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

[junas]

Interesting development from ir.tesla.com Evidently "Citadel Securities" has reported today an ownership of nearly 8 million shares: 0001104659-20-050982 | SC 13G | Tesla, Inc.

Found some commentary/analysis on /r/teslainvestorsclub: SEC Filing Form 13G : teslainvestorsclub

We all know MMs typically delta hedge their call options by buying shares. However, does anyone here know what technically happens to these shares at expiry dates? Some contracts are executed, but are the remaining shares sold to market instantly? Probably the effect on SP is not very relevant, but just trying to understand the dynamics behind.

 

[JRP3]

Does he get paid by clicks for writing these articles? If yes than we shouldn’t give him any.

Last I knew it was a penny a click. Cheap entertainment.

 

[JRP3]

Inherently I knew that. But you provided a link! I said; Self, why would @JRP3 provide a link to THAT site from THAT twerp UNLESS there’s something I should know? Self, you must click. He would not lead us astray.

Then I said; ****** ****** what the ****? You have been duped, but keep reading because there has to be something of value or @JRP3 would NOT have linked.

Then I said; (can’t even asterisk code it because it’s that bad; like words you’ve never even heard). But by this time I was so far down the rabbit hole there was only one way out - finish reading.

I’ve been traumatized.

Sorry for the emotional scars. I really thought my summary was enough to indicate what would be found inside the article. It's also not the first time I've linked incredibly insipid articles at SA just for fun. My twisted sense of humor at work. I also must point out the 18 "funnys" my post currently has.

 

[Artful Dodger]

Yikes. I presume what they don’t have to disclose is their short position.
That they can dump 8M shares whenever it benefits them is obviously of concern. Just depends which side of the trade they are on at any given time.
Can someone remind what the volume was that caused the Feb 4 drop?

No, they are a Market Maker. Its their clients (such as Hedge Funds) that dump short shares. The Feb 4th bear raid saw 2.5M shares traded in 7 minutes, which knocked the SP down by $94 (-10%):

But unprecedented levels of naked shorting continued for 2 more days (reaching nearly 10% of all short volume reported by FINRA). Here's the short volume data for the period from FINRA (we get ZERO short selling data on all the rest of non-FINRA shares traded on NASDAQ).

In fact, there where 4 episodes of prolonged naked shorting of TSLA (with the 'uptick rule' in effect) during 2020Q1, three of 2 days duration each, and one of 6 continuous days of abnormally large percentage of naked shorting. Make no mistake: the Market Maker's Exemption to the SEC prohibition against naked shorting was abused at the great expense of TSLA Shareholders. Here's the summary table:

 

[j6Lpi429@3j]

FWIW There is a whole (fascinating) book about people like citadel... they are the original dark pool:
https://www.amazon.co.uk/Dark-Pools-I-trading-machines/dp/1847940986
I think the book is called 'quants' in the US.
Basically citadel used to be an early 'hidden' exchange where AI algorithmns did high frequency trading away from the glare of the main markets that us ordinary peasants traded on...

 

[Hock1]

We all know MMs typically delta hedge their call options by buying shares. However, does anyone here know what technically happens to these shares at expiry dates? Some contracts are executed, but are the remaining shares sold to market instantly? Probably the effect on SP is not very relevant, but just trying to understand the dynamics behind.

Don't bother. Even if you totally understood the dynamics, you would still be a loser trying to beat them. Just buy the stock and hold until TSLA's growth starts to wane. Then consider selling. Let's talk in 5-10 years. GL.

 

[JustSaying]

"Besides, the fun is in the journey not the destination
☝

 

[woodisgood]

No, they are a Market Maker. Its their clients (such as Hedge Funds) that dump short shares. The Feb 4th bear raid saw 2.5M shares traded in 7 minutes, which knocked the SP down by $94 (-10%):

View attachment 535471

But unprecedented levels of naked shorting continued for 2 more days (reaching nearly 10% of all short volume reported by FINRA). Here's the short volume data for the period from FINRA (we get ZERO short selling data on all the rest of non-FINRA shares traded on NASDAQ).

In fact, there where 4 episodes of prolonged naked shorting of TSLA (with the 'uptick rule' in effect) during 2020Q1, three of 2 days duration each, and one of 6 continuous days of abnormally large percentage of naked shorting. Make no mistake: the Market Maker's Exemption to the SEC prohibition against naked shorting was abused at the great expense of TSLA Shareholders. Here's the summary table:

View attachment 535473

I wouldn't read too much into this. Citadel Securities is the market-making business, not the hedge fund.
This ownership can be part of a myriad of delta-neutral, gamma-neutral market-making strategies.
Unlike the hedge fund, they don't actually do buy-side investments, so I suspect that this position was already hedged by some combination of derivatives trades, and possibly even some combination of the convertable bonds.

Now on the other hand, if Citadel LLC (the hedge-fund), acquired $5B of $TSLA, that'd be another story.

Yeah thanks. I didn’t previously understand the difference between Citadel Securities and Citadel LLC.

 

[Krugerrand]

@Krugerrand
its easy to get rid of your SA fix.
just constantly contradict Monostat Styptic. tell him he's wrong, providing correct numbers
you get put on permanent double secret monitoring and can never again post there without getting posts "checked" and no longer even it seems to post in MS comments.
actually helpful "cold turkey" as SA is a waste of time

I’ve been banned from posting there since 2013.

 

[willow_hiller]

Yeah thanks. I didn’t previously understand the difference between Citadel Securities and Citadel LLC.

I will say, we're not the only ones. Barrons had a news flash that seems to conflate the hedge fund and the market maker as well: Hedge Fund Citadel Discloses Huge Stake in Tesla Stock

 

[MC3OZ]

The original art being patented is the sintering process to create the single crystal anode material, not the chemistry per se:

“Method for Synthesizing Nickel-Cobalt-Aluminum Electrodes.”​

EDIT: This is probably bad news for shareholders of anode powder manufacturers: Sounds highly likely that Tesla is setting themselves up to produce their own anode materials

Again, it is highly unlikely that Tesla will include any Cobalt in their new batteries. This patent is NOT the whole recipe, or even binding on what they will produce. It's IP, and another tool in Telsa's toolbox.

Thanks I must admit this patent threw me at first, because I was wondering how it would combine with Maxwell.
There is an art in writing patents, making claims as wide as possible, while revealing as little as possible.

I remember there was some talk about whether milling in the Maxwell process could deliver "something like" single crystal, you don't need "something like" when you have the real deal.

The complete shopping list of battery Investor Day is:-

• Cobalt Free - Dahn
• Single Crystal - Dahn
• Some Silicon ? - SilIon?
• Dry Electrode - Maxwell
• Million Mile Electrolyte - Dahn
• Larger Form Factor? - Tesla / Maxwell
• Cell-to-Pack? - Tesla
• Improved Cooling? - Tesla
• Fast low capex addition of capacity - Maxwell/Hibar/Grohman/Tesla

Given that Elon's mind has been blown, I'm optimistic we will get a fair chunk of the shopping list...

Special credit must go to the Dahn team for working out what problems were important, and solving 3 very important problems in what seems to me like a shorter than normal time-frame...

Roll on Battery Day, I'm like a kid waiting for Christmas ....

Cheers.

 

[Cirrus MS100D]

I will say, we're not the only ones. Barrons had a news flash that seems to conflate the hedge fund and the market maker as well: Hedge Fund Citadel Discloses Huge Stake in Tesla Stock

This article is what confused me as well. I have a hunch that this is a robo-generated article based on standard filings. Or at least, it's written as poorly as one.

 

[Artful Dodger]

After-action Report: Fri, Apr 24, 2020: (Full-Day's Trading)

VWAP: $714.88
Volume: 13,254,875
Traded: $9,475,682,555.68 ($9.48 B)

Closing SP / VWAP: 101.48%
(TSLA closed ABOVE today's Avg SP)​

FINRA Short/Total Volume = 58.7% (52nd Percentile rank Shorting)
FINRA Volume / Total NASDAQ Vol = 55.0% (60th Percentile rank FINRA Reporting)

Comment: "It's a swingin' town, so it's up and down in TSLA (twist, twist)"

♫ The Bedrock Twitch ♫

 

[capster]

The U.S. Congress has gone (and will continue to go) to great lengths to protect the Markets (read: Wall St.). As such, they are pumping literally trillions of dollars into the Market, with no increase in underlying assests to back it.

This generally leads to an inflationary spiral, but IMHO this Market cycle will be different than most recessions of the past: I expect HYPERINFLATION in the Markets, while Mainstreet languishes in unemployment, persistent restrictions on personal travel, and spotty outbreaks of health issues.

So, S&P 500 goes to 5K, while unemployment lingers around 20M? Or figures resembling that result.

I am trying to wrap my ahead around the fact governments will be printing money while many if not most people are producing less or nothing of economic value. And then trying to weave in various possibilities for the time course of real progress on the virus.

It seems to me that this is all a recipe for massive distortions — just not sure what all they might be and when, though, yes, inflation looms.

I’m comfortable with my TSLA position, but have no idea where it will go over the next several months. Outside of TSLA and a couple other things, I’m not sure what I’d do in the way of buy-to-keep investments beyond keeping a sharp lookout for opportunities to make said investments.

 

[Singuy]

I am trying to wrap my ahead around the fact governments will be printing money while many if not most people are producing less or nothing of economic value. And then trying to weave in various possibilities for the time course of real progress on the virus.

It seems to me that this is all a recipe for massive distortions — just not sure what all they might be and when, though, yes, inflation looms.

I’m comfortable with my TSLA position, but have no idea where it will go over the next several months. Outside of TSLA and a couple other things, I’m not sure what I’d do in the way of buy-to-keep investments beyond keeping a sharp lookout for opportunities to make said investments.

The U.S is not printing money per se. They are issuing large amount of bonds and investors(like our social security fund) plus other countries are buying them up at a specific interest rate. The U.S will eventually raise taxes when things return to normal to pay this massive debt off. It's not a huge infusion of mass inflation with printed money or anything.

 

[FrankSG]

Tesla patents battery chemisty in order to release it into the public domain, via their open patents policy. IMHO, this is done to support the growth of the EV industry (and 2ndy to CYA on anti-trust suits post 2025...

I watched the Bill Gates documentary on Netflix last weekend. It's great and I highly recommend it, especially episode 3 which covers sustainable energy.

However, the most interesting part to me was about the Microsoft antitrust lawsuit from a few decades ago, and especially when they mentioned that a big part of it was Microsoft intentionally using shady tactics to limit competition.

Listening to that I realised that Tesla's public stance, open sourcing of patents, openly inviting competitors to use their Supercharger network etc. are all the exact opposite of what Microsoft tried to do. Tesla is not trying to get rid of the competition, but promote it.

Sadly, the 'competition' hasn't stepped up to the plate, but no government could ever argue in court that Tesla hasn't tried to promote competition, let alone stifle it.

If Tesla gets to a majority market share position or even Microsoft levels of dominance, all of this would help them tremendously in court if it ever gets to that point. Tesla has always welcomed competition with open arms, but it is winning fair and square through superior execution.

 

[tinm]

This new ProPublica article claims Tesla has only 10% of lithium-ion battery output worldwide and China completely dominates the world market.

https://www.propublica.org/article/to-understand-the-medical-supply-shortage-it-helps-to-know-how-the-us-lost-the-lithium-ion-battery-to-china

Is this accurate? I was under the impression Tesla, thanks to GF1, was far in the lead, and that with Battery Day announcements coming, Tesla’s lead would only dramatically increase.

 

[StealthP3D]

@StealthP3D
note:
MS seems to be retired at a young age, so he has a lot of free time on his hands
{{he probably needs the pennies from the clicks}}

I suspect Montana Skeptic is probably a trust-fund baby judging solely by his persona, etc. He fits the mold to a tee. Had everything handed to him by a hard-nosed grandpappy or daddy who didn't know how to show love, only make money. Now he's struggling to follow in their footsteps. He hates high-flying stocks because he bought the wrong ones at an early age, blew a good portion of his huge inheritance, and now is bitter over the whole thing. He transfers his bitterness to companies that remind him of those that went bust on him but he's too stupid to tell the difference. He's highly educated but dumber than a doorknob. And he probably still has monthly payments coming in from a trust account.

So I doubt he writes this crap for the money. That's my $0.02 psychoanalysis.

 

[MC3OZ]

This new ProPublica article claims Tesla has only 10% of lithium-ion battery output worldwide and China completely dominates the world market.

https://www.propublica.org/article/to-understand-the-medical-supply-shortage-it-helps-to-know-how-the-us-lost-the-lithium-ion-battery-to-china

Is this accurate? I was under the impression Tesla, thanks to GF1, was far in the lead, and that with Battery Day announcements coming, Tesla’s lead would only dramatically increase.

That article strikes me as having a agenda, but other sources seem to back it up:-
Why China Is Dominating Lithium-Ion Battery Production

According to an analysis by BloombergNEF, in early 2019 there were 316 gigawatt-hours (GWh) of global lithium cell manufacturing capacity. China is home to 73% of this capacity, followed by the U.S., far behind in second place with 12% of global capacity.

Stats are always out of date, GF1 production did grow in 2019, but Chinese production probably grew faster.

 

[MC3OZ]

with Battery Day announcements coming, Tesla’s lead would only dramatically increase.

I think Battery Day announcements will be very significant, Tesla can move beyond being cell constrained and scale pack production to meet vehicle / storage production as needed.

I see it more as Tesla narrowing the gap on the Chinese, and most others being left well behind for a few years.