General Discussion: 2018 Investor Roundtable

[NicoV]

I’m not clicking the link for love nor money. Feel free to paraphrase her points that allow her to come to such a ridiculous and false conclusion.

She has troubles organising her thoughts: “In March, a Tesla driver was killed while test-driving an auto-piloted Model X, the impact fully decimating half the car.”. Was the car fully destroyed, or only for an tenth, or half the car?
You know enough with the following quote: “Spacex has been a literal failure to launch”: truth and balanced reporting are not her strong points.

 

[NicoV]

I quantified it a while ago, but I've totally forgotten. I'll try again.


The biggest S&P index fund is about $266 billion, and the others sum up to about the same amount; closet indexers may double that or may not, so let's assume not.

$266 billion * 2 / $23 trillion S&P market cap = 2.3% (maybe 4.6% if you include closet indexers)

S&P is market cap weighted, so the percentage of Tesla shares the funds have to buy is about that percentage of Tesla's market cap. So 2.3% - 4.6% of the shares. Less than the Tencent purchase, but significant.

Thanks for the feedback. In the mean time I had googled a bit and found the following quote “The result of that is that passive funds now own an average of 17% of each component of the S&P 500, per Goldman’s data (the range is as little as 10%, and as much as 35%), whereas passive ownership was “a rounding error” a decade ago.” in Passive investing is changing the stock market in ways investors don’t realize . I wonder which of the percentages is appropriate.

Also note that when Tesla is added to the S&P 500, it will be in the top 100, which means that it wil get a relatively high weight.

 

[avoigt]

Tesla Model 3: Hat sich Elon Musk verkalkuliert?

web front article of one of Germany's biggest newspapers. Core statements:

• Those who reserved an M3 early now get it faster than previously announced
• If you order an M3 now, you can get it within 1-3 months

Conclusions:

• it would take more than 1 year to actually work through the backlog of 400k reservations; but since the lead time is now so much lower, it follows that:
• much fewer of the 400k reservations have converted into actual orders than anticipated
• with every shipped M3, the spread between production capacity and demand increases.

Furthermore, by announcing "only" 5k net new M3 orders, Elon has shown that the demand lags behind the 8k goal of new orders per week for the M3.

FAZ has a history of FUD when they report about Tesla I have to say. A highly recognized newspaper that I always like to read is going completely of rail if it comes to Tesla. Guess what? Look who is buying full pages of ads....?

Still its very disappointing to read them spreading nonsense and structure very strange argumentation logic and even repeating plain lies.

Their logic: because Tesla delivers faster than before there must be something wrong with demand given that they still have 400k reservations.....

Its a shame that I have to read that in FAZ, just a a shame....

 

[neroden]

Thanks for the feedback. In the mean time I had googled a bit and found the following quote “The result of that is that passive funds now own an average of 17% of each component of the S&P 500, per Goldman’s data (the range is as little as 10%, and as much as 35%), whereas passive ownership was “a rounding error” a decade ago.” in Passive investing is changing the stock market in ways investors don’t realize . I wonder which of the percentages is appropriate.

Also note that when Tesla is added to the S&P 500, it will be in the top 100, which means that it wil get a relatively high weight.

I saw this elsewhere and responded in another thread. The 17% appears to be *all* passive funds (many of which already own TSLA), not just the S&P funds. However, they give a number for S&P ETFs alone which amounts to 2.5% of the S&P market cap, and there are also S&P mutual funds (probably as much money in mutual funds as there are in ETFs, which would bring us to 5%). So maybe there are a lot of really small S&P funds which didn't show up when I tried to add them all up. And then there are still closet indexers.

So I guess the percentage is somewhere between 2.5% and 10%.

Since the S&P is market-cap-weighted, (money in S&P funds)/(market cap of S&P) = (amount of TSLA S&P funds have to buy)/(market cap of TSLA), which makes it simple: that percentage is the percent of outstanding TSLA shares the funds have to buy.

In answer to the other question which I didn't answer, the true really-tight S&P tracker funds have to buy it very quickly -- on a specific day no less. Other traders will, however, front-run the S&P addition by buying stock before the S&P addition in hopes of selling it to the S&P funds at a higher price (this is perfectly legal).

So most S&P funds give their managers leeway to do this "early purchase", or the "early sale" of the stock being removed from the S&P, themselves -- since most S&P investors are OK with their fund doing better than the S&P, and not so happy about doing worse than the S&P. And by definition a perfect tracking fund does worse than the S&P due to fees. Anyway, they'll probably buy it over the course of a week, maybe even more.

Because of the managers front-running S&P additions and the "closet indexer" funds who officially are actively managed but basically follow the S&P, the stock price effect of the S&P addition will probably happen over the course of months before the actual addition.

 

[bdy0627]

Ran into this FUD piece Why Are All Those Tesla Cars Baking In The Sun? - Tesla, Inc. (NASDAQ:TSLA) | Seeking Alpha (M Septic ). Shorts have a newly formed "Shorty Air Force" with logo and all.
However if you are blind you can't really see ...

I like this new Shorty Air Force term. Talk about cash burn!

 

[winfield100]

I like this new Shorty Air Force term. Talk about cash burn!

notice how the air force is headed almost straight down, in flames perhaps, to land with a "ka Blam!"

 

[NicoV]

I saw this elsewhere and responded in another thread. The 17% appears to be *all* passive funds (many of which already own TSLA), not just the S&P funds. However, they give a number for S&P ETFs alone which amounts to 2.5% of the S&P market cap, and there are also S&P mutual funds (probably as much money in mutual funds as there are in ETFs, which would bring us to 5%). So maybe there are a lot of really small S&P funds which didn't show up when I tried to add them all up. And then there are still closet indexers.

So I guess the percentage is somewhere between 2.5% and 10%.

Since the S&P is market-cap-weighted, (money in S&P funds)/(market cap of S&P) = (amount of TSLA S&P funds have to buy)/(market cap of TSLA), which makes it simple: that percentage is the percent of outstanding TSLA shares the funds have to buy.

In answer to the other question which I didn't answer, the true really-tight S&P tracker funds have to buy it very quickly -- on a specific day no less. Other traders will, however, front-run the S&P addition by buying stock before the S&P addition in hopes of selling it to the S&P funds at a higher price (this is perfectly legal).

So most S&P funds give their managers leeway to do this "early purchase", or the "early sale" of the stock being removed from the S&P, themselves -- since most S&P investors are OK with their fund doing better than the S&P, and not so happy about doing worse than the S&P. And by definition a perfect tracking fund does worse than the S&P due to fees. Anyway, they'll probably buy it over the course of a week, maybe even more.

Because of the managers front-running S&P additions and the "closet indexer" funds who officially are actively managed but basically follow the S&P, the stock price effect of the S&P addition will probably happen over the course of months before the actual addition.

Thanks! Sorry I didn’t understand entirely what you were saying the first time and got sidetracked to something else so I forgot to ask more info.
So basically we don’t have exact data about how much (partial or full)S&P500 trackers there are, hence the wide range of percentages. I’m also a bit suprised that the effect could be felt over a few months, instead of all at once in one day. Still, the optimistic case of 10% would be 2 tencents, which would certainly be very noticable.
What kind of passive fund would already own TSLA? That would be funds that track other indexes where Tesla is already part of, wouldn’t that be small compared to S&P500 tracking funds?
EDIT: I had to look up 'closet indexing', never heard of that term before. Some time ago I thought it would be easier to buy some fund rather than picking my own stocks. My banker advised me some funds, and when I looked at the fund details, I was suprised about how much were just collections of other funds, but with a big management fee. Needless to say, I dropped the idea of buying those funds.

 

[jelloslug]

You don't charge at home ?

You live 2 miles outside Texas. You leave the house with a full charge. After driving 300 miles you stop for your first charge, drive 300 more and charge again. Then you exit Texas after driving 300 more.
Total miles driven 900!


Always be an optimist!
Except when reading the Shortsville Times. Then you can be a fatalist.

According to the Shortsville Times, you would have been killed 2 times on that trip and Elon Musk would have personally called you a buffoon on national TV.

 

[X Yes?]

Behind The Wheel of the Tesla Model 3 Performance Vehicle .. Dan Neil (video) interview ..not sure if posted here , so just cross posting .. more gems here in addition to the article ...

Seems to be taking much flack from the article. The man had to delete his Twitter account: https://jalopnik.com/wall-street-journals-dan-neil-deletes-twitter-after-tes-1827785899

 

[Lessmog]

She has troubles organising her thoughts: “In March, a Tesla driver was killed while test-driving an auto-piloted Model X, the impact fully decimating half the car.”. Was the car fully destroyed, or only for an tenth, or half the car?
You know enough with the following quote: “Spacex has been a literal failure to launch”: truth and balanced reporting are not her strong points.

Either the author does not fail to misunderstand the meaning of literal (most common mistake) or she is confused by all those double negatives this week and actually meant to write that SpaceX launches from beaches (litorally) ?
But that excludes the nearest explanation: illiteracy.

 

[EVMeister]

Double negatives... like "does not fail to misunderstand". Or was that a triple negative? Although I entirely agree with what you're saying, this made me chuckle. Simple things.

 

[Lessmog]

Double negatives... like "does not fail to misunderstand". Or was that a triple negative? Although I entirely agree with what you're saying, this made me chuckle. Simple things.

Here all night. Tip the waiters.

 

[CorneliusXX]

The negative comments regarding Tesla and M3 really seem to be increasing. Look at the comments on this reddit post today. The vast majority are negative.

https://www.reddit.com/r/technology/comments/90xw5u/24_of_tesla_model_3_orders_have_been_canceled/

I know there has been negativity on Twitter, and on smaller sites like SA and various niche forums but this is the first time i have seen such a one sided opinion on a site as large a reddit. It's probably astroturfers mostly but I'd expect some people to be convinced by the overwhelmingly negative sentiment.

I'm looking forward to the next couple of hundred thousand M3s to be produced and enough of the population to experience them first hand that this kind of sentiment is muted.

 

[30seconds]

It’s in the r/technology thread and not the r/Tesla thread. Troll city

 

[scaesare]

Either the author does not fail to misunderstand the meaning of literal (most common mistake) or she is confused by all those double negatives this week and actually meant to write that SpaceX launches from beaches (litorally) ?
But that excludes the nearest explanation: illiteracy.

 

[gene]

Next time someone asks you if you are worried about your Tesla catching f**e, refer them to this article: 10+ Million Fires, 19,000 Deaths, And 70,000 Injuries From Internal Combustion Vehicles | CleanTechnica

Also, fun video, be sure to watch until the grand finale!

 

[ValueAnalyst]

How many Model 3 Performance units will Tesla deliver in the third quarter of 2018?

Model 3 Performance Deliveries in 3Q18

 

[AudubonB]

She has troubles organising her thoughts: “In March, a Tesla driver was killed while test-driving an auto-piloted Model X, the impact fully decimating half the car.”. Was the car fully destroyed, or only for an tenth, or half the car?
You know enough with the following quote: “Spacex has been a literal failure to launch”: truth and balanced reporting are not her strong points.

OK, I went and parsed her mathematics. Fully decimating half the car means that it is 5% destroyed. So not even totaled, for most insurance companies!

 

[adiggs]

Thanks for the feedback. In the mean time I had googled a bit and found the following quote “The result of that is that passive funds now own an average of 17% of each component of the S&P 500, per Goldman’s data (the range is as little as 10%, and as much as 35%), whereas passive ownership was “a rounding error” a decade ago.” in Passive investing is changing the stock market in ways investors don’t realize . I wonder which of the percentages is appropriate.

Also note that when Tesla is added to the S&P 500, it will be in the top 100, which means that it wil get a relatively high weight.

The variance in the range of ownership by S&P 500 is due to using the float shares rather than all shares.

Unlike the Dow, which you calculate by just adding up the prices of the component stocks and multiplying by a constant, the S&P 500 is more complex. Instead of adding the constituents stocks’ prices, the S&P 500 adds the companies’ float-adjusted market capitalization. “Float-adjusted” means counting only the shares available to us ordinary folk, excluding those held by management, by governments and by other companies. There are hundreds of ostensibly “publicly traded” companies that keep most of their shares in-house. (For more, see: How Is The Value of the S&P 500 Calculated?)

Read more: The S&P 500: The Index You Need To Know | Investopedia The S&P 500: The Index You Need To Know
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There's more info on the page about membership. One is that at least 50% of shares needs to be in the publics hands (not owned by management). The Tencent shares might get counted as ownership by another company, and therefore counted in with the management shares (I don't know either way about that).

 

[generalenthu]

The variance in the range of ownership by S&P 500 is due to using the float shares rather than all shares.



There's more info on the page about membership. One is that at least 50% of shares needs to be in the publics hands (not owned by management). The Tencent shares might get counted as ownership by another company, and therefore counted in with the management shares (I don't know either way about that).

If the committee were rigorous, it should include the float added by the short interest, but I am sure they don't.