Hedge funds were hot to jump into Tesla’s stock after Donald Trump won the election. They figured Elon Musk’s involvement in the administration would be good for the stock. Never mind that Trump and most Republicans are anti alternative fuels and electric vehicles, Tesla’s main business. But in recent weeks, the stock has plummeted, closing Friday at $262.67.
On November 6, the day after Donald Trump won the election, shares of Tesla jumped nearly 15 percent, to $288.53. By December 10, the stock had soared to about $401. It peaked on December 17 at $480, up about 80 percent. Hedge funds poured into the stock, although we don’t know what each of them paid.
Altogether, 61 hedge fund managers initiated new positions in Tesla in the fourth quarter versus 23 that fully liquidated, for a net gain of 38 hedge funds, according to SEI, which has perhaps the most comprehensive database of hedge fund stock ownership. Altogether, 189 hedge fund managers held Tesla stock at year-end, the 18th-most among all stocks, per SEI. The fourth-quarter net gain was by far the largest for investors among the most widely held hedge fund stocks, SEI says.
Hedge funds that initiated positions in the fourth quarter included Quantitative Investment Management, with Tesla now its fifth-largest U.S. long, as well as Woodline Partners and Ratan Capital Management. D.E. Shaw almost tripled its stake, to more than 3.164 million shares, making the stock the multistrategy and macro firm’s fifth-largest U.S. common stock long. Millennium Management also nearly tripled its Tesla position in the fourth quarter.
It is not known what these hedge funds paid for the stock. But all of them are currently looking at a paper loss and, except for those who bought in the few days following the election, a large one.
One hedge fund, however, is not regretting its play.
Paul Wick of Seligman Tech Spectrum has been shorting Tesla’s shares for several years. He just may be vindicated when Tesla’s stock screeches to its bottom price, especially with the administration doing all it can to destroy the electric-vehicle industry.
In his most recent client letter, dated January 2 — nearly three weeks before Musk and DOGE got to work — Wick noted that Tesla had higher valuations than all other auto companies in the world combined. “The company had down earnings per share in 2024 on revenue growth of 3 percent, driven by battery storage for solar, not by car sales, which are down,” he stressed, reminding his investors that Tesla’s operations are not doing well.
“The auto market globally has been weak all year, and Tesla has lost share in every market in the world,” Wick explained. “We believe the majority of the recent stock rally has been driven by the notion that Elon Musk will be protected by Trump and will get his way with autonomous driving while escaping Department of Justice and National Highway Traffic Safety Administration scrutiny over things like the alarming number of Tesla accidents while in [full self-driving] mode.”
So while the stock is up from when Wick first disclosed he was shorting the stock, Wick pointed out that Seligman has had “multiple hedges” of its Tesla short via call option spreads, “which has mitigated the damage caused by the wild move up in Tesla stock.” He added, “I don’t view the recent surge as sustainable. Tesla’s fleet of cars is old and stale, they are losing share to BYD and others in the vital Chinese market, and even Trump wants to end the EV subsidies that have enabled Tesla’s rise.”
Wick also noted that California Governor Gavin Newsom wants to eliminate the California EV credit for Tesla but retain it for other EV brands, musing, “I guess he’s annoyed that Elon moved Tesla HQ to Texas?”
