Scottish investment firm Baillie Gifford — formerly Tesla’s largest outside shareholder — 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 Edinburgh-based investment company said the recent rise in Tesla’s share price meant it needed to reduce its holding due to guidelines that restrict the weight of a single stock in client portfolios, reads a new report from Business Insider.
“Baillie Gifford’s shareholding in Tesla has dropped below five per cent at the end of August, therefore it is required to disclose this information to the U.S. Securities and Exchange Commission (SEC),” the company said in a statement. “It submitted this filing earlier today.”
The firm, with £262 billion in assets under management and more than 200 of its clients owning positions in Tesla, now holds $19.7 billion USD of the company’s stock, or 4.25 percent.
Explaining the development, Baillie Gifford partner James Anderson said: “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. 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.”
“We are privileged to have been Tesla’s largest external 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 skepticism and often downright hostility. Without Tesla’s efforts the possibility of averting climate disaster would have been significantly reduced.”
Tesla shares have surged more than 465 percent this year through Tuesday’s close, amid broad investor enthusiasm for electric vehicles.
The company’s 5-for-1 stock split went into effect on Monday, leading to a more than 12 percent jump in shares even though stock splits are purely cosmetic. Amid Tesla’s record run, the company said Tuesday it plans to raise up to $5 billion USD through a new stock offering.
Tesla closed down 5.8% on Wednesday, falling to $447 per share.
