The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Tesla Inc. (NASDAQ:TSLA) based on those filings.
Tesla Inc. (NASDAQ:TSLA) investors should be aware of an increase in hedge fund interest in recent months. TSLA was in 61 hedge funds’ portfolios at the end of March. There were 51 hedge funds in our database with TSLA positions at the end of the previous quarter. Our calculations also showed that TSLA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Lei Zhang of Hillhouse Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. Also, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s analyze the fresh hedge fund action surrounding Tesla Inc. (NASDAQ:TSLA).
How have hedgies been trading Tesla Inc. (NASDAQ:TSLA)?
At the end of the first quarter, a total of 61 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in TSLA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Tesla Inc. (NASDAQ:TSLA) was held by Citadel Investment Group, which reported holding $3839.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $402.2 million position. Other investors bullish on the company included Whale Rock Capital Management, Coatue Management, and Darsana Capital Partners. In terms of the portfolio weights assigned to each position Tao Capital allocated the biggest weight to Tesla Inc. (NASDAQ:TSLA), around 25.09% of its 13F portfolio. Darsana Capital Partners is also relatively very bullish on the stock, setting aside 12.39 percent of its 13F equity portfolio to TSLA.
As aggregate interest increased, specific money managers were breaking ground themselves. Coatue Management, managed by Philippe Laffont, initiated the most valuable position in Tesla Inc. (NASDAQ:TSLA). Coatue Management had $280.2 million invested in the company at the end of the quarter. Anand Desai’s Darsana Capital Partners also initiated a $262 million position during the quarter. The following funds were also among the new TSLA investors: John Overdeck and David Siegel’s Two Sigma Advisors, Lei Zhang’s Hillhouse Capital Management, and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks similar to Tesla Inc. (NASDAQ:TSLA). These stocks are Danaher Corporation (NYSE:DHR), American Tower Corporation (REIT) (NYSE:AMT), TOTAL S.A. (NYSE:TOT), and Lockheed Martin Corporation (NYSE:LMT). This group of stocks’ market values are closest to TSLA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DHR | 63 | 3193618 | 2 |
| AMT | 57 | 3819731 | 11 |
| TOT | 12 | 836773 | -5 |
| LMT | 55 | 1505572 | 8 |
| Average | 46.75 | 2338924 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.75 hedge funds with bullish positions and the average amount invested in these stocks was $2339 million. That figure was $2125 million in TSLA’s case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 12 bullish hedge fund positions. Tesla Inc. (NASDAQ:TSLA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on TSLA as the stock returned 55.9% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
