Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[TradingInvest]

That is big news, if true. What is that information based on, please? TIA

A few months a go someone mentioned GS dropped coverage on Tesla, I didn't dig into it. Then I heard the GS analysts who covers Tesla has left the company. Also I noticed GS has been very quiet about Tesla for a while.

If someone can confirm GS indeed dropped coverage on Tesla, I think that's a sign they no longer feel comfortable shorting Tesla. To be fair, GS has lots of Tesla shares for years, but they also sell CDS, trade shares and trade options. I think they had net short based on how their analyst acted.

 

[Tslynk67]

Tesla Call Traders Target Deep Out-of-the-Money Strikes

Well my Jan-21 $650's are 442% up from what I paid for them, but I did buy on 5th September when the SP was around $225

 

[dww12]

Round 3
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WTF is that! I sold half. Elon is going to ruin everything that has been accomplished in the last year arguing with this F over the weekend. Pedo, 420, smoke out, pt 4. He’s got the F’in win, take it and shut up. If he doesn’t the FUD will let it overshadow the truck completely.

 

[StealthP3D]

A very clear bullish cup and handle pattern has formed over the last two weeks for those who believe in such things..

And it looks like the TSLA manipulators just had to give up their line in the sand and start buying again.

I believe they make small trades back and forth to hold down the price, they couple this with short-selling at opportune times but they eventually have to give up and start over when they run out of powder.

 

[TradingInvest]

Round 3
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The way this letter is written shows David Einhorn is a true idiot, an arrogant one. Of course he doesn't need this proof. His shareholder letters and his investment actions in the past 10 years already showed what he is.

 

[EinSV]

A few months a go someone mentioned GS dropped coverage on Tesla, I didn't dig into it. Then I heard the GS analysts who covers Tesla has left the company. Also I noticed GS has been very quiet about Tesla for a while.

If someone can confirm GS indeed dropped coverage on Tesla, I think that's a sign they no longer feel comfortable shorting Tesla. To be fair, GS has lots of Tesla shares for years, but they also sell CDS, trade shares and trade options. I think they had net short based on how their analyst acted.

GS dropped coverage when Tesla analyst David Tamberrino left GS. Not sure you can read too much into it under the circumstances.

I did expect them to pick up coverage by now though — maybe they’re having a hard time finding a replacement that suits their needs. Big shoes to fill after all given Tamberrino’s <1 star ranking and average -4.7% return per Tipranks.

 

[anthonyj]

WTF is that! I sold half. Elon is going to ruin everything that has been accomplished in the last year arguing with this F over the weekend. Pedo, 420, smoke out, pt 4. He’s got the F’in win, take it and shut up. If he doesn’t the FUD will let it overshadow the truck completely.

Exactly. I just went long Greenlight Capital. Elon is literally Elizabeth Holmes.

 

[S3XY]

OMG - the WayMo-Chrysler “ectomobile”. I almost like this thing.
Electrek: Waymo’s Detroit plant goes online, a step toward reducing FCA into a hardware provider - Electrek

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If they were to park two of these next to each other they would have to blur out the top portion of a published photo.

 

[JRP3]

Other long-timers: am I correct in thinking there has not been this level of positive press about Tesla since early days (2011-mid-2013)?

Early days? But yes press seems generally more positive.

 

[capster]

A few months a go someone mentioned GS dropped coverage on Tesla, I didn't dig into it. Then I heard the GS analysts who covers Tesla has left the company. Also I noticed GS has been very quiet about Tesla for a while.

If someone can confirm GS indeed dropped coverage on Tesla, I think that's a sign they no longer feel comfortable shorting Tesla. To be fair, GS has lots of Tesla shares for years, but they also sell CDS, trade shares and trade options. I think they had net short based on how their analyst acted.

Bit thin to carry your conclusion, isn’t it?

Still too early in the transformation for GS to switch teams, IMHO. Love to be wrong, though.

Playing both sides against the middle is likely the best we can expect from GS here and now, besides it’s seems more their style anyway.

 

[dandurston]

Drama aside, do we have a good answer for the question Einhorn poses about why Tesla's accounts receivable are so high? E.g. time lag involving line of credits? Delayed payment for energy products?

 

[SOULPEDL]

Given the comments on it being like an APC, I’m thinking the truck has a built-in camper shell kind of thing(probably on a motorized hinge a la falcon doors so it can open fully when parked). Would also solve the problem of aerodynamics with the bed.

Agree. And as I said before, the Blazer and Bronco were extremely popular.

Then I just looked at the Roadster 2 and that cool hatchback that everyone loves on the Model S. Put that concept in your head and you've got a lifting (or retracting) top that detaches possibly. Would be really cool if it could dump as an upgrade. Interchangeable bed options (Construction vs ATVs vs Seating).

Is it Christmas yet? Just $1,000 got me started on our Model 3 in 2016. A bit more stock pop would probably trigger a down-payment here. (So yes to that question earlier in the week about feeding stock gains back into Tesla products. That's absolutely a thing.)

 

[Mike Smith]

I can only imagine how pissed off I'd be if I was a paid client of GS, had gone short based on their $154 price target, watch the price soar to over $300, then suddenly they just drop coverage...

 

[SOULPEDL]

AZ doesn't regulate utility monopolies? I don't care if they are a non-profit, the management still collects fat checks.

That makes zero sense to have an unregulated monopoly.

I get you... I'm not a lawyer, but I believe that's why the Tesla v SRP lawsuit that finally ended this year. And Tesla refused to sell any Energy to me during the blackout period.

 

[TradingInvest]

GS dropped coverage when Tesla analyst David Tamberrino left GS. Not sure you can read too much into it under the circumstances.

I did expect them to pick up coverage by now though — maybe they’re having a hard time finding a replacement that suits their needs. Big shoes to fill after all given Tamberrino’s <1 star ranking and average -4.7% return per Tipranks.

David Tamberrino is just a tool. Trading stocks and making profit from it is a big deal for GS. I suggest everyone listen to their quarterly results Q&A.

 

[dww12]

Exactly. I just went long Greenlight Capital. Elon is literally Elizabeth Holmes.

I think you are missing my point. There is NO reason to give Ihorn the time of day and Elon is giving him fuel. This stupid back and forth is going to be the only headlines for weeks, and there is a greater than 0 possibility Elon says or posts something that gets him sued by this numbnut. Next week there will be one headline on the truck and 10 on this. Twitter fight with Porsche, not this 0.

 

[M3Rider]

Well whomever is doing it, seems indeed that $335 makes the most/loses the least this week, which I can live with - consolidates a bit before climbing again next week. NAA

Why 335? Max pain is 320.

 

[ZsoZso]

Round 3
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Wow, he is asking for 1 sentence that is false and to refute it with facts, THEN he goes on to make the false claim about Tesla receiving billions of dollars in subsidy. AFAIK, Tesla received half a billion dollar LOAN which they paid back early full with interest. All the EV tax incentives go directly to customers, not to Tesla. So what other "subsidy" did Tesla ever get from the government ?

 

[ReflexFunds]

Drama aside, do we have a good answer for the question Einhorn poses about why Tesla's accounts receivable are so high? E.g. time lag involving line of credits? Delayed payment for energy products?

A few days for clearance of customer's payments (also remembering deliveries are heavily weighted to the final weeks of the Q). Slight delay receiving funds from leased vehicles. Likely a longer delay for clearance of funds from selling trade in cars to third party retailers. Longest delay for utility scale battery projects. Likely a combination of reasons, but hardly an interesting question. If he thinks that's the sort of thing that matters towards long term value (or odds of success) of a rapidly expanding tech driven company, he's completely missing the point.

I think Einhorn clearly fits into the category of traditional stable company finance experience with absolutely zero expertise of how to analyse and value growth companies. Somehow he got himself way out of his comfort zone with his short tech investments and its killing his fund.

I discussed this misapplication of valuation techniques and experience previously:

I do think a discussion on company valuation preferences is particularly important with regards to Tesla.

Part of the reason there is such a divergence in opinion on Tesla stock, and why many people with typical finance experience have been sold on the Tesla is way overvalued narrative is because different people have different valuation experience, using different methods and embracing different theories on valuation.

My background was in science before I worked in investment banking (I'm not working there anymore), and I was surprised at how dogmatically people believed in valuation theories and “facts”, which seemed so clearly to be either rules of thumb or very early stage science. As in much of science, these are not always “facts” but just our current best explanations which will have to be iterated and improved in the future.

Similar to the divide between quantum physics and general relativity, some valuation methods and valuation expertise are only functionally useful within a narrow range of criteria, such as for example tools used to value growth companies (or at the extreme, startups) vs value companies.

The vast majority of financial capital is invested in mature companies so this is the experience most people in the financial industry have. Many of the people working in this subset of finance falsely believe their experience and valuation methods are easily transferable across the whole of finance. Hence we see investors such as Einhorn and Chanos completely out of their comfort zone trying to apply value investing methods to a startup like Tesla.

The discussion on whether actual dividend payments are ultimately the only source of value for a company here is much less practically relevant in the near term (I think everyone on both sides of the argument here still understands that short term value methods like P/E ratios etc are not a useful method of valuing startups and growth companies). Still, it does highlight how emotionally attached people are to their valuation beliefs.

I’ve spent a lot of time studying the different methods of valuing companies and frankly I don’t think much of them. I choose specific traditional methods when they are most practically useful, but I generally use my own valuation methods which are heavily based on expectation value across hundreds of probability weighted alternative financial models rather than using an arbitrary base case with arbitrary discount rates.

I only really spend time investing in and valuing difficult to value companies (startups, growth companies, fast declining companies, distressed companies) because I think this is where it is much easier to beat the market.

Ultimately there are three main ways to beat the market on a specific stock investment - relative to the crowd sourced equilibrium view reflected in the current price:
• Use a more appropriate valuation methodology
• Have a more accurate forecast for the company’s future cash flow
• Better predict upcoming catalysts or corporate actions.

People with a background investing in mature companies do not have experience with the best valuation methodologies for a company like Tesla. They also do not have experience of how to think about disruption, rapid consumer change, experience curves, operating leverage, optimum use of capital, technological innovation etc, so it is much more difficult for them to form an accurate forecast of the company’s future cash flow.
This is why we so often see auto analysts and typical financial investors completely failing to get the full picture with Tesla and the EV transition.

 

[Fact Checking]

A few months a go someone mentioned GS dropped coverage on Tesla, I didn't dig into it. Then I heard the GS analysts who covers Tesla has left the company. Also I noticed GS has been very quiet about Tesla for a while.

If someone can confirm GS indeed dropped coverage on Tesla, I think that's a sign they no longer feel comfortable shorting Tesla. To be fair, GS has lots of Tesla shares for years, but they also sell CDS, trade shares and trade options. I think they had net short based on how their analyst acted.

What matters is IMHO not just Goldman Sach's own proprietary trading and positions, but that of their clients: big hedge funds, pension funds, sovereign funds, high net value private banking clients, etc. These can often dwarf an investment bank's own positions.

Also, maybe this detailed expose about Goldman Sachs analyst David Tamberrino by @ZachShahan, and the TipRanks chart from @shrspeedblade, earlier this summer, played a role as well:

Historical Tesla [TSLA] Forecasts From Goldman Sachs, David Tamberrino | CleanTechnica​

Tamberrino basically had a permanent "sell" rating for TSLA no matter how well Tesla did, and his last TSLA price target of $158 was outright disastrous:

Tesla’s second-quarter sales are as good as it gets, Goldman Sachs says

"Tesla’s second-quarter sales are as good as it gets, Goldman Sachs says"

"Second-quarter deliveries ‘fine,’ but there’s nothing more to stoke demand this year, analyst says"

"The analysts, led by David Tamberrino, are known Tesla bears. They kept their rating on the stock at sell with a price target of $158, a 30% downside from Thursday’s price."​

Ouch - Q3 results basically annihilated Tamberrino's bearish thesis.

If I was an influential Goldman Sachs client affected negatively by his advice I'd be mighty pissed off and would be pressuring GS management to launch an internal investigation into David Tamberrino: were there any unethical links between him and the TSLAQ scammers? How come he only ever had a sell rating on Tesla? Why were there often suspiciousTSLA stock price movements shortly before his latest ratings were released?

I refuse to believe that all relevant Goldman Sachs personnel and management was involved in those (alleged) shenanigans (including their market making/dealing desk): if true then these actions would be illegal AF, and GS, having won the race for dominance in global investment banking, doesn't have to play dirty all the time anymore.

Btw., @ZachShahan also wrote an expose about Morgan Stanley analyst Adam Jonas as well:

Remember, Morgan Stanley's Adam Jonas Predicted In 2016 Tesla Would Sell Only 246K Cars In 2020 — Just Sayin' | CleanTechnica​

Jonas toned down his bearish rhetoric after Q3 and was recently defending Tesla on CNBC - so maybe shining sunlight on Wall Street auto analyst shenanigans really helps!