TSLA: Saudi fund hedge against Tesla stake with perfect timing

The Saudi Arabian sovereign wealth fund took a large stake in Tesla last year worth almost 5% of the company, but they have now reportedly hedged their bet on the automaker and they did so with perfect timing.

After the fund took a stake in Tesla last year, CEO Elon Musk claimed that Saudi Arabia was interested in taking Tesla private and the company was considering the move.

The deal has since fallen through and now we have now learnt that the fund has been de-risking its bet on Tesla.

Financial Times (paywall) reported:

“The Saudis’ Public Investment Fund hedged most of its 4.9 per cent stake in Tesla with the help of bankers at JPMorgan Chase after the market closed on January 17, according to four people with direct knowledge of the trade.”

They didn’t report exactly how they hedged their bet, but the timing is interesting since it happened hours before Musk announced that Tesla is laying off 7% of its staff.

Tesla’s stock (TSLA) dropped significantly in the days following the announcement.

Musk told the paper that he wasn’t aware of any contact with the fund for months and he thought that they sold their shares:

“To the best of my knowledge, there has been no communication with PIF for months. I thought they had probably sold their shares. We don’t know if they own any at all.”

The fund has since made investments in other electric vehicle projects, including a $1 billion bet on Lucid Motors.

Electrek’s Take

I wouldn’t read too much into this. Hedging large positions is not unusual for funds like this one.

The timing is admittedly worrying, but we have to keep in mind that hedging a multi-billion position doesn’t happen in a day.

Therefore, it’s likely a coincidence unless Tesla timed the news with the closure of their hedge, which I don’t think is likely because I simply can’t think of a reason for them to do that.

Of course, the fund could have received some inside information and managed to time the hedge with the announcement, but we have no indication that it is the case other than the timing.

What do you guys think? Let us know in the comment section below.