Link: http://www.bloomberg.com/news/2013-...buying-276-million-hand-musk-146-advance.html
May 15, 2013 04:00 AM GMT
Bears blindsided by Tesla Motors Inc. (TSLA) have been forced to buy $276 million worth of the automaker’s shares, pushing the company toward the biggest rally in the Russell 1000 Index (RIY) this year.
Tesla’s short interest, a measure of shares borrowed and sold on speculation they will fall, shrunk by 17 percent in the five days through May 13, after earnings that beat analyst forecastsand Consumer Reports gave the Model S sedan a top rating, data compiled by London-based Markit show. More than $3 billion in market value has been created as the stock jumped 50 percent to $83.24 since May 7.
The gains illustrate what’s possible when negative sentiment builds in a company and management is able to avoid disappointment. Short interest in Tesla was 40 percent of available shares as recently as April 19, more than 11 times the average of companies in the Russell 1000. While bears say the news on Elon Musk’s company will one day turn sour, for those who bet against it, last week was a shock.
“I’m watching this with amazement,” Mark Travis, chief executive officer of Jacksonville Beach, Florida-based Intrepid Capital Management Inc., which manages $1.4 billion and covered its Tesla short around $40, said in a phone interview. “I’ve had a very hard time being short here in the last six to nine months. There were a few things that worked but a lot that haven’t.”
Shanna Hendriks, a spokeswoman for Tesla, said the company isn’t commenting on trading in the stock.
About 19.7 million shares were sold short in Tesla as of May 13, or 17 percent of the company’s outstanding stock, according to Markit data. That’s down 4 million from May 7, the day before the automaker reported its first profit. Buying that many shares at the market’s average of $69.05 over the period would cost a total of $276 million.
“That number is a fair approximation of the amount of short covering we’ve seen recently,” David Riehl, a New York-based research analyst with Markit, wrote in an e-mail. “Tesla has been a crowded short since its first day of trading. Like many recent IPOs, the supply of shares made available for borrow has been relatively scarce. This has kept the cost to borrow extremely high.”
May 15, 2013 04:00 AM GMT
Bears blindsided by Tesla Motors Inc. (TSLA) have been forced to buy $276 million worth of the automaker’s shares, pushing the company toward the biggest rally in the Russell 1000 Index (RIY) this year.
Tesla’s short interest, a measure of shares borrowed and sold on speculation they will fall, shrunk by 17 percent in the five days through May 13, after earnings that beat analyst forecastsand Consumer Reports gave the Model S sedan a top rating, data compiled by London-based Markit show. More than $3 billion in market value has been created as the stock jumped 50 percent to $83.24 since May 7.
The gains illustrate what’s possible when negative sentiment builds in a company and management is able to avoid disappointment. Short interest in Tesla was 40 percent of available shares as recently as April 19, more than 11 times the average of companies in the Russell 1000. While bears say the news on Elon Musk’s company will one day turn sour, for those who bet against it, last week was a shock.
“I’m watching this with amazement,” Mark Travis, chief executive officer of Jacksonville Beach, Florida-based Intrepid Capital Management Inc., which manages $1.4 billion and covered its Tesla short around $40, said in a phone interview. “I’ve had a very hard time being short here in the last six to nine months. There were a few things that worked but a lot that haven’t.”
Stock Slips
The stock retreated from its record high yesterday, declining 5.2 percent for the first drop in five days. The Palo Alto, California-based automaker has rallied 177 percent over the last 12 months, pushing its price to about 73 times analysts’ forecasts for its 2014 profit, compared with a multiple of 13.8 for the Russell 1000, according to data compiled by Bloomberg. The shares trade at more than 550 times projections for earnings this year, the data show.Shanna Hendriks, a spokeswoman for Tesla, said the company isn’t commenting on trading in the stock.
About 19.7 million shares were sold short in Tesla as of May 13, or 17 percent of the company’s outstanding stock, according to Markit data. That’s down 4 million from May 7, the day before the automaker reported its first profit. Buying that many shares at the market’s average of $69.05 over the period would cost a total of $276 million.
“That number is a fair approximation of the amount of short covering we’ve seen recently,” David Riehl, a New York-based research analyst with Markit, wrote in an e-mail. “Tesla has been a crowded short since its first day of trading. Like many recent IPOs, the supply of shares made available for borrow has been relatively scarce. This has kept the cost to borrow extremely high.”
