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Asian Hedge Funds Win Big From Tesla’s Stock Surge

Tesla Model S

Tesla’s soaring stock this year was the key driver of the returns of several hedge funds based in Asia which had either bought Tesla shares at the dip last year or held the EV maker’s stock for years.

According to executives at the hedge funds and a person with knowledge of the returns who spoke to Bloomberg, Hong Kong-based funds Optimus Prime Asset Management and CloudAlpha Capital Management, as well as Singapore’s Golden Horse Fund Management Pte, saw their bets on buying and/or owning Tesla shares pay off in January, when Tesla’s stock rally contributed the most to the funds’ returns. 

Optimus Prime Asset Management returned 14.5 percent in January, mostly thanks to its Tesla holdings, the person familiar with the fund’s operations told Bloomberg. The fund held Tesla’s stock even when the EV maker’s shares were under intense pressure in 2018 and early 2019 and when analysts were questioning the company’s survival due to the consistent lack of profits.

For CloudAlpha Capital Management, the Tesla stock rally contributed 5.5 percent to the return of its global technology hedge fund last month, according to CloudAlpha’s newsletter to clients cited by Bloomberg.

Singapore-based Golden Horse Fund Management also benefited from the Tesla rally as its Global Macro Discretionary Fund returned 2.2 percent in January, half of which thanks to Tesla, although Tesla shares accounted for just 3 percent of the fund’s holdings.

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At the end of January, Tesla easily beat market expectations and posted a profit for Q4, a second consecutive quarter in which the company beat outright analyst expectations and defied skeptics.

Tesla’s stock continued to rally in February, hitting an all-time high closing price of US$917 last week.  

One of the big losers in the Tesla share price rally was Saudi Arabia’s Public Investment Fund which had sold nearly all of its Tesla stock at the end of 2019, missing out on this year’s stock surge and on billions of U.S. dollars in potential gain.

The Saudi Arabian fund held more than 8,277,080 shares in Tesla as at the end of Q3 2019, while its holding in Tesla was just 39,151 shares as at the end of 2019, according to the fund’s filing with the SEC.   

By Tsvetana Paraskova for Oilprice.com

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