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

[perwis]

TSLA looks like a stair over the last week.
Stairway to heaven?

 

[Artful Dodger]

I'm no expert in the accounting of corporate shares but it's apparent to me you know even less. Because every single share has a serial number and there are a fixed amount of them. If you get an actual share certificate it will list the serial numbers. This means phantom shares cannot become 5 new phantom shares - they need actual issued shares to be attached to them. And that is the entire point of the date of record.

There's another ownership/accounting issue to address: Tesla uses a specific legal term the "Shareholder of Record" in their announcement. Contrast that to the "Benefical Owner":

Stockholder of record - Wikipedia

"Stockholder of record is the name of an individual or entity shareholder that an issuer carries in its shareholder register as the registered holder (not necessarily the beneficial owner) of the issuer's securities. Dividends and other distributions are paid only to shareholders of record. Stockholder of record may be also called shareholder of record or holder of record or owner of record"​

With certain Brokers, it is the Broker themself who is identified to Tesla as the "Shareholder of Record". Tesla issued a block of shares to that broker, who manages sales of them with it's clients (my Broker does this; in early years, I couldn't even vote at the AGMs). It is those clients who are the actual "beneficial owners" of the shares, however is internal record-keeping which is all done by the Broker themself. Tesla has no knowledge of the internal state of its shares at that Brokerage, other than Broker 'X' is the "Shareholder of Record" for Y shares (its a 'Trust').

Here's where the potential problem arises for Broker X after a a stock dividend: Tesla accounting says Broker X has 1,000,000 shares so Tesla issues 4,000,000 more shares to Broker X as the dividend. Now if Broker X has been trading properly, these 5m total shares will cover all their needs. However, if Broker X has been creating phantom shares (ie: via their Reg. SHO exemption) then clients of Broker X will have claims on MORE than 5m shares after the split. Bbut the Broker does not have the ability to create these shares (only Tesla does).

The Broker either has to go to the Open Market to buy sufficient shares to cover their shortfall before the split (driving the SP up >50% since the Stock Dividend annoucement), or the Broker has to buy the shares back from the "Beneficial Owner":

• scary FUD is on the job (as usual? more than usual?)
  
• 'Sell your Shares' buttons on the Broker's App.

This last behavior is a dead give-away that monkey business is going on at a Broker.

Cheers!

 

[dl003]

Hmm, RSI remains elevated but not overbought for TSLA.... the short stew goes on.

 

[woodisgood]

First drive of Polestar 2, the electric sedan for buyers wanting European style - Electrek

Dripping with contempt - this is a perfect example of how consumers quickly want to revolt against what is perceived to be becoming mainstream.

 

[TexasGator]

I bought another 10 just for the hell of it.

currently 8 pages back... but I also put in orders for some souveneirs

1 @ 2100
1 @ 2103.45

 

[oldTAVguy]

I don't think anyone was disputing the naked short part - only the 'normal' shorts (with actual borrowed shares).

I go back and forth on the naked shares question. I initially thought they would have to cover but then the one article about the guy who lost $1M on pink sheet shares (sorry don't have the link handy) talked about how the CUSIP changes and that creates zombie share on the books of the market makers who don't cover. Basically a liability that can never be covered. I haven't mulled over that enough to think of how that could actually happen or what would happen in the future with that liability.

Ultimately I don't care. The brokerages will have all of this taken care of. Non-event for 99.99% of us with the TSLA stock and I'm not going to be investing in any market makers that might implode because of any zombie shares.


edit: found the link The Penny Stock Chronicles — An Investigative Series by The Intercept

But with shorts the person/broker clients, that were borrowed, still think they have their shares, but they are now synthetic, these shares need to be paid in real post split shares. The shares have to come from somewhere they have to be bought from the market, they cannot be just book entries. Remember that most of our shares are in "street name" and that they are tracked by the broker, not Tesla. Proxies are handled by special companies that keep this stuff sorted out.

 

[M|S|M MYP]

Good friend texted me this morning (I recommended buying $TSLA at $900 and said that was his last chance to get in at 3 digits, he bought 50 shares which is a lot of $ for him). Text read "I've made more $$ since i bought $TSLA when you told me to, then in the last 8 years of my investment account at work" It's texts like this that make me feel good. Although i wonder what the text would have read if $TSLA was $420 today...oh wait....that is happening on the 31st.

 

[oldTAVguy]

Some of us have lived through multiple national currency replacements. I have lived through seven of them. Stock splits do not mean much in comparison. Just as with the currency example, some governments figure out ways to cause any change into a taxable event, no matter how inconsequential it is in reality.

If it a taxable event is does have real consequences.

 

[Sofie]

Hmm, RSI remains elevated but not overbought for TSLA.... the short stew goes on.

So you’re saying there are people out there actually shorting this thing....

 

[TSLA Pilot]

Gartman: Tesla stock surge reminds me of dot-com era’s now defunct businesses

Of course, people have been saying this for quite some time. For instance, back in Feb:
Tesla draws comparisons to past speculative bubbles: ‘Stock is going to get absolutely clobbered’

Even better, Google "Dennis Gartman Tesla" and see his history.

Looks like he didn't "get" Tesla back in 2018 either. At his advanced age (70) his rigid thinking doesn't do well trying to understand a disruptive company like Tesla. Sad, but a good fit for Faux Business. (He's bullish on gold though--something even Warren Buffett finds comical).

Tesla has very real problems: Dennis Gartman

[Apr 3, 2018-- On Tesla: "One of the great scams of our time." Cute and hopelessly wrong here too: "AMZN in dire straights." It was under $1,400 as he spoke; now it's at almost $3,300. So he's on the wrong train, going the wrong way, but riding it to the very end of the track. With his video record of hopelessly bad calls, we DO have some good news: if this is the best "bear case" arguments that Faux News can find, it's best to heed the "contra-advice." Do the exact opposite. Back up the truck and load up on TSLA . . . . ]

 

[LN1_Casey]

https://twitter.com/enn_nafnlaus/status/1296857484255264781

OMG, @KarenRei post.

 

[StealthP3D]

There's another ownership/accounting issue to address: Tesla uses a specific legal term the "Shareholder of Record" in their announcement. Contrast that to the "Benefical Owner":

Stockholder of record - Wikipedia

"Stockholder of record is the name of an individual or entity shareholder that an issuer carries in its shareholder register as the registered holder (not necessarily the beneficial owner) of the issuer's securities. Dividends and other distributions are paid only to shareholders of record. Stockholder of record may be also called shareholder of record or holder of record or owner of record"​

With certain Brokers, it is the Broker themself who is identified to Tesla as the "Shareholder of Record". Tesla issued a block of shares to that broker, who manages sales of them with it's clients (my Broker does this; in early years, I couldn't even vote at the AGMs). It is those clients who are the actual "beneficial owners" of the shares, however is internal record-keeping which is all done by the Broker themself. Tesla has no knowledge of the internal state of its shares at that Brokerage, other than Broker 'X' is the "Shareholder of Record" for Y shares (its a 'Trust').

Here's where the potential problem arises for Broker X after a a stock dividend: Tesla thinks they have 1,000,000 shares so Tesla issues Broker X 4,000,000 more dividend shares. If Broker X has been trading correctly, these 5m total shares will cover all their needs. However, if Broker X has been creating phantom shares (ie: via the Reg. SHO exemption) then clients of Broker X will have claims of MORE than 5m shares after the split, but the Broker does not have the ability to create these shares (only Tesla does).

The Broker either has to go to the Open Market to buy sufficient shares to cover their shortfall before the split (which would be the case during this week after the announcement), or they have to buy the shares back from the "beneficial owner" (scary FUD is on the job) and also place 'Sell your Shares' buttons on the Broker's App. This is a dead give-away that monkey business is going on at that Broker.

Cheers!

Thank you @Artful Dodger ! You said it better than I could have.

 

[TSLA Pilot]

Can you believe we are +50% since the split announcement?

Just wow!

Theory:

Stock split created even more TSLA publicity.

Basic research gives many more people awareness of the pending string of massive big news/good news events coming in the months and years ahead, a very short time in WS terms.

More people start buying TSLA . . . .

 

[bhzmark]

From Feb 2020:

Who else feels a moral obligation to buy a new Tesla?

Who else feels a moral obligation to buy some Tesla solar panels or roof?

 

[mongo]

OK, we will just have to agree to disagree on this. Because I'm fairly certain the new shares are assigned on an individual basis for purposes of accounting for the shares that exist on the corporate level.

They are assigned on brokerage by brokerage basis.The brokerage handles the individual internal accounts.

Exactly! Counterfeit money doesn't get assigned new dollars - it creates an imbalance that must be rectified.

If you are talking short positions without a borrow, yes that is a potental issue assuming it wasn't the brokerage doing it internally .

To be clear, that is exactly what I'm contemplating. Unaccounted shares are not issued 4 new shares. It forces a complete accounting to take place during this specific period! Anyone who issued unaccounted for shares has to make good on them, not at their convenience, but at this point in time.

Whether it creates a short squeeze is a seperate question and that would depend upon the size of the (assumed) phantom share problem.

The complete accounting you speak of is for intrer-brokerage transfers. If side A invented shares that it sold to B then A+B will be the wrong number. A will be over reporting by the number of generated shares. However, A could just as likely report the number as if they had borrowed shares, and run the same % deficit that they had originally.

Side A only runs into trouble if client withdraw more shares than exists

Thank you @Artful Dodger ! You said it better than I could have.

Or in the case, side X.
No one knows that the president of the bank embezzled most of the money until enough is withdrawn to cause an issue.

 

[Nocturnal]

If we get a split at $2100 that will confirm that we are in a simulation. That means I'll have to buy some cool black leather trenchoats and say "whoa" a lot.

Also, this is going to be a LONG weekend for anyone short.

 

[M|S|M MYP]

Tesla stock looks unstoppable even at $2,000: strategist

 

[StealthP3D]

They are assigned on brokerage by brokerage basis.The brokerage handles the individual internal accounts.

It's irrelevant who compiles the accounting of all the shares on an individual basis, the relevant fact is that it must be done and the books must balance.

 

[Nocturnal]

First drive of Polestar 2, the electric sedan for buyers wanting European style - Electrek

Dripping with contempt - this is a perfect example of how consumers quickly want to revolt against what is perceived to be becoming mainstream.

This Bradley guy sounds like a doosh.

They leave all the superlatives to other automakers with messianic ambitions and their faithful followers.

Oh, man. Soooo edgy.

From Feb 2020:



Who else feels a moral obligation to buy some Tesla solar panels or roof?

They don't sell here yet and my roof is too shaded. Stupid trees.

 

[hobbes]

to the degree that the unaccounted (by a central clearing house or depository) for short, borrows and loans, inflate...is what could be a catalyst for such scrambling by participants to reduce these balances in time. i think this is what many are contemplating...

i am..but i argue that in order for them to consider scrambling to reduce this exposure, we need added catalyst that drives the demand for borrowable shares above supply

If we assume for a moment that this was the case ("scrambling by participants to reduce these balances in time") - how would you define "in time"? Up until today? Meaning they could get back into exposure as soon as next Monday?