Baillie Gifford has been forced to cut its stake in Tesla to less than 5% after the automaker’s soaring share price meant the Scottish asset manager was at risk of breaching concentration guidelines.
The share price of the $440bn company has increased 452% in the year to date.
But Scottish Mortgage fund manager James Anderson (pictured) said he remained committed to the company, in which his investment trust held a 13.4% weighting at the end of July, according to its last factsheet.
“The substantial increase in Tesla’s share price means that we needed to reduce our holding in order to reflect concentration guidelines which restrict the weight of a single stock in clients’ portfolios,” Anderson said in a statement.
“However, we intend to remain significant shareholders for many years ahead. We remain very optimistic about the future of the company. Tesla no longer faces any difficulty in raising capital at scale from outside sources but should there be serious setbacks in the share price we would welcome the opportunity to once again increase our shareholding.”
Anderson went on to say Baillie Gifford was privileged to have been Tesla’s largest shareholder “over a critical period for the development of the company”.
“We are immensely grateful for the extraordinary efforts and achievements of Tesla in driving forward a transportation and energy revolution in the face of persistent scepticism and often downright hostility. Without Tesla’s efforts the possibility of averting climate disaster would have been significantly reduced.
“In our view the underlying purpose of providing equity capital at scale is to try to assist in mitigating, and hopefully solving, the most serious problems the world faces. For sure, we and our clients are extremely happy with the progress of the share price but we see this as but a reflection of the ultimate objective.”
While Scottish Mortgage is the investment trust with the largest Tesla weighting in the Baillie Gifford stable, it is also held by the Edinburgh Worldwide and Baillie Gifford US Growth trusts.
There are also seven Baillie Gifford funds in the Investment Association universe that hold Tesla in their top-10: the Baillie Gifford Long Term Global Growth Investment, American, Positive Change, Global Stewardship, Global Discovery, Global Alpha Growth and Managed funds.
A filing with the Securities and Exchange Commission states Baillie Gifford now owns 4.25% of the company.
See also: Kate Fox: How Baillie Gifford’s impact fund is quadrupling the returns of its peers
