Hedge fund Renaissance built stake ahead of Tesla share surge
Algorithm-driven investment towards end of last preceded price jump
Renaissance Technologies, a secretive computer-powered hedge fund founded by billionaire Jim Simons, added nearly 3.3m Tesla shares ahead of the electric car maker’s surge earlier this year.
The $60bn hedge fund built a stake of more than 2 per cent in Tesla in the three months to December, putting it in position to benefit from the company’s vertiginous rally past $900 a share in early February assuming it held the stake.
Filings with the Securities and Exchange Commission show Renaissance owned almost 4m Tesla shares at the end of last year, making the Elon Musk company its second-largest holding behind Bristol-Myers Squibb.
Renaissance, which uses algorithms to systematically scour markets for profitable patterns, does not take a view on company fundamentals. The hedge fund last year also cut back on strategies that hunt for market trends, once extremely popular with systematic funds.
A spokesperson for Renaissance declined to comment.
Tesla’s rapid stock jump came after the company reported its second consecutive quarterly profit and said it would build more than half a million vehicles this year, the highest annual output in its history.
The rally, which saw Tesla surpass the combined market capitalisation of Detroit’s big three carmakers — General Motors, Ford and Fiat Chrysler — with a value of just over $100bn, confounded some investors and analysts who said the company’s fundamentals were not strong enough to support the surge.
Tesla shares were trading around $800 a share at its last closing price on Friday, putting its market value at $145bn.
Tesla delivered a bruising start to the year to short-sellers whose paper losses totalled $9bn in betting against the company.
Mr Musk’s car group has long been a target of high-profile investors such David Einhorn and Jim Chanos, who have taken bets that Tesla’s stock price will fall.
Renaissance is respected in the hedge fund industry for its record, although the firm is resolutely secretive. Quarterly disclosures of hedge fund managers’ stock holdings, in what are known as 13F filings, are one of the few public ways of tracking what the managers are selling and buying.
Mr Simons named his son co-chairman of Renaissance earlier this year and added five new directors, as he stepped up preparations to hand over the firm to the next generation.
The move positioned Nathaniel Simons, who runs hedge fund Meritage Group and has been vice-chair of Renaissance since 2006, to take over from his father as chairman.