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Tesla Motors Inc (NASDAQ:TSLA): Insiders Are Buying, Should You?

Is Tesla Motors Inc (NASDAQ:TSLA) a first-rate investment today? The best stock pickers are turning less bullish. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience

In today’s marketplace, there are plenty of gauges investors can use to watch the equity markets. Some of the most underrated are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can outperform the S&P 500 by a solid amount (see just how much).

Equally as beneficial, optimistic insider trading activity is another way to break down the stock market universe. As the old adage goes: there are many stimuli for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).

Keeping this in mind, it’s important to take a peek at the latest action regarding Tesla Motors Inc (NASDAQ:TSLA).

Hedge fund activity in Tesla Motors Inc (NASDAQ:TSLA)

In preparation for this year, a total of 16 of the hedge funds we track held long positions in this stock, a change of 0% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies we track, Drew Cupps’s Cupps Capital Management had the biggest position in Tesla Motors Inc (NASDAQ:TSLA), worth close to $20 million, comprising 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Highside Capital Management, managed by Lee Hobson, which held a $10 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other peers with similar optimism include James Crichton and Adam Weiss’s Scout Capital Management, John Griffin’s Blue Ridge Capital and John Murphy’s Alydar Capital.

Since Tesla Motors Inc (NASDAQ:TSLA) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few funds who were dropping their positions entirely last quarter. Intriguingly, William Duhamel’s Route One Investment Company said goodbye to the largest investment of all the hedgies we monitor, comprising close to $7 million in call options, and David Costen Haley of HBK Investments was right behind this move, as the fund said goodbye to about $4 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Tesla Motors Inc (NASDAQ:TSLA)

Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time period, Tesla Motors Inc (NASDAQ:TSLA) has experienced 1 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned research, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Tesla Motors Inc (NASDAQ:TSLA) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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