January 26th, 2021 by Johnna Crider
Baillie Gifford, a fund manager in Edinburgh, Scotland, scored a $29 billion profit off of its Tesla (TSLA) investments. The firm bought its first TSLA shares when they were just $6 each, reported The Guardian. At the time of The Guardian’s article, TSLA was trading at $846 a share.
Baillie Gifford’s investments on behalf of its investors’ resulted in enormous profits for the pension funds, foundations, and charities it serves. The company manages Scottish Mortgage Investment Trust, which began buying TSLA shares in 2013 at $6 per share. In 2020, those shares rose by 640% and closed on Friday at $846, bringing Tesla’s market cap to $820 billion.
Due to the success of Tesla in the stock market, Scottish Mortgage was admitted into the FTSE 100 index of the UK’s largest listed companies in 2017. In 2020, Scottish Mortgage was the best performing company in the FTSE 100.
The data from Scottish Mortgage was released to The Guardian just in time for Tesla’s quarterly earnings week. Tesla is expected to report its sixth consecutive profitable quarter, and considering that Tesla sold over 500,000 vehicles in 2020, it’s an extremely safe bet to say Tesla’s 2020 was supercharged.
Baillie Gifford has made a $14.8 billion profit for its investors from the Tesla shares it sold last calendar year. It has also made $14.6 billion on the Tesla shares it is holding. Combined, this profit totaled $29.5 billion for 2020. For Scottish Mortgage, the total profit on Tesla in 2020 was $5.5 billion.
James Anderson, one of the fund managers, had to sell Tesla’s shares due to the share price soaring so high that it triggered a warning alarm that Tesla’s stake had crossed the maximum percentage value that Scottish Mortgage was able to hold in any single stock. This means the fund managers had to sell some Tesla. Anderson told The Guardian that if he hadn’t had to have sold some of the Tesla shares, the stock would have accounted for more than a third of the whole fund.
Despite selling some of its Tesla shares, Tesla is still Scottish Mortgage’s largest holding — 8.9% of its total assets. Anderson shared why he first bought Tesla. This was during a time that analysts believed that Tesla was overvalued at $6. “To us, it was, frankly, clear even back half a dozen years that the underlying technologies from batteries, to solar, to eventually self-driving was progressing and would continue to do so,” he said.
“We thought (and simply observed) that Tesla was already past the technological and practical challenges to a good degree and that execution and finance were the practical issues. What we needed was time. Not many investors can have that luxury and necessity.”
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