As stated earlier, Tesla Inc (NASDAQ:TSLA) is not a very popular stock among smart money investors. Out of over 700 funds that we track, only 38 reported long positions in the company as of the end of 2016, having amassed $1.19 billion worth of the company’s stock, or roughly 3.50% of its float. Over the quarter, these figures increased, as there had been 34 funds holding in aggregate around $1.00 billion worth of Tesla shares at the end of September. Moreover, many investors prefer to own options underlying shares. For example, billionaire Ken Griffin’s Citadel Investment Group holds just 24,519 shares of Tesla, down by 69% over the quarter, but it also owns ‘Put’ options underlying 1.83 million shares and ‘Call’ options underlying 1.04 million shares. In a similar fashion, David S. Och’s OZ Management disclosed holding 3,600 shares, and ‘Call’ and ‘Put’ options underlying 40,268 shares and 1.83 million shares, respectively.
One of the most notorious short-sellers, Jim Chanos of Kynikos Associates is a long-term bear on Tesla Inc (NASDAQ:TSLA). Back in 2015, Chanos said that one of Tesla’s weak points was its scale and that the company was overvalued. He was also shorting SolarCity because of the company’s business-model that relied on debt, but was bullish on the solar business. Last year, after the deal between SolarCity and Tesla had been announced, Chanos called the deal “crazy” at the Delivering Alpha conference. In November, he went further and said that the merger was “absurd”. “There’s deflation going on in the solar business and Tesla is taking on these debts,” Chanos said during an interview on Bloomberg.
Another investor that has presented its case against Tesla Inc (NASDAQ:TSLA) is Mark Spiegel of Stanphyl Capital, a small New York-based hedge fund. Spiegel’s presentation at the Robin Hood Investors Conference held at the end of November was called “Tesla Is a Zero”, but the investor said that the debt actually made Tesla’s equity worth less than zero. Among the reasons fueling his bet against Tesla, Spiegel said that Tesla’s financials “are horrible” even though there isn’t any direct competition and that with big carmakers jumping in the EV segment, Tesla will struggle even more.
Among Tesla bulls is billionaire long-term investor Ron Baron, who reportedly owns $300 million worth of Tesla’s stock. Baron thinks that by 2020 he’ll have quadrupled his investment and that by 2025 he’ll have a return of 3,000% on his shares of Tesla.
In conclusion, Tesla Inc (NASDAQ:TSLA) bears do have a point; the company will face tougher competition, it has weak financials and the stock is overvalued. Nevertheless, call me naive, but I think that a bet on Tesla is a bet on Elon Musk, who is going to do great things for both the electric car and solar rooftop segments, and for the planet Earth. And let’s not forget about SpaceX, Hyperloop and his latest project that involves digging tunnels.
Disclosure: None
