After several tireless days, we finished reviewing the numbers of nearly 900 13F documents issued by elite hedge funds and other investment firms we tracked at Insider Monkey, which released their stock portfolios on December 31. The results of that effort will be displayed in this article, as we share valuable information about the feeling of smart money towards Tesla Inc. (NASDAQ: TSLA).
Are TSLA shares a buy or sell? Tesla Inc. (NASDAQ: TSLA) was in 68 hedge fund portfolios at the end of the fourth quarter of 2020. The highest point for this statistic was previously 67. This means that the bullish number of hedge fund positions in this action it is currently at its highest point. TSLA investors should pay attention to an increase in interest from hedge funds recently. There were 67 hedge funds in our database with TSLA positions at the end of the third quarter. Our calculations also showed that the TSLA is not among the 30 most popular stocks among hedge funds (click to view the fourth quarter ratings).
In the financial world, there are a large number of tools available to investors to value stocks. Two of the most unknown tools are hedge funds and insider trading indicators. We have shown that, historically, those who follow the top choices of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock choices have returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the short S&P 500 ETFs by 20 percentage points a year (see details here). That is why we believe that hedge fund sentiment is a useful indicator that investors should pay attention to.
Philippe Laffont, Coatue Management
At Insider Monkey, we leave no stone unturned when looking for the next big investment idea. For example, lithium mining is one of the fastest growing industries at the moment, so we are looking at proposals for actions like this emerging lithium stock. We looked at lists like the top 10 hydrogen fuel cell stocks to choose the next Tesla that will provide a 10-fold return. Although we recommend positions in only a small fraction of the companies we analyze, we check as many shares as we can. We read letters from hedge fund investors and heard stock presentations at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Now let’s look at the hedge fund’s new action around Tesla Inc. (NASDAQ: TSLA).
Do hedge funds think the TSLA is a good stock to buy now?
Going into the first quarter of 2021, a total of 68 of the hedge funds monitored by Insider Monkey were purchased with these shares, a variation of 1% over the previous quarter. Below, you can see the change in hedge fund sentiment towards the TSLA over the past 22 quarters. With hedging capital changing hands, there are some key hedge fund managers who have significantly increased their holdings (or have already accumulated large positions).
More specifically, ARK Investment Management was the largest shareholder in Tesla Inc. (NASDAQ: TSLA), with a $ 2,917.4 million stake reported at the end of December. Behind ARK Investment Management was LMR Partners, which accumulated a stake valued at $ 2,056 million. Coatue Management, Whale Rock Capital Management and LMR Partners were also very fond of the shares, becoming one of the company’s largest hedge fund holders. In terms of portfolio weights attributed to each position, LMR Partners attributed the greatest weight to Tesla Inc. (NASDAQ: TSLA), about 31.95% of its 13F portfolio. Tao Capital is also relatively optimistic about the shares, distributing 22.56% of its 13F share portfolio to TSLA.
With a general upward trend among heavyweights, some big names led the bull herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, has garnered the largest position at Tesla Inc. (NASDAQ: TSLA). Adage Capital Management had $ 465.4 million invested in the company at the end of the quarter. HBK Investments of David Costen Haley also made an investment of $ 228.3 million in shares during the quarter. The other funds with new equity positions are QVT Financial by Daniel Gold, Gavin Saitowitz and Prelude Capital by Cisco J. del Valle (formerly Springbok Capital), and Clough Capital Partners by Charles Clough.
We will examine the activity of hedge funds in other shares similar to Tesla Inc. (NASDAQ: TSLA). These shares are Alibaba Group Holding Limited (NYSE: BABA), Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM), Berkshire Hathaway Inc. (NYSE: BRK-B), Visa Inc (NYSE: V), Johnson & Johnson (NYSE: JNJ), Walmart Inc. (NYSE: WMT) and JPMorgan Chase & Co. (NYSE: JPM). This group of market capitalization of shares is similar to the market capitalization of TSLA.
[table] Ticker, No. of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BABA, 156,17892090, -10 TSM, 72,11843403,5 BRK-B, 110,20795968,1 V, 166,23599162 .6 JNJ, 81.5820696, -1 WMT, 70.6197019.1 JPM, 112.6967178, -6 Average, 109.6.13302217, -0.6 [/table]
See the table here if you have formatting problems.
As you can see, these shares averaged 109.6 hedge funds with optimistic positions and the average amount invested in these shares was $ 13302 million. That number was $ 12,308 million in the case of TSLA. Visa Inc (NYSE: V) is the most popular share on this table. On the other hand, Walmart Inc. (NYSE: WMT) is the least popular, with only 70 optimistic hedge fund positions. In comparison to these stocks, Tesla Inc. (NASDAQ: TSLA) is even less popular than WMT. Our overall hedge fund sentiment score for TSLA is 36. Shares with the highest number of hedge fund positions in relation to other shares, as well as in relation to their historical range, receive a higher sentiment score. Hedge funds have dodged a bullet by taking a pessimistic stance on the TSLA. Our calculations showed that the 20 most popular hedge fund stocks returned 81.2% in 2019 and 2020 and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These shares gained 7% in 2021 through March 12, but managed to outperform the market again by 1.6 percentage points. Unfortunately, the TSLA was not as popular as these 30 stocks (hedge fund sentiment was very pessimistic); TSLA investors were disappointed with the -1.7% stock return since the end of the fourth quarter (up to 12/3) and underperforming the market. If you are interested in investing in large-cap stocks with great appreciation potential, you should check out the 30 most popular stocks among hedge funds, as most of these stocks have already outperformed the market since 2019.
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Disclosure: None. This article was originally published on Insider Monkey.
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