Billionaire investor Ken Griffin has been known for making some rather eccentric purchases.
Back in 2021, Griffin paid a cool $43 million for a first-edition copy of the U.S. Constitution — outbidding a decentralized autonomous organization (DAO) of crypto enthusiasts in the process. More recently, Griffin shelled out $45 million for a stegosaurus fossil. I can say in full confidence that Griffin’s man cave is much cooler than anything my friends have in their houses.
Griffin has amassed his fortune as a hedge fund manager, specifically as the CEO of Citadel Advisors — one of Wall Street’s most elite portfolio management funds.
And while taking a spin through Citadel’s most recent 13F filing, I noticed Griffin and his firm scooped up 1.2 million shares of electric vehicle (EV) manufacturer Tesla (TSLA 0.47%) during the third quarter, increasing the fund’s position by 395%.
Below, I’m going to explore what may have driven this decision and walk investors through important considerations for Tesla stock.
Ken Griffin isn’t shy about his politics
According to data compiled by OpenSecrets, Griffin was the fifth-highest contributor among disclosed individual donors during the 2024 election cycle. Over the last year, Griffin spent $100 million spread across various political organizations supporting the Republican Party.
Who else was high up on the list of top GOP donors in addition to Griffin? Try Elon Musk, the CEO of Tesla. While I can’t say for certain what drove Citadel’s decision to raise its stake in Tesla, I personally find the timing of the purchase over the last few months as the election loomed and Griffin’s support of the GOP to be more than coincidental.
Image source: Getty Images.
Wall Street seems bullish on Tesla’s progress under a Trump administration
It’s no secret that Musk became an influential figure in politics this year. In the months leading up to the election, Musk frequently took to social media platform X (formerly known as Twitter and also owned by Musk) to express his support for the Trump campaign.
And since becoming President-Elect, a lot of information has come out of the Trump camp regarding potential policy changes he will be looking to implement with the help of a Republican-controlled Congress.
As these updates have hit the news, one particular analyst on Wall Street has been abnormally bullish on Tesla’s prospects under a Trump administration. Dan Ives of Wedbush Securities says the incoming Trump administration is going to be a “game changer” for Tesla because Trump’s return to Washington will come with changes in the regulatory environment that could pave the way for Tesla’s autonomous driving vision to enter the fast lane.
Ives very well may be right — just take this recent post on X from prominent financial and political contributor Unusual Whales.
BREAKING: The Trump administration is reportedly planning to ease regulations for autonomous vehicles in the US
— unusual_whales (@unusual_whales) Nov. 17, 2024
In my eyes, Griffin and the team at Citadel may have shared a similar mindset to that of Ives. As such, their decision to buy Tesla stock prior to Trump securing the presidency was rooted in the belief that Musk’s relationship with the potential new president could bode well for his business.
While all of this makes for an intriguing storyline, there is some important information to have before piling into Tesla stock yourself.
Does that make Tesla stock a good buy right now?
Since Election Day (Nov. 5), shares of Tesla have soared. Stocks generally do not rise more than 30% over the course of two weeks, and when they do, the move is usually driven by some groundbreaking news like a major new product launch or the announcement of an acquisition.
Data by YCharts.
While the outlook for Tesla over the next four years might look bright, it’s important to remember that nothing has actually changed for the company yet. New policies have not been put into place, nor has the company started magically selling more cars. It’s pretty obvious that Tesla’s current price action is a hype-driven narrative rooted in speculation.
Citadel is almost certainly sitting on a pretty big gain from its recent purchase right now, but its investment strategy doesn’t always revolve around long-term buying and holding. The firm isn’t afraid to take money off the table and flip a stock during an unusually short time period.
At the end of the day, I wouldn’t chase Tesla stock at its current valuation. The stock is experiencing abnormal momentum, and the prudent strategy is to wait and see how the company benefits (or doesn’t benefit) from the new leadership in Washington.