Tesla Inc. (NASDAQ:TSLA) on April 20 is falling 0.86% or $2.62 to $302.83 on midday Thursday, after CNBC reported that the automaker ordered a recall of 53,000 Model S and Model X cars over a “potential issue” involving parking brakes. “We do not believe this issue could ever lead to a safety concern for our customers, and we have not seen a single accident or injury relating to it,” Tesla said according to the report. “However, in order to be overly cautious, we are going to be proactively replacing these parts to ensure that no issues arise.”
The cars affected were said to be built between February and October of 2016. The defect involves a small gear, which may have been improperly manufactured by Tesla’s third-party supplier. Tesla said the replacement takes 45 minutes and estimates that only 5% of the recalled cars will be affected.
What Does The Smart Money Sentiment Say?
The Smart Money pool sentiment is bullish on Tesla stocks as we saw an increase in hedge funds taking their positions on the automaker. Out of 742 funds we track at Insider Monkey, 38 funds hold shares of Tesla with a total value of $1.2 billion in Q4, compared to only 34 funds in Q3 who hold shares with a total value of $1 billion.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).
The Bottom Line
Tesla is currently trading in the red at slightly below-average volume after news that Tesla is voluntary recalling 53,000 of its Model S and Model X cars. For further reading, here are the top 10 highest-rated auto insurance companies in America.