Will Tesla Motors Inc (TSLA)’s Stock Offering and Expansion Plans Change Hedge Funds’ Mind?

In this way, when we look at Tesla Motors Inc (NASDAQ:TSLA), we see that investors are not very fond of the company as at the end of March only 29 funds held around $1.04 billion worth of stock, which represented roughly 4% of the company at the time. In March, we discussed that hedge funds consider Tesla’s stock overvalued and that it is dominated by a significant level of short interest, based on the data from hedge funds’ equity portfolios for the end of 2014. During the first quarter of 2015, the situation slightly improved as the number of funds holding shares went up from 25 at the end of December, but the aggregate value of the funds’ holdings declined by approximately 25% over the quarter, partially impacted by the stock’s 10% drop during the same period. In this way, on average hedge funds opted to reduce their exposure to Tesla.

Since the current round of 13F filings is not completed, we can’t assess the changes in the hedge funds’ opinion regarding Tesla during the second quarter. So far, among the funds we track, Daniel Benton’s Andor Capital Management disclosed an unchanged position of 1.0 million shares, while Joe Dimenna’s Zweig Dimenna Partners and Drew Cupps’ Cupps Asset Management raised their stakes to 93,258 shares and 61,437 shares respectively.

With this in mind, it looks like there won’t be any surprises in the hedge fund sentiment for Tesla Motors Inc (NASDAQ:TSLA), which suggests that the smart money are underweight on the stock. However, the company’s plans to fund its expansion with a new stock offering paints a brighter picture.

Disclosure: none