Hedge Fund Indicators Say Tesla Is A Buy

Is Tesla Motors Inc (NASDAQ:TSLA) a buy right now? We use multiple hedge fund indicators to determine whether a stock is a buy or a sell. Two of these indicators send buy signals a month ago. First, the number of long hedge fund bets advanced by 4 during the first quarter. TSLA was in 29 hedge funds’ portfolio at the end of March. There were 25 hedge funds in our database with Tesla Motors Inc holdings at the end of the previous quarter. The second hedge fund indicator we employed is a contrarian indicator. Tesla was the 4th most popular stocks that hedge funds were buying protection against. There were 17 hedge funds with put positions in Tesla. Historically, the stocks with heavy hedge fund put positions outperformed the market by an average of 1 percentage point per month.

Will Tesla Motors Inc (TSLA) CEO make Ford Motor Company (F) CEO Jealous with this Payout?

Today there are several metrics stock traders employ to assess publicly traded companies. A couple of the most under-the-radar metrics are hedge fund and insider trading interest. Hedge funds don’t get a lot of respect in recent years because they have been underperforming the market. Most investors don’t realize that the poor performance of hedge funds’ short portfolio as well as the high fees that they charge were the main reason why hedge funds underperformed. Actually, their long portfolio outperformed the market by a healthy margin. We have been tracking the performance of hedge funds’ most popular small-cap picks in real time since the end of August 2012. These stocks returned 142% since then and beat the S&P 500 Index by 84 percentage points in less than 3 years (see the details here).

Tesla shares increased 3% today after Dow Jones reported that the tech company will be partnering with lithium-ion battery guru Jeff Dahn to lower battery costs. Tesla shares returned 38% since the end of the first quarter.

With all of this in mind, we’re going to take a look at the new action encompassing Tesla Motors Inc (NASDAQ:TSLA).

What does the smart money think about Tesla Motors Inc (NASDAQ:TSLA)?

At Q1’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long in this stock, a change of 16% from the previous quarter. With hedge funds’ sentiment swirling, there were a few notable hedge fund managers who were increasing their stakes meaningfully.

According to hedge fund intelligence website Insider Monkey, Daniel Benton’s Andor Capital Management had the biggest and boldest position in Tesla Motors Inc (NASDAQ:TSLA), worth close to $188.8 million, comprising 18.7% of its total 13F portfolio. The second most bullish hedge fund manager is Mike Masters of Masters Capital Management, with a $179.3 million call position; 5.2% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism encompass John Thaler’s JAT Capital Management, and D. E. Shaw’s D E Shaw.

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With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest new position in Tesla Motors Inc (NASDAQ:TSLA). Balyasny Asset Management had $79.4 million invested in the company at the end of the quarter. Dmitry Balyasnyalso made an additional $25.5 million bet via call options. The other funds with brand new TSLA positions are Alexander Mitchell’s Scopus Asset Management, Alexander Mitchell’s Scopus Asset Management, and Daniel S. Och’s OZ Management.