Has Natixis racked up $17bn gain on huge Tesla bet? (No)

Natixis Investment Managers has amassed a $17bn gain on Tesla shares in 2023 after placing a truly spectacular wager that the slide in Elon Musk’s electric-car maker last year was overdone. Except it hasn’t, but you wouldn’t know that from the regulatory filings.

FTAV has been checking Tesla’s shareholder registry on Refinitiv almost daily lately, because we’re cool, totally normal people with rewarding lives and hobbies. On Tuesday, an unusual update appeared:

Yes, that’s Ostrum, a little-known €377bn affiliate of Natixis Investment Management that mostly invests in bonds on behalf of European insurers, buying a humongous 171mn shares in Tesla in the last three months of 2022 and leapfrogging BlackRock to become the company’s third-biggest shareholder.

Beyond the unlikely identity of the buyer, the timing was also eye-catching. At current prices Ostrum’s 190.3mn shares would be worth almost $41bn now, thanks to Tesla’s near-74 per cent rally so far this year. In simplistic terms that’s a $17bn profit in just six weeks (Citadel’s record-breaking trading haul last year was about $28bn).

But beyond the immediate profits, it would raise some pretty awkward questions about the risk management of an institutional investment manager that had YOLO’d $23bn of a very volatile stock.

Just to put this in context, the 171mn shares bought are almost twice as big as the stake that Musk sold last year to raise money to buy Twitter. The only other active asset manager to come close to the size of Natixis’s 6 per cent disclosed stake in Tesla is Capital Group, but it only holds 2.85 per cent, and at $2.2tn its assets under management are about twice that of Natixis.

Of course, this was so wild that we did some more digging.

When FTAV’s questions to the PRs were initially met with silence and confusion, we checked Bloomberg’s more granular data to see if it was another one of Natixis’s many semi-independent “affiliates”. Ostrum used to be called Natixis Asset Management, which often meant it got confused with the parent group, Natixis Investment Managers. There are also a ton of other well-known Natixis-owned affiliates, like Loomis Sayles, Harris Associates and AlphaSimplex.

Bloomberg’s data is directionally similar but lists the purchaser of the 171mn shares as Natixis SA, with Ostrum nowhere to be seen.

That, coupled with some other small differences with Refinitiv data, sent us to the SEC’s Edgar filing system to find the underlying 13F forms that the two data providers scrape, hoping that would provide some clarity.

Quarterly 13F filings are mandatory for all investment groups in the US that manage at least $100mn. No later than 45 days after the end of the calendar quarter they must submit a list of all their equity investments. People check hedge fund 13Fs in particular to see what the “smart money” is doing (Goldman Sachs has even turned it into an ETF)

Lo and behold, Natixis Investment Managers did indeed file a 13F that listed 189.7mn shares in Tesla worth almost $23bn (plus some puts and calls), up from 18.8mn shares in the previous quarter’s filing.

You can read the full 13F here.

Meanwhile, the bane of every journalist’s existence the PRs were still being frustratingly obtuse. Some of this might be because of the chaos of so many affiliates, where no one had a good handle of what was going on elsewhere in the sprawling group. Eventually, they checked with both NIM centrally and Natixis CIB, the parent’s investment bank, in case it somehow had amassed the mammoth haul of $TESLA. But no, finally a more fulsome (ish) on the record statements landed:

Funds managed by Natixis IM affiliates on behalf of investors have exposure to Tesla, however we do not recognize any outsized position and none of those affiliates are, whether independently or on aggregate, major shareholders of Tesla.

And:

The figure mentioned in external reports does not correspond at all to Natixis CIB’s actual position. Our stake in Tesla stock, used for replicating indices, is minimal amount not at all in line with the numbers mentioned and has not changed significantly since the last quarter.

Of course, this begged the question: why did 13F say what it did? At this stage we started to become confident that the obtuseness was actually caused by someone, somewhere screwing up the filing, rather an attempt to kill a story about big trading profits but shoddy risk management. But Natixis just didn’t want to say it.

Finally, even more prodding revealed that yes, that is indeed what had happened. In fact, Natixis only currently holds 1.64mn shares, or about 0.05 per cent of Tesla. Whoops! By yesterday evening, a new statement finally landed:

Our holding in Tesla shares was overvalued in the regulatory filling. This inaccuracy stems from the implementation of a new internal tool that we are currently adjusting. We are preparing a new report to correct this figure, that will be issued by the end of the business day.

At pixel time the restated form hasn’t landed in Edgar yet. In fairness to Natixis, shonky 13Fs are hardly unheard of, so perhaps this lengthy exposition is probably overkill.

But it’s the first time we’ve seen one off by such a wild amount, in such a high-profile company. That fleeting $40bn mirage was fun while it lasted.