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Daimler Cashes In Tesla Equity Stake For $780 Million, Praises 'Bold Partner'

Discussion in 'TSLA Investor Discussions' started by RobStark, Oct 21, 2014.

  1. RobStark

    RobStark Active Member

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    It’s been a charmed few years for Tesla Motors TSLA +2.1% and founder Elon Musk, and the electric car company’s stunning stock market success has drawn praise and admiration. It has also prompted some profit-taking and Tuesday afternoon Tesla partner Daimler became the latest to ring the register.


    Daimler announced it sold its 4% stake in Tesla for about $780 million, 10 months after agreeing to an equity collar that hedged its position in the automaker’s volatile shares At the time, Daimler said it expected to maintain the equity investment in Tesla for at least three years, but apparently this year’s gains were enough to convince the German carmaker to get out while the getting is good.


    http://www.forbes.com/sites/steveschaefer/2014/10/21/daimler-cashes-in-tesla-equity-stake-praises-bold-partner/


    Hopefully, Toyota is next.
     
  2. Chickenlittle

    Chickenlittle Active Member

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    if they really knew what they were doing they would have existed at 291
     
  3. RobStark

    RobStark Active Member

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    If they really knew what they were doing they wouldn't have sold half their shares in July 2012.
     
  4. maoing

    maoing Active Member

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    do you guys know which price Daimler sold the shares? 4% stake with worth $780M, it sounds to me those shares are sold around $160 early this year or last year. Am I right?
     
  5. Chickenlittle

    Chickenlittle Active Member

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    Their collar limited the upside. Your right by limiting the downside, they captures 2.6% of the market cap while they owned 4% of the stock. Suspect if they held on the upside still limited. When they put the collar in place stock was trading in the 140s
     
  6. DaveH

    DaveH Member

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    who did they sell the shares to? hopefully not on the open market ..
     
  7. maoing

    maoing Active Member

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    This move would explain traditional automative manufacturers don't have "strong" interest or faith on BEV as Elon worried. Time will tell the truth.
     
  8. Curt Renz

    Curt Renz Active Member

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    Daimler purchased its stake before Tesla became publicly traded. Back then it wanted to insure the success of a supplier. Daimler has now demonstrated its confidence in Tesla's success.

    The investment had been hedged for nearly a year, so Daimler could not earn much profit from share price advances or lose much from declines. It now unraveled its financial involvement, and essentially pocketed the profit it earned before setting up the hedge. Daimler says it is better for those shares to now be spread more diversely. They may now be in the hands of strong shareholders willing to hold for long term profits. That's the type that Elon wants as investment partners.

    Daimler says it will continue to purchase motors from Tesla, and will likely be involved in future Tesla projects.
    Meanwhile, the sale of Daimler's 5 million shares of TSLA has already been accomplished. Large blocks had been traded in recent days, and now we have the explanation. What had been an overhang of potential selling has been alleviated. That lid on the share price has now been removed.
     
  9. Curt Renz

    Curt Renz Active Member

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    With this overhanging share supply removed, one might have expected the share price to rise after hours. Those after hours traders are not the big guns, and often react impulsively without thinking deeply.

    Meanwhile, here's an interesting comment from Daimler's management board member Bodo Uebber, "This will also allow Tesla to broaden its investor base." It may seem to be nice of him to be so considerate of Tesla's interests. But I suspect Elon may have suggested that Daimler divest its hedged shares so they could move to the strong hands of new shareholders intending to hold them for the long term. Daimler's original investment purpose was to prime the pump to keep a supplier afloat. Now some of those shares are better off with people keeping them for their retirement.
     
  10. AudubonB

    AudubonB Mild-mannered Moderator Lord Vetinari*

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    I just checked my wallet and there wasn't enough in it to snag those 5mm shares, but -

    who profited from that $160-$235 agio? Certainly no purchasers actually bought the shares at $160, did they? Was it the broker who took the other side of the collar? Or someone/thing else?
     
  11. Curt Renz

    Curt Renz Active Member

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    #11 Curt Renz, Oct 21, 2014
    Last edited: Oct 21, 2014
    That must have been the net proceeds after covering the hedges. The hedges were put in place late last year. Their holdings at that point would have accounted for almost all of their profits. Since then the hedges would have prevented their position from moving much.
     
  12. Krugerrand

    Krugerrand Active Member

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    If they really knew what they were doing they'd have waited for Gigafactory to hit full production, along with mass production of Model 3, and the beginnings of grid storage sales.
     
  13. blakegallagher

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    grid storage sales start next year.
     
  14. 30seconds

    30seconds Active Member

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    All sorts of investors would have bought on side or another of the collar via options market. Maybe brokers were able to offload share blocks to larger investors during the hedge period
     
  15. Tasmanian Devil

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    From Daimlers perspective the move makes sense. They need the money to make electric cars... :). Perhaps the B-Class will keep them afloat when nobody buys ICE´s anymore in a few years. Oh, or they could start to pay some taxes.
    That would be a nice move for a start...:mad:
     
  16. Zzzz...

    Zzzz... Member

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    Daimler sold 4.3% position in Tesla for $1.26 billion. $780 million is a “cash inflow”, net after deductions. So no agio.
     
  17. Auzie

    Auzie Tree Hugger Member

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    #17 Auzie, Oct 22, 2014
    Last edited: Oct 22, 2014
    Daimler, like most other businesses, performs best if they stick to their core business, that is where their skills are. Stock market speculation is not their core business. Their TSLA investment served its purpose and it is time to get out of market and back to making good cars.
     
  18. RobStark

    RobStark Active Member

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    There are many that claim Daimler has insider knowledge and there selling is indicative the BEV market share will implode because FCV are now on the horizon or that Tesla is a Ponzi scheme and Daimler now knows the score. Therefore selling shares. The point I am making is they don't have some special insight into Tesla stock.

    BTW Their core business is making 20th Century tech vehicles. That is what they are good at. Powertrains with 800-1200 moving parts.
     
  19. eepic

    eepic Member

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    One could draw a parallel to the $150mm lifeline Microsoft gave Apple in 1997. They divested at a nice profit in the early 2000's, but in recent years the stake would be worth tens of billions. What ever became of Microsofts $150 million investment in Apple? | TUAW: Apple news, reviews and how-tos since 2004

    Ironically, from a 30,000 foot business management view it's a prudent thing to get rid of the stake as it grows to the billions because the swings mark-to-market price on their books is going to cause volatility on their balance sheet from quarter to quarter. As a century old blue-chip company, good luck justifying that to the shareholders.

    That said, total respect to Daimler, they helped Tesla through a tough time and it sounds like a friendly and fair exit with them making a nice 1560% return over 6 years.
     
  20. Chickenlittle

    Chickenlittle Active Member

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    What deductions? The initial investment by Daimler was 50 million with 40% of that previously sold. Pretty hefty commission to result in your claimed 480 million deduction
     

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