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Tesla's S&P 500 inclusion is finally here, and it's shaping up to be a truly unprecedented inclusion. I outlined a few of the reasons why Tesla's inclusion is so special in this blog post a few months ago:

Tesla's S&P 500 Inclusion: Predicting TSLA's post-inclusion stock price

The actual announcement has made it clear that the committee is also aware of the unique nature of this inclusion, because I've never heard of an inclusion quite like this one for two reasons.

  1. There are five weeks between the announcement and when the actual inclusion takes place (Dec 21st). This time usually ranges from a few days to about 10 days at most in cases like Facebook's, but I have never seen such a long period between the announcement and the actual inclusion.
  2. The possibility of the inclusion being split into two. I have also not heard of this happening ever before. The main reason as to why this could make sense is because most of the buying index funds do is usually concentrated in the days surrounding the actual inclusion, even though index funds are free to accumulate the shares they need anytime from announcement until a few weeks after the inclusion. By splitting the inclusion into two, perhaps the committee will be able to split this concentrated buying into two as well.
Some interesting context to this S&P inclusion is the information currently coming out of the 13Fs. We already knew Baillie Gifford sold off a fair amount of its TSLA stake during Q3, but it now turns out that Baillie wasn't the only institutional investor who did so. Although Baillie was the biggest seller far and away, many institutional investors significantly reduced their positions during Q3.

So where did these shares go? That's what's so curious about the 13Fs. It gives no clear answer to where the shares ended up. I was fully expecting to see a (new) institutional investor that amassed a massive stake in TSLA during Q3, and effectively scooped up Baillie's (and others') shares. However, unless this investor missed the official deadline for filing its 13F, that is not the case.

My spreadsheet, in which I keep track of TSLA's biggest holders, went from 23% of shares being unaccounted for in the hands of smaller institutionals, retails, etc. to 33% being unaccounted for:


EDIT: I made a small error here. Vanguard has not reported its holdings as of the end of Q3 yet, so after accounting for this, the difference is shaping up to be around 6.5%, or ~60M shares.

You can find some more details on how this spreadsheet works in this blog:


You can also find the new, updated Q3 spreadsheet here:



So where did all these shares go? Some might've wound up in the hands of Citadel for delta hedging purposes, and it's possible that smaller institutional investors hold more shares than at the end of Q2, but these won't add up to 100M shares, and I think there was likely somebody big buying leading up to the split.

In my opinion. the three most likely theories are:
  1. There is a new big institutional holder of TSLA shares, but he somehow hasn't filed 13F yet.
  2. There were a large number of unaccounted for, naked shorts, that covered their positions leading up to the stock split.
  3. A large number of index funds speculated on the S&P 500 inclusion in Q3, before any official announcement happened.
Although I've been skeptical of the naked shorts theory, because all other evidence is in my opinion quite weak, I think this gives somewhat more credibility to it, because these 100M shares that went missing must've ended up somewhere.

Regarding theory #3, this could explain the missing shares because index funds don't file 13Fs. Index funds file NPORT-Ps, which have different deadlines, so if this is where the shares went, we will not find out until later this year.

Although in my S&P 500 blog I showed a prospectus of an index fund stating it could not buy ahead of an official announcement, I have since seen a prospectus of a different S&P 500 fund that said it could theoretically buy ahead of an inclusion announcement, thereby speculating on future inclusions. So theory #3 is possible.

You might think that, if theory #3 is true, this would mean that the S&P inclusion will be lackluster for the stock, but keep in mind that a minimum of 130M+ shares will have to be bought by index funds at any price, and some of the 100M shares that went missing in Q3 will have ended up in the hands of market makers for delta hedging purposes.

Furthermore, even if index funds have already accumulated half of the shares they will need, it led to a rally from ~$1,350 to $2,700, a 100% increase. A similar rally today would boost the stock to $800+.

All in all, the next 5-6 weeks should be very interesting to watch for people who own TSLA. I think $600 is quite likely, especially if the company continues to execute on Q4 deliveries, MiC MY, Berlin, and Austin. But time will tell.

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