The Great Tesla Rotation: From Institutions To Retail Bag-Holders

Tyler Durden's picture

Two months ago we were the first to highlight the 'real' great rotation in US equity markets as so-called "professionals" were selling in size as "retail" was the big buyer. Since then, market breadth has been weaker and the new highs are made on the back of fewer and fewer supposed "cult" stocks (as Cramer so aptly put it before Lumber Liquidators started to crumble). Perhaps the most infamous of the "cult" stocks is TSLA. At twice the market cap of Fiat, needing to sell 537,815 cars to meet expectations, and the gap in GAAP, Tesla closed at all-time highs on Friday. So who is buying?

 


As BofAML notes,

Institutional ownership of Tesla stock has faded throughout 2013, from approximately 84% of shares held in January to about 66% today.

 

As a result, it now appears that retail investors are playing an increasing role in driving the stock price higher and could be at risk when a correction, which we believe is long overdue, ultimately occurs.

 

Wondering what the catalyst for any pull back could be?

Here's a possibility:

...the $660 million convertible bonds issued in May become freely convertible (at $124) into common shares on October 1st 2013...

with a 67% profit on the notes since issuance, we suspect more than a few will choose early exit and take some profits.