Tesla Inc.’s 56% share-price rally in January supercharged the returns of a pair of Asia-based hedge funds.
Optimus Prime Asset Management Co. got most of its 14.5% gain last month from Elon Musk’s electric car company, according to a person familiar with the technology-focused hedge fund. Tesla and its suppliers were also major contributors to the 17.6% increase at a fund managed by CloudAlpha Capital Management Ltd.
Tesla’s controversial founder Musk has a love-hate relationship with investors -- hedge-fund managers David Einhorn and Crispin Odey have both held bearish bets against the stock at various times. Tesla’s Nasdaq-listed shares have more than doubled this year, helped by a surprise third-quarter profit, a short squeeze and the opening of a key factory in China.
Hong Kong-based Optimus Prime has owned Tesla stock since at least 2013, the person said, asking not to be identified because the information is private. Founder John Wang, an engineer by training who invested his own money before starting the firm in 2011, sees electric vehicles as the future and believes in Tesla’s prospects.
Optimus Prime owned 238,800 Tesla shares at the end of 2019, a number that’s stayed constant even during a rocky first half for the automaker amid cash flow concerns, regulatory filings show. They’re currently worth around $215 million, or about one-third of the group’s some $600 million under management. Optimus Prime is Tesla’s fifth-largest hedge fund investor, data compiled by Bloomberg show.
Wang didn’t immediately respond to messages seeking comment.
CloudAlpha’s Tesla holdings contributed 5.5% to its global technology hedge fund’s January gain, the Hong Kong-based firm said in a newsletter to clients. CloudAlpha is led by former venture capitalist Nancy Yang.
It built up the position as Tesla shares hit lows last year and added to its holdings significantly when the company slashed the price of its Model 3 cars to below 300,000 yuan ($42,670). The price cut was “faster than what we expected as the company ramped up its China production to capture the China market,” CloudAlpha said.
Yang declined to comment.
Another, smaller, fund in Asia to profit from Tesla’s rally was Singapore’s Golden Horse Fund Management Pte, whose Global Macro Discretionary Fund started buying the shares in December. Despite comprising just 3% of the S$42 million ($30 million) fund, Tesla was responsible for about half of the fund’s 2.2% return in January.
“Elon Musk has proven himself to be a great salesman with his ability to capture the hearts and imagination of investors through his showmanship,” Golden Horse Managing Director Ko Ming Nan said.
Optimus Prime’s global technology hedge fund has gained an annualized 36% since inception, the person said. CloudAlpha’s hedge fund has increased an annualized 23% since September 2015 while Golden Horse’s flagship fund has delivered a 25.4% annualized return since August 2016, investor newsletters show.
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