Tesla Motors Inc (NASDAQ:TSLA) investors are buzzing right now following a tweet from Elon Musk regarding the production of the Model 3, the company’s new line of low-cost sedans. Musk wrote that production will start in approximately two years, once Tesla Motors Inc (NASDAQ:TSLA) has a fully functioning “Gigafactory” to produce the batteries for the vehicles. The company has also announced that the delivery of the Model X SUVs will start by the end of the month.
Tesla Motors Inc (NASDAQ:TSLA) has set a $35,000 price tag on the Model 3, which is set to be unveiled in March 2016, which is also when the company will start taking pre-orders. Such a late launch date is dictated by the company’s need to build its own battery factory, since at the moment, the batteries that would power the Model 3 cost as much as the car itself. Tesla Motors Inc (NASDAQ:TSLA), therefore, is building an immense lithium-ion battery factory that will allow them to install batteries at a much lower cost than the current going rate. Hedge fund managers Daniel Benton and Dmitry Balyasny hold significant positions in this stock, which we will analyze later in the article.
Professional investors like Balyasny and Benton spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned 118% and beaten the market by more than 60 percentage points since the end of August 2012 (see the details).
Among the hedge funds that we track, Benton’s Andor Capital Management holds the biggest position in Tesla Motors Inc (NASDAQ:TSLA), of exactly 1.0 million shares with a value of $268 million according to the fund’s latest 13F filing. Balyasny is also a fan of Musk’s company, as his fund, Balyasny Asset Management, holds 310,730 shares worth $83.3 million as of the end of the second quarter. During the second quarter, Peter Muller and Wayne Cooperman initiated significant positions in Tesla Motors through their funds. Muller’s PDT Partners reported ownership of 115,086 shares valued at $30.8 million in its latest 13F filing, while Cooperman’s Cobalt Capital Management bought 20,000 shares worth roughly $5.36 million.
This optimism was reflected in the stock price of Tesla Motors Inc (NASDAQ:TSLA), as it went up by as much as 14% to $286 per share by mid-July, though the stock turned south and has fallen to as low as $195 per share since then. The latest rally has brought it back above the $250 per share mark, including gains of 1.24% today, no doubt because of Musk’s announcement. Although the stock hit a ceiling at $291.42 in September of 2014, analysts believe it is poised for significant growth and see the company’s launch of the Model X as a driver. Deliveries will start on September 29, with the price not explicitly stated, but hinted to be $5,000 more than the price of Model S vehicles, while the Model X Signature series will start at $132,000 before any Federal or state incentives for electric cars are applied. Analysts have set a consensus price target of $297 on the stock, as they are uneasy about the company’s enormous capital spending, believed to amount to approximately $1.5 billion by the end of the year.
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