Are Hedge Funds Losing Interest in Big Auto-Makers?

Fiat Chrysler and Alphabet Partnership Could Lead to Big Things

Hedge fund interest in Fiat Chrysler Automobiles NV (NYSE:FCAU) was flat over the course of the first quarter, as the number of long positions remained unchanged at 28, or 3.7% of the fund’s we follow. Harris Associates’ stake in the car maker was reduced by 22% during the quarter and currently amounts to 34.2 million shares worth $276 million, while Cliff Asness also chose to reduce his fund’s exposure to Fiat Chrysler Automobiles NV (NYSE:FCAU), having trimmed AQR Capital’s stake by 1% to 10.8 million shares valued at $87.4 million. Fiat Chrysler is the first major car maker to announce a self-driving vehicle partnership with Alphabet, as opposed to most of their competitors, who have chosen to develop their own software. The two companies have agreed to work on the redesign of 100 Chrysler minivans to include Alphabet’s software and sensors, with the first cars expected to hit the road by the end of the year. Since Alphabet has said that it does not plan to build its own cars, the deal could lead to the two companies designing a new vehicle from scratch.

Bullish Sentiment Towards Truck Maker

The popularity of PACCAR Inc (NASDAQ:PCAR) among elite hedge funds inched up during the first three months of 2016, with the number of long positions reported as of the end of the first quarter reaching 26, up from 24 reported as of the end of December. Anand Parekh‘s fund, Alyeska Investment Group, established a new position in PACCAR Inc (NASDAQ:PCAR) during the first quarter, having bought 533,310 shares worth $29.1 million at the end of March. The company had a disappointing first quarter, as its main financial indicators were below expectations. PACCAR Inc (NASDAQ:PCAR) posted a loss of $594.6 million, which translated into a profit of $0.99 per share when adjusted for non-recurring costs, on $4.01 billion in revenue. Analysts, in turn, had projected $0.95 per share in earnings on the back of $4.07 billion in revenue. So far this year, the stock has been trending positively, having ended yesterday’s trading session up by 16% for the year.

Tesla Entering Proving Grounds Stage

The popularity of Tesla Motors Inc (NASDAQ:TSLA) surged during the first quarter, as the number of hedge funds invested in the stock reached 39, up from 29 a quarter prior. Daniel Benton‘s Andor Capital Management is heavily invested in Tesla Motors Inc (NASDAQ:TSLA), but chose to reduce its holding by 50% during the quarter. According to its latest 13F filing, the fund holds 500,000 Tesla shares valued at $114 million, a position that accounts for roughly half of its equity portfolio. The maker of electric sports car has recently expanded into other segments, as it introduced the Model X, a full-sized crossover, and has started production of the Model 3, a compact sedan. Priced at $35,000, the Model 3 appears poised to be a major success, as the number of pre-orders reached 400,000 within the first two weeks. Tesla Motors Inc (NASDAQ:TSLA), which has only produced roughly 100,000 cars in total thus far, will now need to prove that it can scale its production to meet the soaring demand, and do so profitably. The first Model 3 units are expected to be delivered at the end of 2017, while the most recent orders will not be delivered until 2020 according to company officials.

Disclosure: None