Ross Gerber is well-known in certain circles as a longtime Tesla Inc. investor, thanks to being a bullish voice on Twitter about the electric-vehicle company.
stock has plummeted in recent months while Chief Executive Elon Musk sells shares and focuses on his newer toy, Twitter Inc., Gerber has changed his tune a bit though. While the president and chief executive of Gerber Kawasaki investment advisers still believes in Tesla’s future, he has also become a bit of an activist investor and hopes that it leads to a seat of power with the company — specifically, a seat on the board of directors.
Gerber has launched a campaign to be added to Tesla’s board via the new Securities and Exchange Commission policies for universal proxy cards. Gerber has skin in the game for Tesla: His clients had, at one point, he said, invested a combined $100 million in the company. The firm’s AdvisorShares Gerber Kawasaki ETF
was down 40% in 2022. Gerber Kawasaki also managed $1.7 billion in assets as of March 31, 2021, according to the firm’s website.
That comes after years of high-flying Tesla share prices. Since Musk took over Twitter in October and engaged in a juggling act running both companies, investors have seen an impact on Tesla, especially its stock price. Tesla shares suffered their worst month, quarter and year on record to wrap up 2022, as Musk sold shares and Tesla cut prices and missed fourth-quarter delivery expectations.
“When he sold the stock at $200, that kind of broke the stock,” Gerber said. “I trade stocks every day, he broke the stock. It burned through a resistance point and everybody saw it.”
Gerber said that sharp downturn gave short sellers more fodder, but he argued that there are still huge opportunities for upside.
“The differential between its performance as a company and the stock is massive, and it creates an opportunity for investors, and one we will take advantage of,” Gerber told MarketWatch. “But it is also extremely painful for the small investors who have put all their money in Tesla stock. We meet with people all the time who have 100% of their funds in Tesla.”
As far as his efforts to join the Tesla board, Gerber said he wants to join so that the board can communicate better with investors and the media. He cited the haphazard way in which Musk sold billions of dollars of his Tesla shares to help fund his $44 billion purchase of Twitter as one big area where the company should have had communications with investors, or organized a stock purchase plan, to help counter the swift decline in its shares.
Gerber said he is currently working on the universal proxy card (UPC) filing, and the notification to the company. Under the SEC’s new rules that went into effect for annual meetings that took place after Aug. 31, 2022, shareholders presenting their own candidates need to “solicit holders of a minimum of 67% of the voting power of shares entitled to vote in the election.” Stephen Diamond, an associate professor of law at Santa Clara University, said the use of Universal Proxy Cards “lets non-management-backed proposals and candidates more easily seek shareholder approval.”
“I think I have already had an impact, considering Tesla BOD is already trending,” Gerber said. “I think I could have everyone forgetting about this by June, if Elon just listens to me for five minutes, I could totally could fix the whole situation. People want to like him.”
Ironically, Gerber will be referred to as a dissident shareholder, if management does not support his effort, while he is probably one of the most prominent Tesla bulls on Twitter. He also is touting his relationships with the media, even though if he became a board member, it is unlikely that board rules would allow him to speak directly with the media. The company, however, does not have a media-relations representative. So possibly if Gerber won a seat on the board, he could advocate for that job to be restored.
Gerber has not acted like a dissident shareholder thus far. Despite his recent actions, he has supported Musk for years while the CEO lied about Tesla’s path to self-driving cards, made the self-serving acquisition of Solar City and continuously shot the company in the foot with his outbursts on social media, especially Twitter.
The Tesla board is notorious for rubber-stamping all of Musk’s edicts, so it seems unlikely that a longtime, uncritical investor like Gerber would have any different impact if he got the votes from shareholders. Hopefully, however, just this effort from a loud and proud Tesla bull will make Musk realize just how far he has strayed from his mission at Tesla.
This article has been updated to clarify that the AdvisorShares Gerber Kawasaki ETF and funds under Gerber Kawasaki‘s management are separate, and it is the ETF that declined 40% last year.