How Did Tesla Become Renaissance Technologies’ Gem?

In the fourth quarter of 2019, Tesla was Renaissance Technologies’ second-largest holding. Renaissance is one of the largest hedge funds in the US. The hedge fund’s AUM (asset under management) in the fourth quarter of 2019 exceeded $165 billion. In the same quarter, the US largest hedge fund Bridgewater Associates’ AUM was around $236 billion.

So far in 2020, Tesla (NASDAQ:TSLA) has risen around 93.9%, while the S&P 500 Index has fallen 9.3%. Tesla’s stock prices rose sharply after it launched cybertruck last year. In the past few years, famous hedge fund managers like Jim Chanos and Bill Ackman lost a large amount of money on their short position on Tesla.

Tesla in Renaissance’s portfolio since 2016

Based on Renaissance Technologies’ filings, it has accumulated Tesla since 2016. However, in the fourth quarter of 2019, the hedge fund increased its exposure to the company. Tesla accounted for around 1.3% of Renaissance Technologies’ total portfolio of publicly traded securities. In the third quarter of 2019, the figure was just 0.14%. Tesla wasn’t among Renaissance Technologies’ top ten holdings in that quarter.

In the fourth quarter of 2019, Bristol-Myers Squibb (NYSE:BMY) accounted for around 3% of Renaissance Technologies’ total portfolio of publicly traded securities. On a year-to-date basis, Bristol-Myers Squibb’s stock prices have fallen just 2.4%. Apart from Tesla and Bristol-Myers Squibb, Amazon (NASDAQ:AMZN), Vertex Pharmaceuticals (NASDAQ:VRTX), and AbbVie (NYSE:ABBV) were Renaissance Technologies’ largest buys in the fourth quarter of 2019. 

Healthcare sector stocks accounted for 21.8% of Renaissance Technologies’ total portfolio of publicly traded securities in the fourth quarter of 2019. Consumer discretionary and technology stocks accounted for 12% of the hedge fund’s total portfolio in the fourth quarter of 2019.

Renaissance Technologies’ top sells

In the fourth of 2019, Johnson & Johnson, Starbucks, UnitedHealth Group, and Facebook were Renaissance Technologies’ top sells. The hedge fund also exited Twitter, JPMorgan Chase, and Anthem in the fourth quarter of 2019. A quarter ago, these stocks accounted for 0.2%, 0.1%, and 0.1%, respectively, of Renaissance Technologies’ total portfolio of publicly traded securities.

Tesla’s moving averages

Overall, Tesla could be a profitable bet for Renaissance Technologies in 2020 if it continues to hold the stock. On Monday, Tesla’s stock prices closed above their key moving averages. Based on technical analysis, the levels support the continuation of the bullish trend in Tesla’s stock prices.

The 50-day moving average at $748 is an important support point for stock prices. Moreover, the 50-day moving average was 42% above the 200-day moving average, which is a bullish indicator for stock prices. In November 2019, the 50-day moving average moved above the 200-day moving average. Since then, the stock prices have more than doubled.

Read Is NIO Catching Tesla in China’s EV Market? to learn more about Tesla.