Seligman Tech Spectrum Fund is maintaining a big short bet on Tesla.
The technology hedge fund headed by Paul Wick told investors in the second-quarter letter that the electric-car maker continues to be its largest short position, representing 4 percent of capital.
“While it’s one of the worst-performing large-cap stocks this year, we are frankly surprised that it’s held up as well as it has,” Wick said. It is down 22 percent for the year.
Seligman has been short Tesla for several years. During this period, the stock has been on a roller-coaster ride, surging as high as $488 in mid-December before plummeting more than 50 percent, to about $222, earlier this year. It has since rallied, and closed Friday at $313.51.
All along, Wick has stuck to his skeptical conviction. In the letter, he reminded investors that Tesla’s first-quarter car sales were down 13 percent and are projected to drop 18 to 20 percent in the second quarter. “Profit margins are under pressure, the recent Robotaxi trial in Austin was a flop, and more and more executives are quitting the company,” he noted. “Meanwhile, CEO Elon Musk has burned bridges with President Trump, which could lead to additional regulatory pressure from the SEC, FTC, and NHTSA, all of which were kept at bay in the earlier days of Trump’s second term.”
Now Trump has initiated policies that figure to hurt Tesla. He invalidated the California climate requirements on auto companies, which Wick asserted “should crimp Tesla’s highly profitable zero-emission vehicle regulatory credits.” And under Trump’s budget bill, electric-vehicle buyers will lose the federal tax credit of up to $7,500 beginning December 31, 2025.
“Our conviction that Tesla has significant downside has never been higher,” Wick proclaimed.
Wick runs the Seligman Tech Spectrum hedge fund as well as tech mutual funds. The hedge fund was up more than 6 percent in June and has risen 0.32 percent through July 9, according to a Seligman document seen by Institutional Investor. Wick and Seligman declined to comment.
Seligman’s quarterly letters are always interesting. Not only does Seligman offer a detailed discussion about its long positions, but it is perhaps the only hedge fund that identifies the names of the stocks it is shorting and explains why.
In the letter, Wick said that his short strategy can be broken into three buckets he calls “the worst of the worst”: quantum computing, nuclear energy, and space and defense. “All the companies in these buckets are richly valued, and most of them would politely be described as specious,” he elaborated. “All of them are highly shorted, as hedge funds have correctly identified them as overvalued detritus.”
Wick noted that the fund is short four stocks in quantum computing, all of which had “miserably bad first-quarter results, with significant ongoing losses and minimal revenues.” They are IonQ, D-Wave Quantum, Rigetti Computing, and Quantum Computing. Wick believes all of the stocks will fall by 90 to 100 percent.
When it comes to nuclear, Wick acknowledged there is a well-known electricity shortage propelled by new factories and data centers and a surge in electronic cars. He said this is why Seligman is bullish on Bloom Energy.
“Leading cloud service providers like Amazon, Microsoft, and Google have signed contracts to power new data centers with utilities that have excess nuclear power plant capacity; there are also well-publicized efforts to bring back online older, discontinued nuclear plants like Three Mile Island,” Wick said. “And President Trump has promised to ease regulatory burdens of permitting new nuclear plants.”
Wick said the leading nuclear players are private start-ups like TerraPower and Kairos Power and established companies like GE Vernova and Westinghouse Nuclear. “These are the companies that will likely benefit in the coming decade, when new nuclear plants finally start to get built,” Wick added. “Probably a five- to 15-year process.”
Seligman, however, is short NuScale Power and Oklo, the two companies it says retail investors have embraced as “pure plays” — simply because they are the only public companies. Wick said NuScale has been around for many years and has no revenues, no customers, and a design that’s not economical. He also pointed out it has not received full certification from the Nuclear Regulatory Commission.
Oklo, Wick insisted, has even less going for it than NuScale. “They don’t have a design finalized, let alone submitted to the NRC,” he said. “They also have no revenues and no customers, and their reactor will depend on a type of fuel called HALEU [high-assay low-enriched uranium] that’s uneconomical.”
Last, there are the space companies — satellites and rockets. “Retail speculators like to dream big — and what’s bigger than space?” Wick asked.
Seligman is short Rocket Lab, which it calls “a real company” with annual revenues of $475 million. It has a small rocket that can take payloads under 1,000 pounds into space. “The company, however, is extremely unprofitable, with ongoing losses of almost $200 million per year,” Wick explained. Its market value of $19 billion is nearly 40 times revenues, “even though they can’t economically compete against Elon Musk’s SpaceX.”
Seligman is also short AST SpaceMobile, previously a successful short. “AST is a satellite company with no satellites in space but [with] a bold plan to launch a constellation of 60 to 80 satellites to provide terrestrial cellphone coverage in remote areas lacking cellular tower coverage — places like the Himalayas, the Sahara Desert, national parks, and poor rural areas around the world,” Wick explained. “AST’s satellite is too heavy and bulky to be profitably deployed, however, and the company has embarked on redesigning its satellite to enable four of them to fit in a SpaceX rocket."
