Wealthy investor Ken Griffin boosted his Tesla shareholding by an impressive 395%. Given Tesla's post-election growth, is it advisable to invest in the company now?
Billionaire financier Ken Griffin is recognized for his peculiar acquisitions.
In 2021, Griffin spent a substantial $43 million on a first-edition version of the United States Constitution, outdoing a decentralized autonomous organization (DAO) of crypto enthusiasts in the process. More recently, Griffin splurged $45 million on a fossilized stegosaurus. It's safe to say that Griffin's private den surpasses the coolness factor of my friends' homes.
Griffin amassed his wealth by serving as the CEO of Citadel Advisors, one of the most distinguished portfolio management firms on Wall Street.
By examining Citadel's most recent 13F filing, I discovered that Griffin and his team acquired 1.2 million shares of electric vehicle (EV) manufacturer Tesla (TSLA 4.34%) during the third quarter, amplifying the fund's position by 395%.
In what follows, I will delve into the potential reasons for this investment and provide investors with crucial considerations regarding Tesla stock.
Ken Griffin is not reserved about his political leanings
OpenSecrets data reveals that Griffin ranked as the fifth-highest individual donor in terms of political contributions during the 2024 election cycle. Over the past year, Griffin contributed $100 million towards various Republican Party-supporting organizations.
Elon Musk, the CEO of Tesla, was among the top GOP benefactors alongside Griffin. Although I cannot definitively determine the motives behind Citadel's investment in Tesla, I argue that the timing of this purchase – as the election was just around the corner and Griffin was supporting the Republican Party – is more than a coincidence.
Wall Street appears to be optimistic about Tesla's progress under a Republican administration
It's no secret that Musk emerged as a significant political influencer in 2024. Throughout the election period, Musk expressed his support for the Trump campaign on the social media platform X (previously known as Twitter and now also owned by Musk).
Following Trump's election as President-Elect, revealing developments emerged from his administration regarding potential policy shifts that could potentially benefit Tesla.
One analyst on Wall Street has been notably optimistic about Tesla's prospects under a Republican administration. Dan Ives of Wedbush Securities believes that the incoming Trump administration represents a "game changer" for Tesla, as changes in the regulatory environment could expedite the realization of Tesla's autonomous driving vision.
Ives may well be correct – consider this recent X post from Unusual Whales:
BREAKING: The Trump administration is considering easing regulations for autonomous vehicles in the US
-- unusual_whales (@unusual_whales) Nov. 17, 2024
It appears that Griffin and the Citadel team shared a similar outlook as Ives. Their Tesla stock purchase prior to Trump's election victory could be attributed to their belief that Musk's relationship with the potential new president might lead to positive developments for his business.
Although this scenario presents an intriguing narrative, it's prudent to consider certain factors before jumping into Tesla stock.
Is Tesla stock a sound investment at the current market price?
Since Election Day (Nov. 5), Tesla shares have experienced extraordinary growth. Generally, stocks do not surge by over 30% within a two-week period, and such instances are usually triggered by groundbreaking events such as the launch of a new product or an acquisition announcement.
Although Tesla's prospects over the next four years may appear promising, it's crucial to remember that nothing has materially changed for the company yet. No new policies have been introduced, and Tesla has not instantaneously started selling more vehicles. It's evident that Tesla's recent rally is driven by speculation and hype.
Citadel is likely sitting on substantial gains from its recent acquisition, but it's essential to note that the firm's investment strategy is not always centered around long-term holding. Citadel is not hesitant to liquidate holdings and capitalize on short-term market opportunities.
In conclusion, I advise against overpaying for Tesla stock at its current valuation. The stock is experiencing excessively enthusiastic momentum, and the wise move is to observe and evaluate how Tesla performs (or fails to perform) under the new political leadership.
Given his background in finance and his significant investments, Griffin likely has a strategic approach when it comes to managing his wealth and making investment decisions. In the pursuit of generating even more returns, Griffin might explore various investment opportunities, such as the stock market.
Following Citadel's substantial acquisition of Tesla shares, questions might arise about the potential impact of political connections and policy shifts on Tesla's stock price. As a savvy finance professional, Griffin may take into account factors like these when making decisions about where to invest his and his clients' money.
