1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is a Texas-based EV company led by billionaire Elon Musk.
Tesla, Inc. (NASDAQ:TSLA) is a leading EV maker that also manufactures batteries generating renewable solar energy. The company manufactures solar panels for residential and commercial customers. Tesla, Inc. (NASDAQ:TSLA) is making an aggressive foray into the Chinese EV segment as it is working on ramping up production from its Shanghai gigafactory facility.
Adam Jonas at Morgan Stanley thinks that Tesla, Inc. (NASDAQ:TSLA) will undergo a “peak China” dependency stage in the next year. However, the supply chain of the EU and NAFTA countries will ramp up as it starts to fall in compliance with the IRA. The analyst has given Tesla, Inc. (NASDAQ:TSLA) stock an Overweight rating and a target price of $383 in a research note issued on September 20.
Here’s what Baron Funds said about Tesla, Inc. (NASDAQ:TSLA) in its Q2 2022 investor letter:
“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:
- First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic;
- second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.
Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful.
Regardless, I was right to have spoken with Roger. That was since he outlined numerous issues we needed to consider, study, and question before we determined whether we believed Tesla could be a successful business…before we ultimately chose whether to invest in that company.
When we completed our initial due diligence on Tesla, which diligence has been ongoing since 2014, we decided to invest $360 million in Tesla over the next two years. I then called Roger and outlined why I thought we could earn 20 times our capital over the next 10 years. Roger was so certain I was wrong that he offered to bet me $1 million that Tesla would fail. “Roger, I can’t bet you a million dollars. First, if you are right, I couldn’t afford to pay you. Second, if I’m right, you’re my friend, and I couldn’t take your money.” We settled on a dinner bet…”
Of the 895 hedge funds in Insider Monkey’s database, Tesla, Inc. (NASDAQ:TSLA) was held by 72 elite funds as of Q2 2022.
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