So I wonder how that works out with the lawsuit that wants an injunction on the merger? Do they just ignore it until the hearing date (and maybe complete the merger before then) or do they have to put things on hold?
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Tesla Weekly - Issue 107
For 'veterans' of this thread this newsletter link is probably already known. I just got mine and thought I would post a link.
For newer members I strongly recommend this free weekly newsletter.
It is a great weekly summary of all things TM.
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For 'veterans' of this thread this newsletter link is probably already known. I just got mine and thought I would post a link.
For newer members I strongly recommend this free weekly newsletter.
It is a great weekly summary of all things TM.
***I receive no compensation for this recommendation/suggestion****
Mutual fund performance isn't impacted by lent shares -- other than the interest income received from lending. The fund gets to continue to include the mark-to-market valuations of any securities it lends.
The position even still shows up as a portfolio holding in all reports (typically lent holdings are footnoted and there is some aggregate number somewhere in the financial report).
In other words, unless it needs to vote or sell a lent security, a fund will leave the shares out on loan for as long as someone is willing to pay them to borrow it.
It provides a nice extra bit of juice to that fund's return -- particularly in situations like TSLA or SCTY where the juice is double digits annualized.
The assumption is that sudden availability of millions of shares for shorting will result in precipitous drop in SP. I would be on a watch-out for this on Monday, especially if interest for borrowing TSLA shares plummets in pre-market trading.
Thanks, hopefully we'll see an announcement soon.
Funds will start lending all their shares again on Monday assuming we see that announcement (I would think they'd want official confirmation).
I guess I won't bother to take up Schwab on the very juicy offer I just got 10 minutes ago to lend my SCTY arbitrage position -- it'll drop in rate again next week.
I'm buying some protective puts. Heck if this actually happens I can turn the protective puts around to buy calls for the deliveries report.
[EDIT for bad grammar - d-Oh!]
Not sure a precipitous drop would necessarily be in the cards:
- First impact of increase in availability would be to finally satisfy any unfilled recalls (some lenders will likely not return to lending immediately).
- Then, you need actual shorts to establish new positions in excess of long demand. I think there's a bit of psychology at play here. It's one thing to maintain a short position you established at $250 when the stock is now at $209. It's another thing to initiate a new short position at $209. Plus, tax is always a consideration. Maintaining a short position defers your short term gain, so all things being equal you'd continue to hold the short position even if you think the trade is mostly played out.
stealthology
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Mind Reader. If this does happen, Monday will likely be the most affected with the fast approaching Oct 3rd deliveries report. Just nibbled at some weeklies (I never do this type of stuff), but I may unload them before market close. Decisions.. I may get rid of the protective puts.
The question is, are we going to be dealing with more dumb shorts (ie. Twitter crowd and most ) or smart money shorts who know what's in store for Oct 3. Man, thinking too short term here..
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There is no voting period. There will be a Special Stockholder Meeting at which everyone who held votes on the record date (presumably today) is allowed to vote.
If you look at the data in another way, 20-29% choosing Tesla vs 41-52% choosing other brands is not bad at all. Remember 41-52% are usually those die-hard BMW, etc fans, they have never tried a tesla before. Bottom line, Tesla taking 29% of market share while all else combined taking a 52% share doesn't seem a problem to me!
I'm still quite puzzled by the arbitrage.
Right now, SCTY is priced like TSLA is 173. So either SCTY is mis-priced to the downside or TSLA is mis-priced to the upside. Maybe collectively they think that once this recall is over, TSLA hits 170's? There's no point in recalling SCTY shares, as the vote is almost definitely a yes.
But we know that there will be some sort of fireworks in October and November.
Sigh... more SCTY call options are so, so tempting. I have some SCTY Jan 20 2017's @ $22 for under $1. That's the equivalent of TSLA $200, priced right now at the ask of $14. The TSLA options are $17.40 to $18.80.
Right now, SCTY is priced like TSLA is 173. So either SCTY is mis-priced to the downside or TSLA is mis-priced to the upside. Maybe collectively they think that once this recall is over, TSLA hits 170's? There's no point in recalling SCTY shares, as the vote is almost definitely a yes.
But we know that there will be some sort of fireworks in October and November.
Sigh... more SCTY call options are so, so tempting. I have some SCTY Jan 20 2017's @ $22 for under $1. That's the equivalent of TSLA $200, priced right now at the ask of $14. The TSLA options are $17.40 to $18.80.
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I think it could be nothing more than there has been so much media reporting that the deal wont go through. Someone linked to that one cnbc show where all 4 hosts said it wouldn't go through, ect. And unlike a lot of other mergers, in this case it seems like solarcity will crater if the merger doesn't go through. So you take decent % of traders thinking deal wont go through and factor in the assumption that solarcity plumets if it doesn't = bigger than usual arb.
The record date is 3 trading days after you hold the position to allow for settlement to clear, i.e Tuesday 9/20. Nothing on Edgar yet; I think it would in an S-4/A.
If today is the record date, then yes. (In fact, they would have had to initiate their recall on Tuesday since the shorts would have had 3 days to deliver).
In order to vote shares that they lent, institutions had to recall them 3 days prior to record date, as short sellers have 3 days to satisfy the recall and return shares to the lender.
My neighbor is German and for years has bought BMW 3s. Gave me a hard sell for buying a Mercedes 15 years ago when I bought an LS430 instead. Learned recently he chatted with a MS owner who offered a drive. The neighbor plans to buy Tesla after MS 2.0 comes out. (He claims a service rep said a complete revise is due sometime.) I don't believe he will buy an M3, but we will unless the stock goes up substantially and I feel we can afford an MX.
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I'm trying to confirm, but I don't think the record date set be set more than 60 days in advance of the vote. I don't understand how they can set this date without knowing the extent of the SEC's comments and how long that process will take. Curious indeed.
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