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Tesla Motors Inc (TSLA) Has Yet to Win Investors’ Confidence

Both Apple Inc. (NASDAQ:AAPL) and Tesla Motors Inc (NASDAQ:TSLA) are both among most trending companies in the news. The key of their popularity is mainly the innovativeness of their products aimed towards revolutionizing the gadgets industry in Apple’s case and automobile industry in Tesla’s. However, while the general public is excited about the prospects of both companies, such as Apple’s recently released iPhone 6, Watch and Macbook and Tesla’s Model S and upcoming Model X and Model 3, investors views are very different in regard to each company. If we look at the short interest in Apple and Tesla separately we can see that most investors are net long Apple and net short Tesla.

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This is supported by many factors. Tesla Motors Inc (NASDAQ:TSLA)’s stock skyrocketed in 2013, after the company released its Model, and since 2013 gained over 450%. On the other hand, Apple’s stock had a more modest growth of only 58% in the same period. However, if we look at the last 52 weeks, we see a reverse in trends as Tesla’s stock lost 17% versus Apple Inc. (NASDAQ:AAPL)’s growth of 55%. Moreover, if we take a look at the data that we collected across around 730 hedge funds we can also see that Apple’s popularity among investors doesn’t even stand close to the level of attention that Tesla gets. Apple Inc. (NASDAQ:AAPL) has been one of the most popular stocks among hedge funds for years with 149 funds holding around $20.88 billion worth of stock, while in Tesla only 25 funds reported holding shares with an aggregate value of $1.38 billion. However, short interest data shows some promises for Tesla Motors Inc (NASDAQ:TSLA)’s stock, since the number of shares shorted at the end of February amounted to 23.29 million, versus 23.34 million a month yearlier, while for Apple Inc. (NASDAQ:AAPL), the number of short shares went up to 72.72 million from 61.09 million. Nevertheless, Tesla’s short ratio currently amounts to 4.50, significantly above Apple’s 1.10.

The reasons in the change of the number of shares shorted for Apple and Tesla Motors Inc (NASDAQ:TSLA), again lie behind the recent performance of both stocks. Apple Inc. (NASDAQ:AAPL)’s stock gained 11% since the beginning of the year, as the company reported impressive earnings for the fourth quarter and reached a market capitalization of over $700 billion, becoming the largest publicly-traded company. Therefore, many investors decided that it’s time to take advantage of the recent gains and started selling shares. The trend actually started months ago, as our data shows that the number of funds holding shares of Apple fell from 154 a quarter earlier, while the value of the total capital invested in the company decreased from over $22 billion.

For Tesla Motors Inc (NASDAQ:TSLA) the same trend can be noticed as at the end of the third quarter 31 funds held $1.73 billion worth of stock, significantly above the latest figures. Tesla’s latest earnings report showed an expansion in net loss to $107.60 million in the fourth quarter, from $74.7 million a year earlier. Nevertheless, the automaker promised to address the issues it faces currently in China that led to a decrease in sales and it has its Model X on its way, with deliveries expected in the third quarter, which means that 2015 has high chances to be more successful for the company.

Even though both companies have a promising future, it is clear that investors are more confident regarding Apple Inc. (NASDAQ:AAPL) rather than Tesla Motors Inc (NASDAQ:TSLA), if we take each fund separately. For example among the funds that we track, the largest shareholder of Apple is billionaire Carl Icahn, who owns 52.71 million shares of the company, the $5.82 billion stake amassing 18% of his equity portfolio. On the other hand, the largest shareholder of Tesla is Daniel Bentor‘s Andor Capital Management, which owns 1.25 million shares, valued at $278.01 million, representing 17% of its equity portfolio. Andor also holds 3.0 million shares of Apple Inc. (NASDAQ:AAPL), valued at $331.14 million, representing 21% of the equity portfolio. Moreover, the trend shows that billionaire investors prefer to hold common shares of Apple Inc. (NASDAQ:AAPL), while in Tesla, they choose options or bonds.

The bottom line for now is that Tesla Motors Inc (NASDAQ:TSLA)’s shares are overvalued, which explains investors’ bearish sentiment towards holding the stock. Tesla is a great company with huge prospects of revolutionizing the auto industry, but it has to convince investors into holding the stock for the long term, despite many analysts considering that the stock could soar even more in the next couple of years. Apple Inc. (NASDAQ:AAPL) has already proven its reliability over the years and if the company manages to keep its pace in bringing innovative products, it will continue to bring value to shareholders.

Disclosure: none