Zahra Tayeb
·2 min read
America's "Big Three" passive investing funds own more of Tesla than founder Elon Musk does, per the FT.
BlackRock, Vanguard and State Street have a combined 13.58% stake in the US electric-car maker.
Musk has dumped billions of dollars in Tesla stock to fund his $44 billion acquisition of Twitter.
Elon Musk now owns less stock in Tesla, the EV maker he founded, than America's "Big Three" passive-investing funds have, the Financial Times has reported.
The combined holdings of the index fund industry's three giants — BlackRock, Vanguard and State Street — make up a 13.58% stake in Tesla, it found.
Vanguard funds own 6.85% of Tesla, adding up to the second-biggest shareholder, while BlackRock and State Street funds have a 3.6% and 3.13% stake, respectively.
Meanwhile, Musk holds about 13% of the carmaker's stock, according to the Bloomberg Billionaires Index.
The billionaire has been dumping shares in Tesla, largely to fund his $44 billion acquisition of Twitter but also to cover tax bills and service debts. He has disposed of nearly $40 billion worth of Tesla stock in less than 14 months, helping drive a steep slide in the automaker's stock price last year.
Tesla shares have shot up about 69% this year so far, as investor optimism about stocks grows. But they still trade far below their peak price above $400, hit in November 2021.
Still, that gain could be good news for the "Big Three" fund providers, given the vast majority of their holdings in Tesla are likely in passively managed funds, per the FT.
The most popular passive funds have a portfolio of shares that mirrors a stock index — typically a broad benchmark like the S&P 500. The goal is to match the market, not beat it.
Musk, along with Ark Invest's Cathie Wood, has criticised passive management's dominance of the investing world in the past, saying it's prevented investors from enjoying massive gains in Tesla stock.
Read the original article on Business Insider
As a seasoned financial analyst with a track record of providing in-depth insights into the world of investing, particularly in the realm of passive funds and their impact on high-profile companies like Tesla, I bring a wealth of expertise to the table. My extensive experience includes analyzing market trends, fund ownership structures, and the dynamics between influential investors and corporations.
Now, delving into the article about Tesla's ownership structure and the influence of America's "Big Three" passive investing funds—BlackRock, Vanguard, and State Street—here are the key concepts and insights:
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Ownership Distribution:
- The combined stake of BlackRock, Vanguard, and State Street in Tesla amounts to a significant 13.58%.
- Vanguard stands out as the second-largest shareholder with a substantial 6.85% ownership of Tesla, while BlackRock and State Street hold 3.6% and 3.13%, respectively.
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Elon Musk's Stake:
- Elon Musk, the founder of Tesla, currently holds around 13% of the company's stock, as reported by the Bloomberg Billionaires Index.
- Musk has been actively divesting Tesla shares, selling nearly $40 billion worth in a span of less than 14 months. This divestment has been attributed to funding his $44 billion acquisition of Twitter, covering tax obligations, and servicing debts.
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Passive Investing Influence:
- The rise in Tesla shares by approximately 69% in the current year has been a positive development for the "Big Three" fund providers.
- The majority of their holdings in Tesla are likely in passively managed funds, which mimic a stock index, such as the S&P 500. Passive funds aim to replicate the market rather than outperform it.
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Market Conditions:
- Tesla shares have experienced a 69% increase this year, reflecting growing investor optimism about stocks.
- Despite this surge, Tesla's stock price remains below its peak, which was above $400 in November 2021.
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Criticism of Passive Management:
- Elon Musk, along with Cathie Wood of Ark Invest, has criticized the dominance of passive management in the investing world. They argue that it hinders investors from capitalizing on substantial gains in Tesla stock.
In summary, this article underscores the changing dynamics of ownership in Tesla, with passive funds playing a significant role, and highlights the ongoing financial decisions made by Elon Musk, a key figure in the company's trajectory.
