After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Tesla Inc. (NASDAQ:TSLA).
Is TSLA stock a buy or sell? Tesla Inc. (NASDAQ:TSLA) was in 68 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 67. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. TSLA investors should pay attention to an increase in hedge fund interest recently. There were 67 hedge funds in our database with TSLA positions at the end of the third quarter. Our calculations also showed that TSLA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Philippe Laffont of Coatue Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Now we’re going to analyze the new hedge fund action surrounding Tesla Inc. (NASDAQ:TSLA).
Do Hedge Funds Think TSLA Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 68 of the hedge funds tracked by Insider Monkey were long this stock, a change of 1% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TSLA over the last 22 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, ARK Investment Management was the largest shareholder of Tesla Inc. (NASDAQ:TSLA), with a stake worth $2917.4 million reported as of the end of December. Trailing ARK Investment Management was LMR Partners, which amassed a stake valued at $2056 million. Coatue Management, Whale Rock Capital Management, and LMR Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position LMR Partners allocated the biggest weight to Tesla Inc. (NASDAQ:TSLA), around 31.95% of its 13F portfolio. Tao Capital is also relatively very bullish on the stock, dishing out 22.56 percent of its 13F equity portfolio to TSLA.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, assembled the biggest position in Tesla Inc. (NASDAQ:TSLA). Adage Capital Management had $465.4 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $228.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Daniel Gold’s QVT Financial, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Charles Clough’s Clough Capital Partners.
Let’s go over hedge fund activity in other stocks similar to Tesla Inc. (NASDAQ:TSLA). These stocks 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 stocks’ market caps resemble TSLA’s market cap.
[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]
View table here if you experience formatting issues.
As you can see these stocks had an average of 109.6 hedge funds with bullish positions and the average amount invested in these stocks was $13302 million. That figure was $12308 million in TSLA’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 70 bullish hedge fund positions. Compared to these stocks Tesla Inc. (NASDAQ:TSLA) is even less popular than WMT. Our overall hedge fund sentiment score for TSLA is 36. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards TSLA. Our calculations showed that the top 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 stocks gained 7% in 2021 through March 12th but managed to beat the market again by 1.6 percentage points. Unfortunately TSLA wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was very bearish); TSLA investors were disappointed as the stock returned -1.7% since the end of the fourth quarter (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.