors access to some of the hottest, privately held unicorns on the market, including ChatGPT owner OpenAI, fintechs Stripe and Klarna, and Elon Musk’s SpaceX. It currently owns positions in 22 companies, but eventually plans to have 100 companies in its portfolio.

Traders immediately jumped on board sending DXYZ stock to the moon with a 1,000% gain in a matter of weeks. It was just as abrupt of a hard landing though as the stock crashed again and has largely traded sideways since.

However, since Donald Trump’s electoral win last week, Destiny Tech100 is ratcheting higher once more, quadrupling in value. Shares went from about $10 a stub to over $41 as investors bet SpaceX will land more contracts due to Musk’s close relationship with the once and future president. So have you missed out on the opportunity?

Riding the SpaceX rocket

While Destiny Tech100 is arguably one of the best way to invest in SpaceX, investors might want to go slow here.

First, Trump doesn’t take office till late January so nothing is going to happen right away. Second, SpaceX is already a premier partner with NASA, receiving over $1 billion worth of contracts. Although some pundits were calling for SpaceX to be cut off from federal contracts if Kamala Harris won the election, Trump’s victory ensures that won’t happen. It doesn’t mean more will automatically flow its way either.

Even if more contracts do come SpaceX’s way, DXYZ stock is trading at a substantial premium to its net asset value (NAV). With the stock going for over $40 a share, it is nearly eight times greater than its $5.15 NAV, despite the companies they own being illiquid securities that are difficult to assign a value to.

Destiny Tech100 is also not the only investment owning a piece of SpaceX and they’re not trading at such huge premiums. Fidelity, Sequoia Capital, and Bank of America (NYSE:BAC) are all listed as investors and their valuations are not heading for Mars.

Investors would do well to use caution here. You haven’t missed anything and there is a very good chance DXYZ stock will come in for a hard landing again. That could put the ETF at a more reasonable valuation once more.