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Allianz's Price buys back into Tesla

Allianz's Price buys back into Tesla

Walter Price, who runs the £487m Allianz Technology trust, has revealed the reasons why he has started to buy Tesla shares again, despite the concerns he has about the stock.

Mr Price said there was much debate between himself and colleagues on the trust about the merits of investing in Tesla.

He said: "For many people, concerns about the governance of the company mean we shouldn’t invest.

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"But, while I acknowledge those concerns, I think the opportunity from electric vehicles is huge, particularly as Tesla are now aiming for the mass market with their pricing, no one else is doing that."

He said while conventional car companies were now making electric vehicles, "they are not interested in selling a lot of the cars, so they don’t sell them at a mass market price, as Tesla is now doing, and that gives them an advantage".

Tesla is not among the top ten holdings in his fund.

David Jane, who runs a range of four multi-asset funds at Miton, is sceptical of the investment case for Tesla, he said Chinese electric car producers were ahead of Tesla in terms of technology, and had a more sympathetic government and regulatory environment, and so could potentially achieve more.

He added total car sales were not growing very much around the world, so while Tesla can win a share of the market, it is not a growing market, so there is a limit to the upside that can be achieved from the share price.

He said he was concerned at the valuation at which the company currently trades.

Tesla's share price has fallen from $376 (£288) to $276 (£211) since December as investors have grown concerned about the public declarations of the chief executive about taking the company private and subsequent comments about hitting profitability, which were later reversed.

Elon Musk had faced charges of impropriety brought by the US Securities and Exchange Commission last year following tweets he sent to his 22.8m followers in August, stating that he was going to take Tesla private at $420 (£321) per share.

He also claimed funding had been secured and a shareholder vote was the only potential stumbling block.

The US market regulator reached a settlement with Tesla and Mr Musk in October.

david.thorpe@ft.com