You’d expect that up Tesla Motors Inc (NASDAQ:TSLA) by 337% year-to-date, hedge funds would be all over Tesla, right? It’s not that simple, but from a growth standpoint, there’s some momentum behind Tesla. We think that there aren’t more hedge funds invested in the meteoric auto company because of the valuation. See who is taking the plunge below, though.
According to most market participants, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, we hone in on the moguls of this group, about 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total asset base, and by watching their best investments, we have formulated a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (check out a sample of our picks).
Just as key, positive insider trading activity is another way to parse down the financial markets. Just as you’d expect, there are plenty of reasons for an executive to downsize shares of his or her company, but just one, very simple reason why they would buy. Various academic studies have demonstrated the valuable potential of this method if you understand what to do (learn more here).
Now, it’s important to take a gander at the latest action surrounding Tesla Motors Inc (NASDAQ:TSLA).
What have hedge funds been doing with Tesla Motors Inc (NASDAQ:TSLA)?
In preparation for this quarter, a total of 25 of the hedge funds we track were long in this stock, a change of 39% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully.
According to our comprehensive database, Philippe Laffont’s Coatue Management had the most valuable position in Tesla Motors Inc (NASDAQ:TSLA), worth close to $76.2 million, comprising 0.8% of its total 13F portfolio. On Coatue Management’s heels is Ken Griffin of Citadel Investment Group, with a $69.4 million call position; 0.1% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include Roberto Mignone’s Bridger Management, D. E. Shaw’s D E Shaw and Drew Cupps’s Cupps Capital Management.
Consequently, key money managers have been driving this bullishness. Oaktree Capital Management, managed by Howard Marks, assembled the largest position in Tesla Motors Inc (NASDAQ:TSLA). Oaktree Capital Management had 111.7 million invested in the company at the end of the quarter. Philippe Laffont’s Coatue Management also initiated a $76.2 million position during the quarter. The following funds were also among the new TSLA investors: Ken Griffin’s Citadel Investment Group, Roberto Mignone’s Bridger Management, and D. E. Shaw’s D E Shaw.
What have insiders been doing with Tesla Motors Inc (NASDAQ:TSLA)?
Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, Tesla Motors Inc (NASDAQ:TSLA) has seen 1 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Tesla Motors Inc (NASDAQ:TSLA). These stocks are Honda Motor Co Ltd (ADR) (NYSE:HMC), Ford Motor Company (NYSE:F), Nissan Motor Co., Ltd. (ADR) (PINK:NSANY), General Motors Company (NYSE:GM), and Tata Motors Limited (ADR) (NYSE:TTM). This group of stocks belong to the auto manufacturers – major industry and their market caps resemble TSLA’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Honda Motor Co Ltd (ADR) (NYSE:HMC)||15||0||0|
|Ford Motor Company (NYSE:F)||48||0||16|
|General Motors Company (NYSE:GM)||122||2||6|
|Tata Motors Limited (ADR) (NYSE:TTM)||23||0||0|
With the returns exhibited by the aforementioned time-tested strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Tesla Motors Inc (NASDAQ:TSLA) is an important part of this process.