Tesla's largest outside investor was forced to trim its stake after the stock's roaring rally this year

• Tesla's largest outside shareholder, Baillie Gifford, cut its stake by two percentage points, regulatory filings show.
• In a statement, the Scottish firm said it had to trim its stake in order to comply with internal policies.
• Tesla's searing rally this year left it with an outsize presence in Baillie Gifford's portfolio, but the firm remains bullish.
• Shares of Tesla stuttered this week after the company announced plans to sell up to $5 billion in dilutive stock. The stock sank even more on Wednesday following Baillie Gifford's filing.

Not everyone can stick around for the entirety of Tesla's soaring ride.

The company's largest outside investor, Scottish investment firm Baillie Gifford, was forced to trim its stake to 4.25% from above 6.32%, according to a Wednesday regulatory filing.

In a statement, the extremely bullish firm said the paring was in response to Tesla's 438% share price gain this year that's left it with a higher weight in Baillie Gifford's portfolio than internal policies allow.

"We intend to remain significant shareholders for many years ahead," portfolio manager James Anderson told Business Insider through a spokesperson "We remain very optimistic about the future of the company. Tesla no longer faces any difficulty in raising capital at scale from outside sources but should there be serious setbacks in the share price we would welcome the opportunity to once again increase our shareholding."

The firm's cuts put it behind Vanguard in terms of overall holdings, and comes at a pivotal moment for Tesla. The stock's monstrous gains saw a slight stutter this week after the company announced plans to raise up to $5 billion in fresh capital by selling shares, potentially diluting existing holders.

Shares were down as much as 14% in trading Wednesday following Baillie Gifford's filing.

Tesla's likely to use those funds in expanding its China footprint, a significant source of growth for the company in recent quarters, as well as funding its second US automotive factory in Texas, which broke ground in August. CEO Elon Musk is also expected to show off advancements in battery and powertrain technology at the company's annual shareholder meeting later in September.

Analysts are hesitant about how much fuel the presentation can add to the stock's rally. Fewer than one-fifth of analysts polled by Bloomberg currently rate the stock as a buy, as its price has blown past many of their price targets.

"We are privileged to have been Tesla's largest external shareholder over a critical period for the development of the company," Anderson's statement continued. "We are immensely grateful for the extraordinary efforts and achievements of Tesla in driving forward a transportation and energy revolution in the face of persistent skepticism and often downright hostility. Without Tesla's efforts the possibility of averting climate disaster would have been significantly reduced.

In our view the underlying purpose of providing equity capital at scale is to try to assist in mitigating, and hopefully solving, the most serious problems the world faces. For sure, we and our clients, are extremely happy with the progress of the share price but we see this as but a reflection of the ultimate objective."