Tesla Motors Inc (NASDAQ:TSLA) shareholders have witnessed a decrease in enthusiasm from smart money of late.
To most shareholders, hedge funds are viewed as worthless, outdated financial vehicles of years past. While there are more than 8000 funds in operation today, we at Insider Monkey look at the crème de la crème of this group, around 450 funds. Most estimates calculate that this group controls the lion’s share of the smart money’s total asset base, and by tracking their top picks, we have come up with a number of 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 per annum 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 beaten the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Just as important, optimistic insider trading sentiment is a second way to break down the marketplace. There are a number of reasons for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would buy. Several empirical studies have demonstrated the useful potential of this strategy if “monkeys” understand what to do (learn more here).
Keeping this in mind, it’s important to take a peek at the latest action surrounding Tesla Motors Inc (NASDAQ:TSLA).
What does the smart money think about Tesla Motors Inc (NASDAQ:TSLA)?
In preparation for this year, a total of 16 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.
When looking at the hedgies we track, Drew Cupps’s Cupps Capital Management had the biggest position in Tesla Motors Inc (NASDAQ:TSLA), worth close to $20.3 million, accounting for 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Lee Hobson of Highside Capital Management, with a $9.6 million position; 1% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include James Crichton and Adam Weiss’s Scout Capital Management, John Griffin’s Blue Ridge Capital and John Murphy’s Alydar Capital.
Because Tesla Motors Inc (NASDAQ:TSLA) has experienced falling interest from hedge fund managers (stagnancy is negative in our opinion), we can see that there is a sect of hedge funds that elected to cut their positions entirely in Q4. Interestingly, William Duhamel’s Route One Investment Company cut the biggest position of the 450+ funds we key on, totaling an estimated $7.3 million in call options, and David Costen Haley of HBK Investments was right behind this move, as the fund dumped about $4.4 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Tesla Motors Inc (NASDAQ:TSLA)?
Bullish insider trading is best served when the company in question has experienced transactions within the past six months. Over the latest six-month time frame, Tesla Motors Inc (NASDAQ:TSLA) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also take a look at 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 are closest to TSLA’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Honda Motor Co Ltd (ADR) (NYSE:HMC)||9||0||0|
|Ford Motor Company (NYSE:F)||58||0||11|
|Nissan Motor Co., Ltd. (ADR) (PINK:NSANY)||1||0||0|
|General Motors Company (NYSE:GM)||98||2||2|
|Tata Motors Limited (ADR) (NYSE:TTM)||17||0||0|
With the results demonstrated by the aforementioned research, retail investors must always watch hedge fund and insider trading sentiment, and Tesla Motors Inc (NASDAQ:TSLA) shareholders fit into this picture quite nicely.
See the 7 most bullish money managers: