If you’d ask most market participants, hedge funds are perceived as underperforming, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation today, we at Insider Monkey hone in on the leaders of this club, about 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total asset base, and by watching their best stock picks, we have spotted a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as beneficial, bullish insider trading sentiment is another way to break down the stock market universe. There are a number of incentives for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this strategy if you know what to do (learn more here).
Consequently, it’s important to take a look at the recent action regarding Tesla Motors Inc (NASDAQ:TSLA).
What have hedge funds been doing with Tesla Motors Inc (NASDAQ:TSLA)?
Heading into Q2, a total of 18 of the hedge funds we track held long positions in this stock, a change of 6% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly.
When looking at the hedgies we track, Drew Cupps’s Cupps Capital Management had the most valuable position in Tesla Motors Inc (NASDAQ:TSLA), worth close to $21.5 million, accounting for 2.2% of its total 13F portfolio. The second largest stake is held by William Duhamel of Route One Investment Company, with a $18.9 million call position; 2.9% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Phill Gross and Robert Atchinson’s Adage Capital Management, John Griffin’s Blue Ridge Capital and Alexander Mitchell’s Scopus Asset Management.
Consequently, some big names have been driving this bullishness. Route One Investment Company, managed by William Duhamel, created the biggest call position in Tesla Motors Inc (NASDAQ:TSLA). Route One Investment Company had 18.9 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $9.2 million position during the quarter. The following funds were also among the new TSLA investors: Alexander Mitchell’s Scopus Asset Management, Ryan Frick and Oliver Evans’s Dorsal Capital Management, and Philip Hempleman’s Ardsley Partners.
How are insiders trading Tesla Motors Inc (NASDAQ:TSLA)?
Insider purchases made by high-level executives is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the last six-month time period, Tesla Motors Inc (NASDAQ:TSLA) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Tesla Motors Inc (NASDAQ:TSLA). These stocks are Honda Motor Co Ltd (ADR) (NYSE:HMC), Ford Motor Company (NYSE:F), Nissan Motor Co., Ltd. (ADR) (PINK:NSANY), General Motors Company (NYSE:GM), and Tata Motors Limited (ADR) (NYSE:TTM). This group of stocks are in the auto manufacturers – major industry and their market caps are similar to TSLA’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Honda Motor Co Ltd (ADR) (NYSE:HMC) | 6 | 0 | 0 |
| Ford Motor Company (NYSE:F) | 47 | 0 | 13 |
| Nissan Motor Co., Ltd. (ADR) (PINK:NSANY) | 0 | 0 | |
| General Motors Company (NYSE:GM) | 110 | 2 | 5 |
| Tata Motors Limited (ADR) (NYSE:TTM) | 22 | 0 | 0 |
With the results demonstrated by our studies, retail investors should always watch hedge fund and insider trading activity, and Tesla Motors Inc (NASDAQ:TSLA) is no exception.
