In the aftermath of Donald Trump's election, hedge funds that bet against $Tesla (TSLA.US)$ have reportedly experienced significant losses.
What Happened: Following Trump's victory, hedge funds that were shorting Tesla have seen their fortunes decline by $5.2 billion. These losses took place between election day and the close of the following Friday, according to Bloomberg.
The data, gathered by S3 Partners, highlights the influence of the close ties between President-elect Trump and Tesla CEO Elon Musk on the stock market.
In the four months leading up to the election, many hedge funds had already cut back their short positions on Tesla, aligning with Musk's public endorsement of Trump on Jul. 13. However, those who held onto their positions have suffered significant losses.
Per Lekander, CEO of Clean Energy Transition, revealed that he has "a small short in Tesla heading into the election." Despite this, he confirmed, "We have lost some money."
Since the election on November 5, Tesla's shares have skyrocketed nearly 30%, adding over $200 billion in market value. Consequently, numerous hedge funds have rushed to reverse their short positions on the company.
Why It Matters: The election results and the subsequent surge in Tesla's shares have underscored the influence of political events on market dynamics. The close relationship between Musk and Trump, as well as Musk's public endorsement of Trump, appear to have played a significant role in the market's reaction.
The losses experienced by hedge funds also highlight the risks associated with short selling, particularly in a volatile market environment. This could potentially lead to a reassessment of investment strategies among hedge funds and other market players.
