Baillie Gifford, early Tesla investor, cuts weight in major holdings in Q2…adds SpaceX as new position

In Q2, Baillie Gifford's holdings list showed a general reduction in weight across most positions, except for a few. This is interpreted as the effect of diluting the other holdings' weights in the portfolio due to the new SpaceX addition.

A fund manager's money belongs to its clients, so when clients request fund redemptions or institutions withdraw entrusted assets, the manager must sell stocks to return that cash. Baillie Gifford is estimated to have made net sales of over $10 billion in Q2, which may reflect a principle of proportionally selling all positions as the fund shrinks.

Baillie Gifford sold nearly half of its Rocket Lab stake and took profits of roughly 20% on Meta and Netflix, which were generating large gains. Separately, it also trimmed some loss-making positions such as Coupang.

In the software sector, the reduction in Atlassian, Datadog, Cloudflare and others stands out. This is presumed to reflect concerns over AI-related technological advances and market changes, along with the firm's pessimistic view of the software industry as a whole.

Earlier this year, internal managers described SpaceX as its "most enthusiastically held position," and the Scottish Mortgage fund praised it for holding a dual monopoly in launch and global connectivity. However, it also indicated that position sizing within the fund needs to be managed.

In a May 12 briefing note, one month before SpaceX's listing, Baillie Gifford said it did not yet know what restrictions would apply to the lock-up, how long it would last, or whether it would be the same as for other pre-IPO investors. This suggests the possibility of future weight adjustments in SpaceX while also signaling a desire to keep the investment.

When Baillie Gifford began reducing its Tesla stake in 2020, it stated that the sales were not due to a negative view of Tesla but because the position exceeded its portfolio weight limit. In practice, however, it continued selling gradually over time, and it has now fully exited the position. This past case suggests that there may be a gap between the firm's external commentary and its actual selling behavior.