2017 Investor Roundtable:General Discussion

[ItsNotAboutTheMoney]

Ford is not going to be making $6b profit a year for the next 6 years. Auto sales are trending down now, read the news. One more repeat of 08 and GM and F are done. No more bailouts, lessons learned.

RT

Well, Ford didn't get a bailout, although they did get government loans for the efficiency program.

GM especially is in a much stronger position now than they were. 2008 not only had a credit crunch but followed a string of years of large losses. GM has shifted its lending to less subprime, has cash, shut down the excessive brands, has now finally ditched the Opel albatross and it also has a much better product portfolio in case of a shift in the market.

 

[neroden]

Ah, so, the Sammons deal is a *refinancing* of *already financed* panels. And look at the layers: the SPE owns part of the financing funds, which presumably eventually own the panels...

Under the new accounting rules (not yet adopted) it would be clear whether SolarCity had lowered the interest rate, paid down some of the debt, levered up to a higher level of debt, or *what*. Unfortunately, under the existing accounting rules.... I certainly can't tell.

By default one would assume that it's a neutral transaction.

 

[brian45011]

Market cap is a perfectly respectable measure of value. So is enterprise value. But if Tesla were as highly leveraged as Ford and GM, you know all the sensational headlines would be about how deep in debt Tesla is.

I like that Tesla is not so highly levered. It is positioned for growth, while GM and Ford are positioned for debt repayment.

A large component of GM's and F's debt is in their leasing/financing subsidiaries. They earn an arbitrage profit between the rates they borrow from financial institutions and the money factors/rates charged to the car lessees/buyers.

It's similar to Tesla Warehouse Line.

 

[Runarbt]

if you had $52 billion... would you buy Tesla with all of your money or would you buy Ford and have $6b left over?... then when would you expect to get gains on your investment?... with Ford at $6b/year of profits... you'd get that back in ~6 years... and start making profit from that point on at a rate of $6b or more each year....

when will Tesla ever pay you back your $52 billion?... when?

this market cap has nothing to do with value.

Hrm .. difficult question. A stagnated ice company with limited growth possibilities or a company which may soon (10-20 years) be one the biggest within auto, solar, utility, taxi.. which to choose which to choose..?

 

[Paracelsus]

Regardless of not agreeing with the commentary that comes with the content, I do feel it is important to give credit where credit is due. And while the commentary with myusername's posts can be pretty bearish and a little harsh, the charts that have been presented have proven pretty accurate, both looking forward and from a historical perspective - and I would encourage folks to look past the message when they don't agree with it and give some thought to the content of the charts presented.

Case in point - back on November 18th a wonderful multi-year chart started forming when we hit 185. I posted about this in post 47645 when I thought we would double bottom on it at 187.5 to provide a potential path to be off to the races. If I recall correctly, myusername corrected me and actually nailed the ultimate launch point for this run at 192.5 or so. The subsequent beginning of this run had a few of us that use charts a little nervous at key resistant point, and once again myusername's charts plotted the path through each point. During those times, there was a lot more agree's then disagree's for those posts. And they were for the content, not the commentary.

Once again myusername is posting charts that are favorable for a positive TSLA trajectory - the current chart speaks of 5-point per day moves........but the commentary with those charts is bearish. When we were comparing multi-year charts back in November, I had hoped this formation was what we finally needed to break above the ATH (and with the help of Curt and PapaFox's commentary on this board I got in 11 points lower when I backed up the truck again to load up more shares - thanks again!). And even though myusername was mocking any commentary on a potential path to 300 at that very same time, the charts and content he provided could have paved the way. So while I can't defend (or even sometimes understand) the bearish commentary posted with the bullish charts, I am a person who values the use of historical charts to look for future events and I have found myusername's charts helpful.

 

[geneclean55]

Regardless of not agreeing with the commentary that comes with the content, I do feel it is important to give credit where credit is due. And while the commentary with myusername's posts can be pretty bearish and a little harsh, the charts that have been presented have proven pretty accurate, both looking forward and from a historical perspective - and I would encourage folks to look past the message when they don't agree with it and give some thought to the content of the charts presented.

Case in point - back on November 18th a wonderful multi-year chart started forming when we hit 185. I posted about this in post 47645 when I thought we would double bottom on it at 187.5 to provide a potential path to be off to the races. If I recall correctly, myusername corrected me and actually nailed the ultimate launch point for this run at 192.5 or so. The subsequent beginning of this run had a few of us that use charts a little nervous at key resistant point, and once again myusername's charts plotted the path through each point. During those times, there was a lot more agree's then disagree's for those posts. And they were for the content, not the commentary.

Once again myusername is posting charts that are favorable for a positive TSLA trajectory - the current chart speaks of 5-point per day moves........but the commentary with those charts is bearish. When we were comparing multi-year charts back in November, I had hoped this formation was what we finally needed to break above the ATH (and with the help of Curt and PapaFox's commentary on this board I got in 11 points lower when I backed up the truck again to load up more shares - thanks again!). And even though myusername was mocking any commentary on a potential path to 300 at that very same time, the charts and content he provided could have paved the way. So while I can't defend (or even sometimes understand) the bearish commentary posted with the bullish charts, I am a person who values the use of historical charts to look for future events and I have found myusername's charts helpful.

Exactly
Those charts are very useful to people here, but not in ways that myusername assumes. To me, it indicates that Tencent is still buying. Tencent is not a US bank inflating the SP in advance of book-runner fees for some cap-raise.

 

[winfield100]

For someone who, with very, very good evidence, makes use of Seeking Alpha as a marketing tool, one can likewise make a very, very good argument that such activity is actionably deceptive.

A VERY BAD idea.

on 2 occasions on SA, the word "slander" may have been tossed my way. i reported it to the mods as very very bad form and it got deleted, and i deleted things so not evidence. eh.

 

[EnzoXYZ]

MS note attached. Sorry just page one from my Twitter feed.

 

[luvb2b]

i luv the quality of posters and information on this forum. thank you for finding this.
i had dug around in the scty 10k but couldn't find this disclosure.
as i read it then, there was no gain booked with this sale, or if it was apparently it's not material enough to mention? if this transaction is known to not be a large profit contributor the question of where solarcity made $180m in q4 16 is still live.

You may be misunderstanding/misinterpreting the terminology. It's clear SCTY distinguishes between securitization and tax equity transaction: " At the end of 2016, we had over 54 financing funds with 22 different investors, comprised mostly of large financial institutions and large blue chip corporations, and had engaged in a number of long-term strategic transactions, including securitization and cash equity transactions."

The Sammons (SRE) is discussed here: ($170 million plus $70.9 million equals the $241 million provided in post #10426.

"On December 16, 2016, the Company pooled and transferred its interests in certain financing funds into a SPE and issued $170.0 million in aggregate principal of debt of the SPE (see Note 12) to a syndicate of banks and also issued $70.9 million of equity interests in the SPE to an investor. Of the net proceeds from this transaction, $131.0 million was used to partially prepay the revolving aggregation credit facility due in December 2018 and the remaining amount was retained by the Company to fund its operations...

Cash Equity Debt III
In connection with the cash equity financing on December 16, 2016 discussed in Note 11, the Company issued $170.0 million in aggregate principal of debt that bears interest at a fixed rate of 5.81% per annum. This debt is secured by, among other things, the Company’s interests in certain financing funds and is non-recourse to the Company’s other assets."

The excerpt from the CC likely refers to:

"24. Subsequent Events
New Debt Facility
On January 27, 2017, a subsidiary of the Company issued $145.0 million in aggregate principal of solar loan-backed notes with a final maturity date of September 2049. The solar loan-backed notes are secured by certain customer loans under the MyPower program."

 

[brian45011]

it helps a lot to know there's not a large one time gain on sale stuffed in there on top of the one time silevo reserve release as and others had surmised.

"The debts are secured by, among other things, the SPEs’ interests in the financing funds. The Company has determined that the SPEs are VIEs and that the Company is the primary beneficiary of the SPEs by reference to the power and benefits criterion under ASC 810, Consolidation. Accordingly, the Company consolidates the SPEs in its consolidated financial statements and accounts for the investors’ equity interests in the SPEs as noncontrolling interests (see Note 13, VIE Arrangements). The Company did not recognize a gain or loss on the transfers of its interests in the financing funds and continues to consolidate the financing funds. The cash distributed from the financing funds to the SPEs are used to service the principal payments, the interest payments, the SPEs’ expenses and the distributions to the investors. Any remaining cash would be distributed to wholly owned subsidiaries of the Company. The SPEs’ assets and cash flows are not available to the other creditors of the Company, and the lenders and the investors have no recourse to the Company’s other assets."

 

[Drax7]

My family is lined up with 17% in cash, and 20% in ultra-conservative insurance-company-guaranteed-return stuff (backed by real estate) -- enough to live on if there is some sort of terrible 1929 market crash. We're also completely debt-free. As you can tell, I'm much, *much* more conservative than 007!

So we *have* some certainty. Once you have a base of certainty, then you can be more speculative with the rest of your money.

This makes me very comfortable having 20% invested for growth for the future in TSLA.

To be clear about where I'm coming from with TSLA, my average purchase price is below $160, thanks to SCTY stock being available at an absolute steal of a discount prior to the SolarCity merger. I do not know whether the stock is overvalued or not right now, since it's now within my valuation range; but I also don't care. There is a chance of huge future growth and a chance of the price sitting still for four years. Either case is far better than paying the capital gains taxes today! There is no real chance of it dropping back below $160, barring an asteroid hitting the Gigafactory or Musk dying in a launch pad explosion or something. With a lot of supposedly "safe" stocks, there is a very real chance that they will drop a lot.

007 is a doctor with a guaranteed income of at least $500,000 per year.
From his vantage point being aggressive with Tesla is actually not that risky
To his overall financial situation.

 

[Buddyroe]

Well, Ford didn't get a bailout, although they did get government loans for the efficiency program.

GM especially is in a much stronger position now than they were. 2008 not only had a credit crunch but followed a string of years of large losses. GM has shifted its lending to less subprime, has cash, shut down the excessive brands, has now finally ditched the Opel albatross and it also has a much better product portfolio in case of a shift in the market.

While it is technically true that Ford didn't get a gov't "bailout", the point is still the same because Ford was actually in much worse shape than GM. Ford had lost $23 Billion dollars in the 3 years leading up to '08. Just before, and I do mean, JUST BEFORE the banks crashed, Ford mortgaged EVERYTHING they owned - including the Ford oval and their headquarters - neither of which had EVER been leveraged before. Fortunately for Ford, they were on the verge of bankruptcy before the banks crashed, and there was money to borrow. GM on the other hand was in a little better shape and had no reason to borrow tons of money. When the economy crashed, and GM needed to borrow money, there was none to borrow, hence the bailout.

But, let's be honest here. Ford was in worse shape than GM and only a weird lucky break saved them from getting a bailout from the tax payer - they had already received their bailout from the banks.

 

[jesselivenomore]

The Case for a Tesla-GM Merger

Just threw up a little in my mouth.

 

[Jonathan Hewitt]

The Case for a Tesla-GM Merger

Just threw up a little in my mouth.

Well, he did admit he was a business school dropout...

 

[brian45011]

if this transaction is known to not be a large profit contributor the question of where solarcity made $180m in q4 16 is still live.

I think most, if not all, of it comes from the quarterly recalculation of now much of the Net Profit (Loss) is attributable to Other Interests. SCTY explains the calculation as:

"Noncontrolling interests and redeemable noncontrolling interests represent third-party interests in the net assets under certain funding arrangements, or funds, that the Company has entered into to finance the cost of solar energy systems under operating leases. The Company has determined that the contractual provisions of the funds represent substantive profit sharing arrangements. The Company has further determined that the appropriate methodology for calculating the noncontrolling interest and redeemable noncontrolling interest balances that reflects the substantive profit sharing arrangements is a balance sheet approach using the hypothetical liquidation at book value, or HLBV, method. The Company, therefore, determines the amount of the noncontrolling interests and redeemable noncontrolling interests in the net assets of the funds at each balance sheet date using the HLBV method, which is presented on the consolidated balance sheets as noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries. Under the HLBV method, the amounts reported as noncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheets represent the amounts the third-parties would hypothetically receive at each balance sheet date under the liquidation provisions of the funds, assuming the net assets of the funds were liquidated at the recorded amounts determined in accordance with GAAP and distributed to the third-parties. The third-parties’ interests in the results of operations of the funds are determined as the difference in the noncontrolling interest and redeemable noncontrolling interest balances in the consolidated balance sheets between the start and end of each reporting period, after taking into account any capital transactions between the funds and the third-parties. However, the redeemable noncontrolling interest balance is at least equal to the redemption amount. The redeemable noncontrolling interest balance is presented as temporary equity in the mezzanine section of the consolidated balance sheets since these third-parties have the right to redeem their interests in the funds for cash or other assets.

 

[kenliles]

Well, he did admit he was a business school dropout...

Trump U Valedictorian

 

[dalalsid]

this one's for yesterday... oh look... right on the line... the same line... the random meaningless line that magically occurs naturally.

View attachment 221315

equally valid magic line. I can do at least one more and maybe even more with different time frames.

 

[geneclean55]

Levies on car imports to China reduced this week?

 

[AlMc]

Bannon off National Security Council

 

[luvb2b]

mathematically yes - you take the aggregate solarcity net income and then take out the part that goes to the noncontrolling interests (spe's). what's left is the net to solarcity shareholders.

those large losses you see for the noncontrolling interests are i think appropriate. i'm waiting to see what my consultant's report contains to be sure.

I think most, if not all, of it comes from the quarterly recalculation of now much of the Net Profit (Loss) is attributable to Other Interests. SCTY explains the calculation as:

"Noncontrolling interests and redeemable noncontrolling interests represent third-party interests in the net assets under certain funding arrangements, or funds, that the Company has entered into to finance the cost of solar energy systems under operating leases. The Company has determined that the contractual provisions of the funds represent substantive profit sharing arrangements. The Company has further determined that the appropriate methodology for calculating the noncontrolling interest and redeemable noncontrolling interest balances that reflects the substantive profit sharing arrangements is a balance sheet approach using the hypothetical liquidation at book value, or HLBV, method. The Company, therefore, determines the amount of the noncontrolling interests and redeemable noncontrolling interests in the net assets of the funds at each balance sheet date using the HLBV method, which is presented on the consolidated balance sheets as noncontrolling interests in subsidiaries and redeemable noncontrolling interests in subsidiaries. Under the HLBV method, the amounts reported as noncontrolling interests and redeemable noncontrolling interests in the consolidated balance sheets represent the amounts the third-parties would hypothetically receive at each balance sheet date under the liquidation provisions of the funds, assuming the net assets of the funds were liquidated at the recorded amounts determined in accordance with GAAP and distributed to the third-parties. The third-parties’ interests in the results of operations of the funds are determined as the difference in the noncontrolling interest and redeemable noncontrolling interest balances in the consolidated balance sheets between the start and end of each reporting period, after taking into account any capital transactions between the funds and the third-parties. However, the redeemable noncontrolling interest balance is at least equal to the redemption amount. The redeemable noncontrolling interest balance is presented as temporary equity in the mezzanine section of the consolidated balance sheets since these third-parties have the right to redeem their interests in the funds for cash or other assets.