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Tesla shares: how are institutional investors positioned?

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New data from artificial intelligence specialists Irithmics has revealed some insights into where institutional investors sit with regard to Tesla (NASDAQ:TSLA) stock. While there has been a lot of retail money flowing into Tesla shares over the last six months, driving the stock to dizzying heights, it looks as if institutional investors are taking a more pragmatic, longer term view.

Irithmics is a UK-based specialist in machine learning and artificial intelligence that focuses on the behaviour of large investors in big stocks like Tesla. The chart below describes the longer-term strategic views on institutional investors who hold Tesla shares.

Tesla stock is still trading well up on where it was in May. Despite a drop from $498 at the end of August to $330, it was still trading at $429 today.

How is AI reading Tesla investors?

The x-axis describes the bias of views. This relates to the weights and holdings of institutional portfolios and how bearish or bullish they are on Tesla. The majority of institutional portfolios remain positive to changes in exposures.

The y-axis describes how strongly held these views are. There are many contributors to this area, which measures the confidence and magnitude of investor views on Tesla. How likely are investors going to act on their opinion of the stock?

It is important to note that these are not forward looking. Irithmics will take a snapshot of investor opinion on a specific date. Companies and fund managers use this analysis to understand how institutional investors are positioning themselves in relating to a specific company’s stock, in this case Tesla.

Big funds remain bullish on Tesla stock

A number of large fund managers are still solidly behind Tesla as we move into Q4. Morningstar has already said the company is trading well above its fair value, but funds like Scottish Mortgage Investment Trust and Baillie Gifford Global Discovery are still in a high conviction position when it comes to Tesla and have profited as a consequence.

Morningstar noted this week that James Anderson, who manages SMT (and was recently downgraded to silver by Morningstar), has cut his Tesla exposure to 5% after it threatened to breach 15% of the value of the investment trust. Anderson continues to pronounce himself very bullish on Tesla prospects and has said that should the price fall sufficiently, he will be buying more.

Morningstar says that Timothy Parton, who runs the JPMorgan American Investment Trust, is also a big Tesla fan. He says Tesla is more than just a car company: “If you remain unconvinced about the opportunity for Tesla, and continue to view it as a car company, think back to Amazon in the early stages when the market tried to rationalise it as a plain vanilla bookseller,” he says.

The Irithmics data demonstrates that there is a large cluster of investors who are rated as moderate in the intensity of their beliefs on Tesla, while there is an interesting cluster who are positive on the stock but they suffer from low intensity – i.e. they are less likely to be doing anything about their good vibes!

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

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