Tesla Bruises Another hedge fund with declining GMT losses

(Bloomberg) – Tesla Inc.’s share price hurt another hedge fund manager as Tom Claugus’ GMT Capital suffered losses last month after betting against the electric car maker.

Claugus confirmed that GMT’s three long-short equity funds, which have combined assets of around USD 3.3 billion, each fell about 10% in January. Tesla’s sharply trimmed stocks rose 55% a month, supported by the second quarter in a row of the company’s blowout earnings.

“Tesla did a really good job getting sustainability,” Claugus said in a phone interview. Nevertheless, he said: “The evaluation is detached from reality.”

Claugus joins investors, including hedge fund managers David Einhorn and Crispin Odey, who have made bearish appearances with Tesla when the stock hit records prior to retreating from its high on February 4. Some traders have covered their short positions against Elon Musk’s companies, such as the famous “Big Short” investor Steve Eisman, who called the stock “iconic”.

The stock rose 83% this Wednesday to Wednesday. The stock rose 0.8% in New York at 10:36 a.m. after falling 4.2% on Thursday.

Even brief price drops in the stock hardly slowed Tesla down. The company had a market cap of $ 138 billion at Wednesday’s close. A profit was made in four of the last six quarters, and Musk accelerated the expected launch of the new Model Y crossover vehicle, which he predicts will outperform all other Teslas models in combination.

For Einhorn, whose greenlight capital fell 7.6% against its funds in January, the bet against Tesla is mainly expressed through put options, so his company’s exposure to the position has shrunk as the stock has risen, Bloomberg reported ,

Odey’s flagship Odey European Inc. fell 11.2% in January, a person aware of the matter said. A short bet on Tesla was the fourth largest position, said the person who asked not to be identified because the information was not public. A spokesman for Odey declined to comment.

GMT has been Tesla for a few years. The position is currently around 4.4% of the portfolio, said Claugus, who founded the Atlanta-based company in 1993. The funds rose by 10% to 12% depending on the fund in the past year.

Claugus said Tesla was only one factor in last month’s loss. Long-term betting on stocks with conservative valuations, especially in the oil and gas and commodities sectors, also hurt.

“The corona virus hits everything that is cyclically and economically sensitive, so it’s the worst of all worlds for us,” said Claugus. “If the markets are overheated, this is a very risky time in my opinion. The start-up took a long time and is developing into a speculative bubble.”

Overall, hedge funds had a difficult start to the year. According to Bloomberg data, the average manager fell 0.2% in January. Global equity markets weakened and bonds recovered last month as fears that the spread of the corona virus could affect growth.

– With the support of Nishant Kumar.

Contact the reporter about this story: Melissa Karsh in New York at mkarsh@bloomberg.net

To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Josh Friedman, Alan Mirabella

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