Tom Slater, manager of the £13.8bn Scottish Mortgage investment trust, has acknowledged that last year was "humbling" after Baillie Gifford lost more than $14bn on its Tesla and Shopify holdings.
Speaking at an investor forum in London, Slater, who has co-managed the UK's largest trust since 2015, said it had been a "mistake" to assume that shifts in consumer behaviour during the pandemic would stick.
He also admitted they were "slow to recognise the significance of the shattering in Sino-US relations".
Tesla, which has seen its share price drop by 66.5% in the last year, according to Morningstar data, accounts for 4.9% of the Scottish Mortgage trust and is its third-largest holding.
Baillie Gifford's position in the stock across its funds, along with a smaller stake in Shopify, has cost the firm more than $8bn and $6bn respectively. Until 2019, the Edinburgh-based asset manager was the largest shareholder after the company's CEO Elon Musk, owning about 8% of the stock.
In an interview with the Financial Times, Nick Thomas, partner and leader of Baillie Gifford's North American business, said the firm had reduced its holding to less than 1%, but remained the 12th-largest shareholder.
"Yes, there was quite a lot of damage from the share price falling last year but it could have been a lot worse," he told the newspaper.
"Tesla's actually been a giant success story. The amount of money we have realised from selling shares still far outweighs what we lost last year. It is still a meaningful holding for us so we still have a lot of conviction in its long-term prospects. It has just been a difficult period."
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Shopify's share price has also taken a hit in the last year, falling more than 73%. This slump compares to the 173.5% and 178.4% returns in 2019 and 2020. In 2020, Tesla returned 743.4% to shareholders.
Thomas said: "Like a lot of our stocks, Shopify performed strongly in 2020, and then as the pandemic started to taper off, there were questions around how much of that extra demand will stick and how much is consumer behaviour, and what should the valuations of these companies be? That is the big headwind we have been sailing into in the past 18 months."
According to data from the Association of Investment Companies, Scottish Mortgage's share price has slid 37% over the last year. Over the last ten year period, it returned over 430%.
