Important data releases aren't hard to come by on Wall Street. Every week, investors are privy to economic data and quarterly operating results from some of America's most-influential businesses. But Friday, Feb. 14, was a particularly special day for investors -- and it has nothing to do with Valentine's Day.
No later than 45 calendar days following the end to a quarter, institutional investors with at least $100 million in assets under management (AUM) file Form 13F with the Securities and Exchange Commission. A 13F offers a snapshot that allows investors to see which stocks Wall Street's leading money managers purchased and sold in the latest quarter. February 14 marked the deadline for 13Fs to be filed for the December-ended quarter.
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Although Warren Buffett rightly garners a lot of interest, he's far from the only billionaire asset manager that makes waves on Wall Street. Smart investors also pay close attention to billionaire Ole Andreas Halvorsen of Viking Global Investors, who closed out 2024 with $30.9 billion in AUM spread across 86 stocks.
Halvorsen and his team run an active fund, with the average holding length of Viking Global's top-20 positions coming in at less than one year. This makes his buying and selling decisions all the more intriguing for everyday investors.
During the fourth quarter, Halvorsen sent shares of North America's leading electric-vehicle (EV) maker packing, and more than doubled his fund's stake in a high-flying company that may be Wall Street's next stock-split stock.
Ole Andreas Halvorsen sends Tesla to the chopping block
Though Halvorsen completely exited more than one dozen positions during the December-ended quarter, perhaps none stands out more than selling all 436,272 shares of EV maker Tesla(NASDAQ: TSLA), which was a position worth more than $114 million, as of Sept. 30.
A lot has gone right for Tesla, as evidenced by its inclusion in the "Magnificent Seven." It's became the first automaker in more than a half-century to build itself from the ground up to mass production, and recently reported its fifth consecutive year of generally accepted accounting principles (GAAP) profit.
Additionally, CEO Elon Musk is attempting to spread Tesla's wings beyond the traditional (and highly cyclical) auto industry. The company's rapidly growing energy generation and storage segment, coupled with its Supercharger network, may be able to smooth out some of the cyclical ebb-and-flow that can affect auto stocks.
Selling Viking Global Investors' stake in Tesla might represent nothing more than simple profit-taking. Following Donald Trump's November victory, shares of Tesla skyrocketed up to 91% in six weeks. The return of Trump to the White House has been viewed as a positive for Tesla, with Musk working as a special government employee for the Department of Government Efficiency (DOGE).
But there may be other more nefarious reasons why Viking Global's billionaire chief chose to kick Tesla to the curb.
To begin with, Tesla's vehicle margin has plummeted due to growing competition and waning demand for EVs. Since the start of 2023, Tesla slashed the price for its fleet of EVs (Models 3, S, X, and Y) on more than a half-dozen occasions. While this has helped to reduce inventory a bit in recent quarters, it's decimated the company's vehicle margin and weighed heavily on its profits.
There's also the obvious concern that Elon Musk is spending most of his time overseeing DOGE instead of running Tesla. Tesla's otherworldly valuation premium derives, in part, from investors believing in Musk's vision for the future. Distractions like DOGE may cause Tesla to fall short of various growth expectations.
Another potential issue is that Tesla generates a sizable percentage of its net income from unsustainable and non-innovative sources. More than half of the company's 2024 pre-tax profit could be traced back to regulatory automotive credits, interest income earned on its cash, and digital asset value adjustments -- Tesla holds Bitcoin on its balance sheet. The point being that Tesla's operations aren't responsible for the lion's share of its profit.
Lastly, Halvorsen might be concerned with Musk's inability to meet deadlines and hold true to his promises. Many of Musk's promises, such as robotaxis and Level 5 full self-driving (FSD), are already baked into Tesla's valuation. However, Tesla is nowhere close to L5 FSD, and it hasn't put a single robotaxi on public roads. If these unfulfilled promises were backed out of Tesla's market cap, a case can be made that its share price would plunge.
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Viking Global's chief more than doubled his stake in this streaming giant
On the other end of the spectrum, Ole Andreas Halvorsen was mashing the buy button during the fourth quarter to add to Viking Global's position in streaming-services provider Netflix(NASDAQ: NFLX). Halvorsen oversaw the purchase of 297,317 shares of Netflix stock, which increase his fund's stake by a cool 145% from Sept. 30.
Why Netflix? For one, it's the undisputed leader in streaming services. It ended 2024 with 301.63 million global streaming paid memberships and is one of a select few streaming providers that's shown it's recurringly profitable.
To build on this point, streaming net additions have, for the most part, reaccelerated. The 18.91 million paid net additions during the fourth quarter represents the biggest quarterly increase in years, and it firmly puts a short-lived period of paid-member growth stagnation from 2022 in the rearview mirror.
One of the key catalysts behind Netflix's rapidly growing subscriber base is its content library. More specifically, Netflix has produced more original shows than any other streaming platform. Shows like Squid Game, Wednesday, and Stranger Things are helping to keep members loyal to Netflix, as well as luring in new subscribers.
The company's efforts to crack down on password sharing have also been a positive. Requiring users to create accounts has juiced the company's paid membership, as well as increased Netflix's subscription-pricing power. Last month, Netflix announced it would be increasing subscriptions by $1 to $2.50 per month, depending on the tier.
Adding to this long list of catalysts, Netflix is benefiting from its out-of-the-box innovation. The introduction of an ad-supported tier in November 2022 appears to have kick-started a resurgence in new member additions. Since Netflix's ad tier debuted, it's picked up 70 million paying subscribers.
Ole Andreas Halvorsen might also be counting on stock-split euphoria to take shape. Netflix stock ended Feb. 14 at $1,058.60 per share. The last time the company conducted a forward stock split was in 2015, with its shares trading for around $700 at the time. A quadruple-digit share price might make it difficult for Netflix to appeal to everyday investors -- especially those who can't purchase fractional shares with their broker.
Based on an analysis from Bank of America Global Research, companies conducting forward splits have handily outperformed the benchmark S&P 500 in the 12 months following their split announcement, with an average gain of 25.4% compared to 11.9% for the S&P 500 since 1980. Considering how pricey Netflix stock is amid an already expensive stock market, a split announcement could go a long way to powering its shares even higher.
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Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Bank of America, Bitcoin, Netflix, and Tesla. The Motley Fool has a disclosure policy.
