Billionaire investor Ken Griffin has been identified for making some fairly eccentric purchases.
Again in 2021, Griffin paid a cool $43 million for a first-edition copy of the U.S. Structure — outbidding a decentralized autonomous group (DAO) of crypto fanatics within the course of. Extra not too long ago, Griffin shelled out $45 million for a stegosaurus fossil. I can say in full confidence that Griffin’s man cave is way cooler than something my mates have of their homes.
Griffin has amassed his fortune as a hedge fund supervisor, particularly because the CEO of Citadel Advisors — considered one of Wall Road’s most elite portfolio administration funds.
And whereas taking a spin by Citadel’s most up-to-date 13F submitting, I seen Griffin and his agency scooped up 1.2 million shares of electrical car (EV) producer Tesla (TSLA -1.15%) throughout the third quarter, rising the fund’s place by 395%.
Under, I’ll discover what might have pushed this choice and stroll traders by necessary concerns for Tesla inventory.
Ken Griffin is not shy about his politics
In response to knowledge compiled by OpenSecrets, Griffin was the fifth-highest contributor amongst disclosed particular person donors throughout the 2024 election cycle. Over the past 12 months, Griffin spent $100 million unfold throughout varied political organizations supporting the Republican Celebration.
Who else was excessive up on the checklist of prime GOP donors along with Griffin? Attempt Elon Musk, the CEO of Tesla. Whereas I am unable to say for sure what drove Citadel’s choice to lift its stake in Tesla, I personally discover the timing of the acquisition over the previous couple of months because the election loomed and Griffin’s help of the GOP to be greater than coincidental.
Picture supply: Getty Photographs.
Wall Road appears bullish on Tesla’s progress underneath a Trump administration
It is no secret that Musk turned an influential determine in politics this 12 months. Within the months main as much as the election, Musk steadily took to social media platform X (previously referred to as Twitter and likewise owned by Musk) to specific his help for the Trump marketing campaign.
And since turning into President-Elect, numerous info has come out of the Trump camp relating to potential coverage modifications he will probably be seeking to implement with the assistance of a Republican-controlled Congress.
As these updates have hit the information, one specific analyst on Wall Road has been abnormally bullish on Tesla’s prospects underneath a Trump administration. Dan Ives of Wedbush Securities says the incoming Trump administration goes to be a “recreation changer” for Tesla as a result of Trump’s return to Washington will include modifications within the regulatory surroundings that might pave the way in which for Tesla’s autonomous driving imaginative and prescient to enter the quick lane.
Ives very nicely could also be proper — simply take this current put up on X from distinguished monetary and political contributor Uncommon Whales.
BREAKING: The Trump administration is reportedly planning to ease laws for autonomous automobiles within the US
— unusual_whales (@unusual_whales) Nov. 17, 2024
In my eyes, Griffin and the workforce at Citadel might have shared an identical mindset to that of Ives. As such, their choice to purchase Tesla inventory previous to Trump securing the presidency was rooted within the perception that Musk’s relationship with the potential new president might bode nicely for his enterprise.
Whereas all of this makes for an intriguing storyline, there’s some necessary info to have earlier than piling into Tesla inventory your self.
Does that make Tesla inventory a great purchase proper now?
Since Election Day (Nov. 5), shares of Tesla have soared. Shares typically don’t rise greater than 30% over the course of two weeks, and once they do, the transfer is normally pushed by some groundbreaking information like a significant new product launch or the announcement of an acquisition.
Knowledge by YCharts.
Whereas the outlook for Tesla over the subsequent 4 years would possibly look vivid, it is necessary to do not forget that nothing has truly modified for the corporate but. New insurance policies haven’t been put into place, nor has the corporate began magically promoting extra automobiles. It is fairly apparent that Tesla’s present worth motion is a hype-driven narrative rooted in hypothesis.
Citadel is sort of definitely sitting on a fairly large achieve from its current buy proper now, however its funding technique does not all the time revolve round long-term shopping for and holding. The agency is not afraid to take cash off the desk and flip a inventory throughout an unusually brief time interval.
On the finish of the day, I would not chase Tesla inventory at its present valuation. The inventory is experiencing irregular momentum, and the prudent technique is to attend and see how the corporate advantages (or does not profit) from the brand new management in Washington.
