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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Tesla Inc. (NASDAQ:TSLA) based on that data and determine whether they were really smart about the stock.
Tesla Inc. (NASDAQ:TSLA) was in 63 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 61. 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 of late. There were 61 hedge funds in our database with TSLA positions at the end of the first quarter. Our calculations also showed that TSLA isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we're going to take a peek at the new hedge fund action regarding Tesla Inc. (NASDAQ:TSLA).
What does smart money think about Tesla Inc. (NASDAQ:TSLA)?
Heading into the third quarter of 2020, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TSLA over the last 20 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Tesla Inc. (NASDAQ:TSLA), with a stake worth $8069.9 million reported as of the end of September. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $1195.2 million. Whale Rock Capital Management, LMR Partners, and PEAK6 Capital Management 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 Tao Capital allocated the biggest weight to Tesla Inc. (NASDAQ:TSLA), around 30.73% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, designating 16.01 percent of its 13F equity portfolio to TSLA.
Now, key money managers were breaking ground themselves. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, established the largest position in Tesla Inc. (NASDAQ:TSLA). LMR Partners had $643.2 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners also initiated a $263.2 million position during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Israel Englander's Millennium Management, and Ken Griffin's Citadel Investment Group.
Let's now review hedge fund activity in other stocks similar to Tesla Inc. (NASDAQ:TSLA). We will take a look at Netflix, Inc. (NASDAQ:NFLX), Novartis AG (NYSE:NVS), Cisco Systems, Inc. (NASDAQ:CSCO), Merck & Co., Inc. (NYSE:MRK), The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), and PepsiCo, Inc. (NASDAQ:PEP). This group of stocks' market valuations resemble TSLA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NFLX,113,13487546,4 NVS,21,1942870,-9 CSCO,59,2904558,1 MRK,76,4854278,-2 KO,59,20093024,4 XOM,53,1114752,-12 PEP,53,3156792,-4 Average,62,6793403,-2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 62 hedge funds with bullish positions and the average amount invested in these stocks was $6793 million. That figure was $5561 million in TSLA's case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 21 bullish hedge fund positions. Tesla Inc. (NASDAQ:TSLA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TSLA is 59.8. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th but still beat the market by 20.6 percentage points. Hedge funds were also right about betting on TSLA as the stock returned 86.5% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.