Tesla Inc. (TSLA), the electric car manufacturer headed up by billionaire innovator Elon Musk, has garnered lots of attention in recent weeks. Musk announced plans earlier this summer to take the company private, and in the intervening time there has been substantial debate about this proposal. Most recently, Musk indicated that he had reversed his thinking and would keep TSLA as a publicly-traded company. According to 13F filings, the drama regarding Musk's car company began even earlier than this most recent debate. Indeed, according to filings with the SEC, two major shareholders cut their stakes during the second quarter.
T. Rowe and Fidelity
The two shareholders that cut their positions in Tesla are T. Rowe Price Group Inc. funds and Fidelity Investments. T. Rowe was at one point the second largest shareholder in Tesla after Musk himself, according to U.S. News & World Report. Last quarter, T. Rowe cut its holdings by about a quarter, ending Q2 with 11.9 million shares.
Fidelity had been a top-10 shareholder in TSLA. In its filing with the SEC, this company indicated it had trimmed its stake in the company by about 21% last quarter.
Reasons Remain Elusive
Unfortunately for outside investors, SEC filings do not indicate the reasons why large-scale investment operations like T. Rowe and Fidelity make the decisions that they do. Still, it's not hard to imagine why Tesla might suddenly seem to be a risky proposition. Even before the recent spate of investor lawsuits claiming fraud and the recent probe by the SEC regarding Musk's cryptic August 7 tweet that there was "funding secured" to take the company private, Tesla worried many investors. Throughout the second quarter, for instance, investors were generally focused on Tesla's efforts to turn out new Model 3 sedans without burning through cash too quickly.
Besides their stock holdings in Tesla, both Fidelity and T. Rowe retained a type of bond that Tesla issued and which can be converted to stock under certain conditions. George Soros, the billionaire investor, revealed via 13F filings that his firm also retained a stake in these convertible notes for the second quarter as well.
Other investors did not cut back on Tesla holdings in Q2. Jennison Associates, for instance, added about a third to its shares, ending the quarter with 4.3 million shares. The situation for many financial firms could change if Tesla ever does decide to go private. According to CFRA analyst Efraim Levy, "a lot of these mutual funds, who are the large shareholders, they can't necessarily buy and hold private company's stock."