In this article, we discuss the 10 EV stocks hedge funds are buying instead of Tesla. If you want to skip our detailed analysis of these stocks, go directly to Hedge Funds are Selling Tesla and Buying These 5 EV Stocks Instead.
Tesla, Inc. (NASDAQ:TSLA), the California-based electric vehicle (EV) firm led by billionaire Elon Musk, has been, over the past few weeks, feeling the heat of a number of problems that have combined to persuade market experts to short the stock of the company. A global chip shortage has hit the production and delivery numbers of the firm, the National Transportation Safety Board has initiated a fire safety probe into the vehicles made by Tesla after a fatal crash in Florida, and there are increased murmurings about the $744 billion valuation of the company.
Even hedge funds have been selling the stock in anticipation of a correction in the share price. At the end of the second quarter of 2021, 60 hedge funds tracked by Insider Monkey held stakes worth close to $9.3 billion in Tesla, Inc. (NASDAQ:TSLA), down from 62 in the previous quarter worth more than $10 billion. Even industry veterans like Michael Burry of Scion Asset Management and Cathie Wood of ARK Investment Management are selling the stock, according to the latest 13F filings.
Latest filings show that Cathie Wood’s fund cut its stake in the company by 7% in the second quarter. On September 9, Business Insider, citing Ark’s daily transaction reports, reported that three of ARK’s funds, including its flagship Ark Innovation ETF, sold a combined 142,708 shares of the EV maker. The total worth of the sold shares was close to $108 million, in addition to the $166 million worth of shares sold since late July, the report added.
Burry held PUT options against more than 1 million shares in the company worth over $731 million, representing 35% of the investment portfolio of his fund, at the end of June 2021. Wood, whose fund owned over 5 million shares in Tesla, Inc. (NASDAQ:TSLA) worth $3.6 billion at the end of the second quarter, trimmed her stake by 7% in the EV maker when compared to her filings for the first quarter of the year. Chicago-based Citadel Investment Group also has PUT options on more than 21 million shares of the EV maker worth close to $15 billion.
Craig Irwin, senior research analyst at Roth Capital, is one of the market experts with a long-term bearish outlook on the EV maker. In April, during an interview with news platform CNBC, Irwin said Tesla, Inc. (NASDAQ:TSLA) stock was worth just $150, a 78% discount from the price of the stock at the time, and added that the valuation of the firm was more than the total size of the US and European automotive markets, even though the company was only a “minor player” in the market overall.
Based on our data of 873 hedge funds, 62 funds held stakes in Tesla at the end of June, compared to 60 funds in the previous quarter. In addition, the total value of hedge funds’ stakes in Tesla fell to $9.2 billion in the second quarter from over $10 billion in the first quarter.
In contrast to Tesla, Inc. (NASDAQ:TSLA), some of the EV stocks with a positive hedge fund sentiment heading into the third quarter were Ford Motor Company (NYSE:F), NIO Inc. (NYSE:NIO), and Freeport-McMoRan Inc. (NYSE:FCX), among others discussed in detail below. There is little doubt that the Musk-led company has disrupted the auto industry in the past few years with technology-enabled innovation that is fast obliterating traditional car manufacturing practices. This transformation is also visible in the finance world.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Our Methodology
With this context in mind, here is our list of the 10 EV stocks hedge funds are buying instead of Tesla. Only those firms that work in the EV industry and have seen an increase in the number of hedge funds having stakes in the firm at the end of the second quarter of 2021, as compared to the first quarter, were selected for the listing.
The list is ranked according to the number of hedge funds having stakes in each company. Data from the 873 funds tracked by Insider Monkey was used for this purpose.
Special importance was assigned to outlining the analyst ratings and business fundamentals for each firm to provide readers with some context so they can make more informed investment choices.
Hedge Funds are Selling Tesla and Buying These EV Stocks Instead
10. Romeo Power, Inc. (NYSE:RMO)
Number of Hedge Fund Holders in Q2: 14
Number of Hedge Fund Holders in Q1: 12
Romeo Power, Inc. (NYSE:RMO) is placed tenth on our list of 10 EV stocks hedge funds are buying instead of Tesla. The firm operates as an energy technology company and makes and sells lithium-ion batteries used in electric vehicles. It is headquartered in California.
On August 17, investment advisory BTIG maintained a Buy rating on Romeo Power, Inc. (NYSE:RMO) stock but lowered the price target to $12 from $15, noting the firm needed a “strong finish” to the year after missing earnings estimates in the second quarter.
At the end of the second quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $18 million in Romeo Power, Inc. (NYSE:RMO), up from 12 in the previous quarter worth $7 million.
Just like Ford Motor Company (NYSE:F), NIO Inc. (NYSE:NIO), and Freeport-McMoRan Inc. (NYSE:FCX), Romeo Power, Inc. (NYSE:RMO) is one of the EV stocks attracting the attention of elite hedge funds, unlike Tesla, Inc. (NASDAQ:TSLA).
9. Arrival (NASDAQ:ARVL)
Number of Hedge Fund Holders in Q2: 17
Number of Hedge Fund Holders in Q1: 14
Arrival (NASDAQ:ARVL) is ranked ninth on our list of 10 EV stocks hedge funds are buying instead of Tesla. The firm designs, assembles, and sells electric vehicles and buses. It is headquartered in Luxembourg.
On June 3, investment advisory Barclays initiated coverage of Arrival (NASDAQ:ARVL) stock with an Overweight rating and a price target of $25, noting that the firm was positioned to take share in both the EV vans and buses markets.
At the end of the second quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $117 million in Arrival (NASDAQ:ARVL), up from 14 in the previous quarter worth $164 million.
In addition to Ford Motor Company (NYSE:F), NIO Inc. (NYSE:NIO), and Freeport-McMoRan Inc. (NYSE:FCX), Arrival (NASDAQ:ARVL) is one of the EV stocks that hedge funds seem to prefer over Tesla, Inc. (NASDAQ:TSLA).
8. Velodyne Lidar, Inc. (NASDAQ:VLDR)
Number of Hedge Fund Holders in Q2: 18
Number of Hedge Fund Holders in Q1: 15
Velodyne Lidar, Inc. (NASDAQ:VLDR) is a California-based firm that provides real-time three-dimensional vision for autonomous systems worldwide. It is placed eighth on our list of 10 EV stocks hedge funds are buying instead of Tesla.
Velodyne Lidar, Inc. (NASDAQ:VLDR) has a market cap of more than $1.2 billion and posted over $95 million in revenue last year. The company was founded in 1983 and employs over 300 people. The 52-week price range of the stock lies between $5.9 and $30.
Out of the hedge funds being tracked by Insider Monkey, California-based investment firm No Street Capital is a leading shareholder in Velodyne Lidar, Inc. (NASDAQ:VLDR) with 500,000 shares worth more than $5.3 million.
Along with Ford Motor Company (NYSE:F), NIO Inc. (NYSE:NIO), and Freeport-McMoRan Inc. (NYSE:FCX), Velodyne Lidar, Inc. (NASDAQ:VLDR) is one of the EV stocks that hedge funds are buying instead of Tesla, Inc. (NASDAQ:TSLA).
7. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders in Q2: 20
Number of Hedge Fund Holders in Q1: 18
Li Auto Inc. (NASDAQ:LI) is a China-based company that makes and sells smart electric vehicles. It is ranked seventh on our list of 10 EV stocks hedge funds are buying instead of Tesla.
On August 31, investment advisory Bank of America maintained a Buy rating on Li Auto Inc. (NASDAQ:LI) stock and raised the price target to $42 from $39. Ming Hsun Lee, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $457 million in Li Auto Inc. (NASDAQ:LI), up from 18 in the previous quarter worth $493 million.
Ford Motor Company (NYSE:F), NIO Inc. (NYSE:NIO), and Freeport-McMoRan Inc. (NYSE:FCX) are some of the top EV stocks on the market, just like Li Auto Inc. (NASDAQ:LI).
6. Proterra Inc. (NASDAQ:PTRA)
Number of Hedge Fund Holders in Q2: 23
Number of Hedge Fund Holders in Q1: 0
Proterra Inc. (NASDAQ:PTRA) is placed sixth on our list of 10 EV stocks hedge funds are buying instead of Tesla. The firm operates as an automotive and energy storage company and is headquartered in California.
On August 30, investment advisory Bank of America initiated coverage of Proterra Inc. (NASDAQ:PTRA) stock with a Buy rating and a price target of $15, noting the firm was “differentiated” from other EV manufacturers.
At the end of the second quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $338 million in Proterra Inc. (NASDAQ:PTRA).
Ford Motor Company (NYSE:F), NIO Inc. (NYSE:NIO), and Freeport-McMoRan Inc. (NYSE:FCX) are some of the hottest EV stocks on the market, alongside Proterra Inc. (NASDAQ:PTRA).
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Disclosure. None. Hedge Funds are Selling Tesla and Buying These 10 EV Stocks Instead is originally published on Insider Monkey.
