Baillie Gifford ‘reflecting’ on Elon Musk’s surprise tweets

The Scottish asset manager is one of Tesla’s biggest backers

Baillie Gifford has told Portfolio Adviser it is “reflecting” on a series of tweets from Tesla founder and chief executive Elon Musk indicating he intends to take the electric car company private.

On Tuesday, Musk told his 22.3m Twitter followers that he had backing to take the company private at $420 a share. Tesla stock rallied 11% to end the day at $379.57.

Five asset managers own majority stakes in Tesla. The largest belongs to T Rowe Price at 9.17%, making it the second biggest shareholder behind Musk. Vanguard and Blackrock own 4.18% and 3.55% respectively via their tracker funds.

Biggest Tesla shareholders Stake as at 08 August 2018
Elon Musk19.78%
T Rowe Price9.17%
Fidelity Investments8.33%
Baillie Gifford7.72%
Tencent Holdings4.89%
Vanguard4.18%
Blackrock3.55%

Baillie Gifford, the fourth largest shareholder, refused to tell Portfolio Adviser its intentions for its shares should Musk follow through with privatisation of the company.

A spokesperson for the asset manager said: “As long-term shareholders, we will take time to reflect upon this development.”

Scottish Mortgage Trust, its largest closed-ended vehicle, holds the majority of the Scottish asset manager’s 7.72% stake in Tesla. The trust’s managers James Anderson and Tom Slater (pictured) have been ardent supporters of Musk’s electric car company, despite misgivings from investors in the trust.

The trust’s annual report, published on March 2018, revealed investors had been increasingly asking questions over the Tesla holding. Although Anderson acknowledged the “production hell” Musk’s firm has been going through, he said that did not “fundamentally endanger the intense brand loyalty that has been built”.

Scottish Mortgage currently has a 1.04% stake in the business. The funds with the next biggest stakes are pension fund Baillie Gifford Long Term Global Growth Investments and Baillie Gifford Overseas Growth Funds, which own 0.43% and 0.17% respectively.

Fidelity special vehicle

In a further tweet that baffled the funds industry, Musk floated the idea of creating a special purpose vehicle for existing Tesla shareholders, stating “we already do this with Fidelity’s SpaceX investment”.

Fidelity Investments, the US-based asset management group, said it does not comment on individual companies.

The company has disclosed via regulatory filings that some of its mutual funds have acquired SpaceX shares, Musk’s privately-owned aerospace company, through private placements that began in January.

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