A retail investor amassed a $7 billion stake in Tesla stock after the EV maker nearly wiped him out

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A Californian couple said that their Tesla Model S caught fire and caused a house fire.
  • Leo KoGuan is the third largest individual shareholder of Tesla, after Elon Musk and Larry Ellison, according to a Bloomberg report.
  • The retail investor has amassed more than 6 million shares of the EV company, now worth about $7 billion.
  • Here's how KoGuan amassed such a big stake in Tesla since he began investing in stocks in 2019.

Leo KoGuan, the billionaire owner of IT provider SHI International, would probably agree with Warren Buffett's famous quote: "diversification may preserve wealth, but concentration builds wealth."

The Singapore-based investor has amassed a more than 6 million share stake in Tesla, along with nearly 2 million in-the-money Tesla call options, which combined are now worth upwards of $7 billion, according to a Bloomberg report.

That makes KoGuan the third largest individual shareholder of Tesla, behind only Elon Musk and Larry Ellison, and ahead of long-term shareholder Ron Baron, and in-line with Fidelity's stake. But few would know of KoGuan's stake since it's well below the 5% threshold that requires public disclosure in the US.

KoGuan, who describes himself as a retail investor, told Bloomberg he began trading stocks in 2019 and bought several well known companies like Nio, Nvidia, and Baidu. But his initial investments didn't pan out as time went on, so he sold all of them except for Tesla.

KoGuan said Baron Capital Management founder Ron Baron inspired him to focus solely on investing in Tesla, and that's just what he did. By early 2020, KoGuan had built a 2.3 million share stake in Tesla by pouring all of his money into it and utilizing leverage.

But a wave of margin calls amid the 2020 pandemic sell-off almost wiped out KoGuan's entire Tesla position.

"I lost almost everything," KoGuan told Bloomberg. But he stuck to his strategy and kept buying, specifically by acquiring short-term in-the-money call options, taking profits when the stock moved higher, and then using some of those proceeds to buy actual shares and the rest to buy more in-the-money call options. Rinse and repeat.

The bet paid off, as shares of Tesla did nothing but go up after bottoming at a split-adjusted share price of $70.10 on March 18. The stock is up about 1,500% since that bottom, with Tesla most recently cruising past a $1 trillion valuation in part due to continued earnings strength.

And KoGuan has no plans to ring the register on his Tesla bet, as he seeks to build a $100 billion fortune to help implement a better society plan he calls Civilization 2.0, according to the report.

"I look at it like a squirrel. You collect acorns and you eat some. But most you are trying to keep for the winter and you don't eat until later," KoGuan told Bloomberg.

But if KoGuan's bet on Tesla sours again like it did in early 2020, he will have a fallback plan that most retail investors can't afford: a more than $3 billion stake in New Jersey-based IT provider SHI International, which he acquired out of bankruptcy in 1989.

Read the original article on Business Insider

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