2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is Elon Musk’s EV manufacturing company. The company also provides energy generation and storage systems in the US, China, and internationally.
Philippe Houchois at Jefferies reiterated a Buy rating on Tesla, Inc. (NASDAQ:TSLA) shares on August 27. The analyst also placed a $350 price target on the stock.
This August, Tesla, Inc. (NASDAQ:TSLA) moved forward with a 3:1 stock split to make the company’s shares more affordable. The stock gained by almost 2% and moved higher to about $302.3 when it began trading at the new price. Tesla, Inc.’s (NASDAQ:TSLA) EPS also represent growth potential, as it is expected to grow by 44.6% over the next three to five years.
Our hedge fund data shows 72 hedge funds long Tesla, Inc. (NASDAQ:TSLA) in the second quarter, with a total stake value of $7.2 billion. In comparison, 80 hedge funds were long the stock in the previous quarter, with a total stake value of $11.3 billion.
Baron Funds, an asset management firm, mentioned Tesla, Inc. (NASDAQ:TSLA) in its second quarter 2022 investor letter. Here’s what they said:
“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…”
