Elon Musk vs. Short sellers

[WarpedOne]

It’s possible that the only possible exit for the shorts is that the private sale doesn’t go through (from being voted down).

The problem for shorts is they cannot just wait it out.

Once some of the shorts try to exit, it will cause to SP to rise. This in turns will cause ALL other remaining shorts to fill the required margin with pure cash. They do not have on option of saying yes or no - the ones that are not to come up with required cash, get liquidated automaticaly - it means that their existing cash is used to buy the shares at current prices.

This causes the SP to rise more. And short margin accounts demand even more cash, and more shorts are unable to come up with it, and thus more forced buying at current price, and even higher SP .. rinse and repeat until there are only shorts that have enough cash to pour into their margin account at some skyhigh SP price.
Higher the SP, fewer such shorts.

Longs have no trouble just waiting, shorts on the other hand must pay hard big cash for the wait. Some will be able to do it, many many many will not.
This is about tens or even hundreds of billions of dollars of cash. Such money is normally invested elsewhere and not ready to be transferred at short notice as demanded by brokers managing the shorts.

 

[winfield100]

The problem for shorts is they cannot just wait it out.

Once some of the shorts try to exit, it will cause to SP to rise. This in turns will cause ALL other remaining shorts to fill the required margin with pure cash. They do not have on option of saying yes or no - the ones that are not to come up with required cash, get liquidated automaticaly - it means that their existing cash is used to buy the shares at current prices.

This causes the SP to rise more. And short margin accounts demand even more cash, and more shorts are unable to come up with it, and thus more forced buying at current price, and even higher SP .. rinse and repeat until there are only shorts that have enough cash to pour into their margin account at some skyhigh SP price.
Higher the SP, fewer such shorts.

Longs have no trouble just waiting, shorts on the other hand must pay hard big cash for the wait. Some will be able to do it, many many many will not.
This is about tens or even hundreds of billions of dollars of cash. Such money is normally invested elsewhere and not ready to be transferred at short notice as demanded by brokers managing the shorts.

Does not the vote to go private require the recall/close out of short positions?
25% short >> 15% float = positive feedback loop of SP rise as 35,000,000 get covered at $420, then $430 then "a weeping and wailing and a gnashing of teeth and rending of garments"

 

[mongo]

Does not the vote to go private require the recall/close out of short positions?
25% short >> 15% float = positive feedback loop of SP rise as 35,000,000 get covered at $420, then $430 then "a weeping and wailing and a gnashing of teeth and rending of garments"

If the date of record in the future, the call back can happen. There was recently a case where the DoR was previous to the announcement.

 

[WarpedOne]

Yes, the callback would be just some gasoline over the fire...

 

[bhzmark]

Short sellers make VW the world's priciest firm

would be nice to see a repeat

 

[AlMc]

As to Different Investment Houses/Brokers allowing private equity shares being held: This is particularly thorny for IRA accounts so I asked my broker/agent at TDAmeritrade what their policy 'might be' about me keeping those types of shares in mu IRA accounts: (mine, wife's and daughter's). His response:


Al,

I left you a voicemail but wanted to follow up with a quick email. We do generally allow private placements, or shares of private companies in IRAs, however we review each security on a case by case basis. That being said, as we get more details on TSLA if it does go private, we would review the stock and make a determination then. We have many clients who also hold the stock so I am sure it is something we would review quickly, and while I can’t say for certain, I would imagine it would not be a problem for you to keep holding it in your accounts as you do now.


Let me know if you have any other questions, and if I get more information on my end I will let you know.


Have a great day!

 

[winfield100]

"

As to Different Investment Houses/Brokers allowing private equity shares being held: This is particularly thorny for IRA accounts so I asked my broker/agent at TDAmeritrade what their policy 'might be' about me keeping those types of shares in mu IRA accounts: (mine, wife's and daughter's). His response:


Al,

I left you a voicemail but wanted to follow up with a quick email. We do generally allow private placements, or shares of private companies in IRAs, however we review each security on a case by case basis. That being said, as we get more details on TSLA if it does go private, we would review the stock and make a determination then. We have many clients who also hold the stock so I am sure it is something we would review quickly, and while I can’t say for certain, I would imagine it would not be a problem for you to keep holding it in your accounts as you do now.


Let me know if you have any other questions, and if I get more information on my end I will let you know.


Have a great day!

that is similar to what Schwab told me, though they were more vague
"""Whether Tesla will go private is still in the speculation phase and not confirmed. Taking the company private would require shareholder approval. Should this become a reality, Tesla would buy your shares at a pre-determined price.

Should Tesla go private, CEO Elon Musk mentioned the possibility of creating a special fund to allow current shareholders to retain an investment in the company--although not in shares of stock.
Again, Tesla's going private is currently just a consideration. Should it proceed, you'll hear many more details prior to completion."

 

[neroden]

I do not want to get bought out or dumped in a fund which is not a Tesla pure-play. Grrrr.

 

[oneday]

I do not want to get bought out or dumped in a fund which is not a Tesla pure-play. Grrrr.

I don't think anyone here does. What likelihood, obviously guessing, would you put on being dumped into a fund which is not a Tesla pure play.
I would vote no, if this were the case, as I would expect most retails would not be ok with this.
I would hope this is a 0% likelihood.

 

[neroden]

I don't think anyone here does. What likelihood, obviously guessing, would you put on being dumped into a fund which is not a Tesla pure play.
I would vote no, if this were the case, as I would expect most retails would not be ok with this.
I would hope this is a 0% likelihood.

I think it depends heavily on securities regulations.

 

[jhm]

Big Oil Backs Tesla Short Sellers, Says Wealth Manager | OilPrice.com

It's always interesting to see how this plays at OilPrice.com. They always have an oil centric view in their news rehash peices. This author and a few others do tended to take a broader view. Nice to see the industry standard PR relegated to the bottom of the piece. Yep, Tesla is getting pushed around. And yes, Tesla is a threat to the oil industry.

 

[schonelucht]

Big Oil Backs Tesla Short Sellers, Says Wealth Manager | OilPrice.com

LOL. This article did not age well.

 

[jhm]

LOL. This article did not age well.

Indeed. Apparently the oil world is much more diverse than that.

 

[neroden]

I'm getting a picture of what happened now. Saudi Arabia has been trying to get Musk to go private with them for a while. The short-seller, FUD/disinformation gang has been sufficiently effective at their FUD-spreading that Musk finally decided he'd rather sell out to Saudi Arabia than deal with the short-sellers any more. Reasonable! I probably would have made the same decision!

But he'd still rather not sell out entirely to Saudi Arabia. So the more additional investors he can get in on the go-private deal, the less he has to give to Saudi Arabia.

Silver Lake is now in -- Musk called them financial advisors, but they don't do standalone advice, they do private equity investment. And possibly Goldman Sachs is in (though they might just be advising). We'll see who else is in.

The Board told him to sound out the other major investors about a Saudi buyout, and quite correctly, he knew he had to tell all investors.

So here we are. It's either going to be a straight-up Saudi buyout or a Saudi-plus-lots-of-others buyout, and both Musk and I would prefer the latter. Either way, Tesla gets delisted and short-sellers are gone (as are options traders, as are quants, short-term speculators, HFT traders, and noise traders).

 

[Electroman]

I'm getting a picture of what happened now. Saudi Arabia has been trying to get Musk to go private with them for a while. The short-seller, FUD/disinformation gang has been sufficiently effective at their FUD-spreading that Musk finally decided he'd rather sell out to Saudi Arabia than deal with the short-sellers any more. Reasonable! I probably would have made the same decision!

But he'd still rather not sell out entirely to Saudi Arabia. So the more additional investors he can get in on the go-private deal, the less he has to give to Saudi Arabia.

Silver Lake is now in -- Musk called them financial advisors, but they don't do standalone advice, they do private equity investment. And possibly Goldman Sachs is in (though they might just be advising). We'll see who else is in.

The Board told him to sound out the other major investors about a Saudi buyout, and quite correctly, he knew he had to tell all investors.

So here we are. It's either going to be a straight-up Saudi buyout or a Saudi-plus-lots-of-others buyout, and both Musk and I would prefer the latter. Either way, Tesla gets delisted and short-sellers are gone (as are options traders, as are quants, short-term speculators, HFT traders, and noise traders).

Exactly my reading too. And with the recent increase in position by the Saudis from the open market, Elon had to act now.

 

[TheTalkingMule]

I'm loving this Goldman/Silverlake conversation. Shorts have 4-bet bluffed and Elon has shoved. Shorts must now fold.

None of this should be surprising, Elon has always been willing to bet it all when the market forces his hand. I think this will be a very interesting week.

 

[Electroman]

As excited as I am, I am nervous too..

These advisors are like the hosts of the Shark tank. I am not sure they always keep their client's interest above their personal interest of making money out of this deal.

 

[winfield100]

I don’t know how market dynamics works, I guess only market makers know for sure, how much each million share covered by short sellers moves stock, I think now fights among short sellers may start, smart short sellers may spread FUD and at the same time they could cover their own positions.

I am doing my part to help the short sellers {fight/spiritedly discuss/become educated/naifs_not_get_hurt_by_fagans} among themselves, by repeating over and over what I see as simple truths to many different ones/shorts

1) buy out price sets _floor_ of $420 (or higher as SP spikes, and you sold way below that
2) 35,000,000 shares sold short will be forced redeemed at $14.7 Billion (now ~34.27M) at conversion to TSLAP(rivate)
3) All shorts realized way less and _lost_ $2.8 Billion in 2018, and lose way more as conversion approaches
4) if you look at a combo of Stock price, Vol, and Advance/Decline line it looks like big shorts are unwinding (see #2)
5) smaller shorts will get trampled as the elephants stampede for exits and have a bag of IOU's. ($14.4B as of today) and it looks like larger shorts are hurting smaller shorts
6) this WILL happen in 4-6 months

7) I get hysterical responses and am told i'm lying, "hurting" people, delusional, paranoid, and "just shut up"
8) no one disputes #s 1-6, (i've been in markets since around 1981 and studied Tech Analysis and Charts for a long time, still a mystery, but certain things seem to be there)

if i'm wrong, i'd appreciate responses, except when is Truth, as I see it, Fear, Uncertainty and Doubt?
(should this be another thread, it does seem to apply to market action, at least obliquely)

EDIT: Could the mods move this to the Elon vs the shorts thread, apologies to all

 

[tomas]

Also interesting that this underscores the Saudi oil divestment strategy. Could it be they want Tesla energy as much as transportation? Seems like a smart long term play for remaining an energy leader long into the future... terraplants in the desert anyone?

The US loses its leadership and potential jobs as the future of production will now have both China and Saudi at the table.

Our biggest industry is “financial services” and we let the permutations of ways to squeeze a dollar get out of control and chase away real industry. Sad.

 

[winfield100]

I have a question about a hypothetical scenerio.
I'm having a "spirited" discussion with a few short sellers, being accused of delusional, paranoid, "just shut up you will hurt small shortsellers" etc
IF say I had 10-20 million shares and they were "pledged" (not sure what that means) but say the brokerages holding them loaned a lot of them out to shorts to sell, at prices _well_ below $420/share
The shorts, of their own volition, then built a "Stock bomb" of 35,000,000 (now 34.27M).
Elon hits the countdown timer on the bomb of 4-6 months
All those 34.27M now need to be redeemed, bought back @$420/share, or higher
Do shorts have any legitimate reason to complain about the temporary "loan" that is now being recalled at a substantial loss?
Am I looking at this correctly? I actually hate it that the smaller guys that were sucked in will get hurt worse than the larger elephants "lifting their wallets to mitigate their losses"
i'm extremely new to shorting/options etc as I only have been long, but in markets since around 1981 or so