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Investors who have invested in Tesla (NASDAQ: TSLA) shares have been generously rewarded as their value continues to rise steadily, and the company is expected to report its sixth straight profit. Some of the winners were investors in an investment fund from Edinburgh, which began buying Tesla shares in 2013.
Scottish Mortgage Investment Trust's investment in Tesla has generated a whopping $29 billion for investors, including pension funds, foundations and charities, according to figures released to the Guardian. The trust began to actively buy Tesla in 2013 when the stock was selling for about $6 per share.
Nevertheless, the value of Tesla shares gradually began to increase, and, only in 2020 did their value increase by 740%. At the moment, its price is $846 per share at the close of trading on Friday.
The rise in Tesla share prices resulted in Scottish Mortgage being listed on the FTSE Index of the UK's 100 largest listed companies in 2017. Scottish Mortgage became FTSE 100's Most Successful Company in 2020.
Tesla will report its sixth straight quarterly profit on Wednesday. Analysts expect Tesla to record fourth quarter sales of $10.5bn, up from $7.4bn a year earlier.
As Tesla's share price continued to rise, it exceeded the maximum percentage value Scottish Mortgage could hold in any single share. This meant that fund managers were forced to sell some of its shares in order to comply with their rules.
Baillie Gifford, the fund management group that includes the flagship Scottish Mortgage fund, made $14.8 billion in profits from Tesla shares sold. The group also retains $19.5 billion in Tesla shares. If all of these shares were sold now, the total return that investors would receive from Tesla would be $29 billion.
Tesla remains the largest Scottish Mortgage holding with 8.9% of all assets. One of the fund managers, James Anderson, explained why he started investing in Tesla:
"To us, it was, frankly, clear even back half a dozen years that the underlying technologies from batteries, to solar to eventually self-driving were progressing and would continue to do so.
“We thought and simply observed that Tesla was already past the technological and practical challenges to a good degree and that execution and finance were the practical issues. What we needed was time. Not many investors can have that luxury and necessity."
© 2021, Eva Fox. All rights reserved.
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Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.