2. Tesla Inc. (NASDAQ:TSLA)
Hedge Fund Holdings: 72
Notable Billionaires Having Stakes in TSLA: Catherine D. Wood, Philippe Laffont, Ken Griffin
Based in Austin, Texas, Tesla Inc. (NASDAQ:TSLA) is an American multinational automotive and clean energy company which specializes in the design and manufacture of electric vehicles, battery energy storage from home to grid-scale, solar panels, solar roof tiles, and related products and services. It is one of the world’s most valuable companies, with a total market capitalization of $846.7 billion as of September 3. Tesla Inc. (NASDAQ:TSLA) has been a hot bed for billionaire investors, with 14 of the top 15 hedge funds long Tesla Inc. (NASDAQ:TSLA) managed by billionaires. Ken Griffin’s Citadel Investment Group is the largest shareholder in the stock, owning more than 20.8 million shares worth around $14.04 billion. Other prominent billionaires to have significant stakes in Tesla Inc. (NASDAQ:TSLA) are Catherine D. Wood of ARK Investment Management, Israel Englander of Millennium Management, and Philippe Laffont of Coatue Management.
On September 1, Piper Sandler analyst Alexander Potter raised the price target on Tesla Inc. (NASDAQ:TSLA) to $360 from $344, keeping an Outperform rating on the stock. The analyst noted that several cross-currents may cause a dip in shares of Tesla Inc. (NASDAQ:TSLA) in the coming weeks, including shorter wait times, China weakness and rising interest rates. The analyst also predicted that Tesla Inc. (NASDAQ:TSLA) will slash prices sometime in 2023. Given all this, some investors might conclude that Tesla Inc. (NASDAQ:TSLA) faces a demand problem. However, the analyst points to the contrary, stating that shorter wait times suggest improving supply, not falling demand. He boosted the price target to accurately reflect the company’s decision to increase pricing on its full self-driving software.
Hedge fund sentiment around Tesla Inc. (NASDAQ:TSLA) has decreased in the second quarter of 2022, with 72 hedge funds long the stock, compared to 80 in Q1 2022. The company posted an EPS of $0.76 in Q2 2022, beating estimates of $0.6 by $0.16.
Baron Funds, an asset management firm, mentioned Tesla Inc. (NASDAQ:TSLA) in their Q2 2022 investor letter. This is 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…” (Click here to see the full text)
