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

[Intl Professor]

I'm getting tired of all this palaver about stock split. It is what it is in effect. You end with five times more shares in your account at price change appropriate to market change. If no change in price, they are each valued 1/5 of before. No change in total value.

KISS.

Some of the imagined games here are impossible or illegal.

I'll delete any future posts I catch.

 

[S3XY]

Just when I thought this week of TSLA gains couldn't get any better I get a 'Love' rating from @Artful Dodger instead of the usual 'Informative'. Oh crap, this IS a simulation.

 

[Khamul]

I'm getting tired of all this palaver about stock split. It is what it is in effect. You end with five times more shares in your account at price change appropriate to market change. If no change in price, they are each valued 1/5 of before. No change in total value.

KISS.

Some of the imagined games here are impossible or illegal.

I'll delete any future posts I catch.

I have to admit I am getting quite sick of all these posts about the split. Not that there's anything wrong with posting about it, it just makes my head spin, and I understand very little, except that we get five times the amount of shares, and SP is divided by five. I am very much looking forward to the 31th.

 

[Off Shore]

We should know by now that stuff the casino owners want to work, works. And AFAICT the casino owners want stock splits to work, based on personal experience and WAY TOO MUCH READING ABOUT IT here.

 

[Steve m]

Next week is Aug 24-28. The OP is talking about not having his dividends in place by Sep 3rd and no guarantee of that date either.

Do you understand the implied/potential issues for UK beneficial owners of TSLA?

What are the odds that this is the first time your broker has had to deal with a US company doing a stock split.

Go talk to your broker if you are worried. Pointless to spread these worries around.

 

[Open Interest]

Do any of you use Schwab as a broker? It’s interesting to me that many of you have posted messages from you broker about how the split will be handled. Schwab has not communicated anything to me regarding either my TSLA or AAPL holdings. There is a “forward split” notation under TSLA but no such notation under AAPL.

 

[StealthP3D]

Good article, thanks.

I wonder why the cost of financing for the Camry is so much out of line (lower) as compared to the other two...

Agree. It should be less expensive to finance the Model 3 because it has better resale value and sells more quickly (on average).

 

[dl003]

Right? The rest of the article is almost trying to convince you to short with Spiegel spewing his trash.

yeah, its like "the longest unprofitable short I've ever seen... but heres the rationale why you should follow us." I think Im gonna pass

 

[astrotoy]

Do any of you use Schwab as a broker? It’s interesting to me that many of you have posted messages from you broker about how the split will be handled. Schwab has not communicated anything to me regarding either my TSLA or AAPL holdings. There is a “forward split” notation under TSLA but no such notation under AAPL.

Mine is Fidelity. I just opened my account and only saw the message about proxy voting - nothing about how the split will be handled.

 

[Artful Dodger]

with regard to the role of naked shorting going into a stock split, there was a dedicated thread about this as early as 2013:
The Rolling Naked Tesla Short

Thank you for finding this thread from 2013 created by notable TMC contributor @luvb2b it's an amazing backgrounder to the current discussion, and comes more from a insider's technical understanding of the MMs short selling exemption for Option hedging.

He points the finger at likely a large MM conspiring with a hedge fund for options purchases causing the near instantaneous naked short sales sometimes amounting to up to 2% of TSLA entire outstanding shares (not just the float).

The best part of the thread IMHO is how he explains the mechanism for perpetuating a naked short position thereby avoiding paying carrying charges for share borrowing ( @Boomer19 this explains why TSLA borrow rates are low; this scheme doesn't depend on borrowing shares conventionally thus does not drive up the cost of borrowing shares), all the while never intending to deliver actual shares associated with these outsized naked short sales. @luvb2b comments that this is likely an illegal scheme.

Paging @StealthP3D @FrankSG @Hock1 I think we finally have stumbled upon our viable mechanism for naked shorting, and by extention, how this scheme is disrupted by inducing other MMs to call in their short shares in advance of a Share Dividend dispersment.

This scheme depends upon the hedge fund purchasing Options, which then induces the MM immediately to sell large numbers of TSLA shares due to their delta-hedging requirements. The hedge fund thus able to employ naked short selling by MMs to sell massive numbers of shares w/o locating them first, or paying the fees associated with borrowing shares to sell short. The other advantages are speed and the ability to sell arbitary numbers of shares without the normally expected restricts of supply, demand, and cost elastisity of borrowing those shares. Or as @Unpilot would say, "bastages".

This is the ACTUAL MECHANISM by which this scheme is able to crater the SP: They can short sell an arbitary number of shares, indeed however many shares are needed, to burn through the order book and thus force the SP to their desired price, thus making these shorts almost instaltly profitable. That's what we saw with the huge SP plunges on Feb 4, 2020 and again on July 13, 2020.

I believe this is also what we saw on Fri, Aug 21, 2020 from 3:32 to 3:36 pm where dumping 573K shares dropped the SP from $2,079.89 to $2,049.05 in 5 minutes. And magically, Call Writers (mostly MMs) saved about $28M in payouts to holders of those $2,050 Strike Call contracts (just ask for details if ur curious).

And the 2nd best part of the 2013 thread by @luvb2b ? Almost nobody else has ever read it.

So here's a link which will take you back to the discussion in Apr 2013. Note that @luvb2b has not been active on TMC for over 29 weeks, according to his profile so we will likely be best served by continuing this discussion here in Main rather than on the old thread:

if my theory is correct, the behavior is illegal. this trader is effectively shorting with no intent of ever delivering shares. the market maker helping him also would be running afoul of sec rules.

Regards,
Lodger

 

[StealthP3D]

Pondering on taking action around Aug 29th- Sept 2nd. (esp. if we see a big rise next week).
1. Sell (some)
2. Sell some Sept 22 3800's CC's going for like 450$ +
3. + Could just sell enough shares to be $0 principal investment across all portfolios.

If I do(option 2) against 1 of 3 portfolios , my principal investment on Tesla will be $0, and still up another couple of Mils, if we hit 3800s.

Good chances of a pull back post Split, esp if this is due to Naked Shorts being "caught with their hands out of the cookie jar(no shares)". Need to think through if S&P, Battery Day expectations can out weigh the post split downward pull. ( a short interval b/w the two - post split vs S&P, battery Day looks possible, and that would be the time to get back in.)

(Let the disagrees begin , I know we are never supposed to sell )

This is the first time since the beginning of last year that I think selling some could be a reasonable strategy for some. Not that I don't think it will be higher in a year or two, just that you would not be leaving massive gains (in the shorter term) on the table. By that I mean it's unlikely to double before the year is out (except through a temporary event, like a squeeze of some sort). That said, in a taxable account, it's still probably not the brightest move. The benefits of letting your untaxed gains continue to appreciate through this decade will be huge.

This story is far from played out but everyone's financial situation is different (right down to the percentage that TSLA is of liquid assets).

 

[TSLA Pilot]

Thanks a million, literally, to this forum. I’m happy to say this week I’ve joined the Teslanaire club. Started buying the stock in early 2018 after reading Ashley Vance’s biography about Elon, recognized his vision was the right one for doing something constructive to address climate change (by trade, I’m a federal scientist that studies climate effects on endangered species), luckily discovered this discussion board in mid 2018, and went all-in over the next year as I learned everything about Tesla from reading your posts 20-30 minutes a day, everyday. I’ve learned more about investing from this hive mind in the last 2 years than the previous 18 going it alone. My portfolio and prospects for an early retirement and doing good for my family and friends have swollen beyond my wildest dreams and life going forward is irrevocably altered regardless of how the stock may fluctuate over the next decade or more that I continue to hold it. In particular, my thanks for wealth wisdom & technical insights over the last few years to: Neroden, FactChecking, StealthP3D, The Accountant, Reflex Funds, KarenRei & dozens of others that contribute nuggets of gold to this collective.

My family still doesn’t own or drive the cars but unbeknownst to the wife, she’ll find a M3 parked in the garage for her next xmas morning, which’ll be joined by my Cybertruck a few years later. We went solar on our new house several months ago and look forward to driving exclusively on sunpower in the years ahead. We didn’t start out as a wealthy family, and the thought never crossed my mind of owning Teslas a few years ago when I started buying the stock, but it’s just the next logical thing to do. Millions of other families will reach that same conclusion in the years ahead and the fossil fuel era will pass into history as that process reaches its culmination. I just hope that Elon’s brilliant plan and execution of the plan have come soon enough to avoid catastrophic climate consequences later this century—that part of the story is yet unknown and to be written. But at least now we have a fighting chance & we'll have some fun while in the fight! Thanks Elon, thanks TMC. Dan

Excellent post and a wonderful tribute to some of our best posters (for as long as we had them).

TL;DR version: Do NOT sell ANY shares to buy anything. You'll end up like one of our previous posters here that sold shares to buy a Model S years ago--it ended up being a nearly 7-figure Model S because of how much the shares have grown . . . .

Suggestions:

1. Strongly consider continuing your investments in TSLA and simply borrow against your holdings--never sell the actual assets. This a generation-transforming asset as the value of TSLA in the decades ahead is hard to quantify exactly, but it is likely to be equivalent to deep five-figures per share (accounting for splits, of course). There is just way too much going on at Tesla to list here, but they are just getting started. (Given the massive inefficiencies and general stupidity in a typical new home, and too much current ignorance that the true cost of a house isn't just PITI--it's PITI and Utilities--a new division of Tesla, Tesla Home, is something that will be a reality within the next five years, maybe less. It's a massive, untapped market.)

2. You're on a wonderful path towards a reduced carbon future, but if you look at the total picture, you'll also want to "de-gas" your entire home. We're doing that now, replacing our two gas water heaters with electric unit; furnaces come next--going to electric heat pumps. (All tie-in well with our PV Solar array, which we plan to upgrade to a solar roof soon as we need a new roof anyway due to hail damage.)

3. If you're not there already, learn that a whole food, plant-based transition is necessary too. See: COWSPIRACY: The Sustainability Secret

***********************************************

Congratulations on your excellent investment choices, but remember we're still in the first few innings: DO NOT SELL any shares!

 

[StealthP3D]

I must admit I find orbital mechanics and hypersonic flight dynamics easier to understand than financial instruments. So a simplistic question: if the old splitterino* put a damper on naked shorting and precipitated share purchases and SP rise, what happens afterwords? Do those shares get sold to recoup the expense of buying them (SP crashes) and naked shorting recommences?

No. When buying to cover naked shorts, those freshly bought shares essentially evaporate as soon as they are purchase (because they are being used to "make good" on fictional shares they already sold).

 

[StealthP3D]

2nd best part? I appear to be only the 2nd person to ever read that thread.

Huh?

 

[MikeAtkinson]

In Tesla Battery Day Thumbnail Hints at High-Performance Nanowire Supercapacitor Eva Fox points out that Tesla have a habit of giving clues in their announcements and that the background is probably a clue to battery day.

She then goes on to guess that it is nanowire supercapacitors, linking it to research out of University of Central Florida https://www.researchgate.net/profil...ormal-Growth-of-Capacitive-2D-WS-2-Layers.pdf which Tesla were supposedly interested in.

Searching for the principal authors turns up very few later papers (e.g. https://pubs.acs.org/doi/pdf/10.1021/acsenergylett.7b01169), and no mention of nanowire supercapactors that I can find. This probably either means that the research was a dead end, or that the research has continued in secret funded by a company (perhaps Tesla) and that they do not need to publish to get public funds to continue the research.

Nanowire supercapacitors are still an area of active research, but I have been unable to find any that improve on the ones in this paper, unfortunately that is still an order less energy dense than Li Ion batteries.

There is I think a small chance that Tesla will announce a nanowire supercapacitor battery, but more likely that it is using nanowires (perhaps Silicon) to increase the capacity of a Li Ion cell. Also entirely possible that this is a completely different technology that is being signposted, though the more I look at it the more it resembles small tubes.

 

[GOVA]

^ to me it looks like graphene foam.

 

[MP3Mike]

Tesla is fighting back, as they should, against a third party enabling Tesla software unlocks:

From Electrek article: Tesla fights back against owners hacking their cars to unlock performance boost - Electrek

The third party claims that they will release an update to by-pass Tesla's detection in a week or two. It will be interesting to see how this game of cat-and-mouse ends. (Probably in a law suit.)

 

[ggr]

Curt, what is the point of the “shareholder of record” date if purchased shares after that date also receive the dividend shares? Is it some sort of archaic accounting mechanism?

Behind the scenes, the share you sell comes with a "due bill" requiring the seller to also deliver the dividend shares.

This is completely transparent to people like us. Just trade as usual, unless of course you are shorting...

 

[UkNorthampton]

its possible the original poster misinterpreted the brokers response. cust serv is usually terrible at brokerages, and DTCCs service desk is worse

brokerages will generally relay canned response like
"DTCC's estimated pay date is xxx", or something a little more crisp than that,
dtcc generally gives estimated allocation date,
then theyll credit the participant and update the pay date on the same day
but to mongo point, there can be a hop or two if the structure of the brokerage one is using isnt direct participant of US DTCC...so potential delay (even in this day in age!)

so in this case it doesn’t sound ominous to me. it’s just plain ol brokerage customer service ignorance

as opposed to the brokerage telling the customers that they don’t know the ex date of the split, or that the split shares will be allocated later then the actual pay date - that would be bad

again some brokers allocate corp action proceeds differently..so it depends
but i would imagine all of them give you some 'placeholder' on ex date so that your acct value is inline with market pricing

The info was sent unprompted by HL (Hargreaves Lansdown). Presumably all of their TSLA owning customers got the same two messages (mistake in first). As they made a mistake in the first message, presumably the second was under the microscope.

According to a 2018 article they had 39% of their 'market' (article definition, not mine) - How big is Hargreaves Lansdown's moat?

I think they make their money from being a platform rather than actively trading anything.

I've never seen a USA share split before, so I don't know what's normal.

As I said before, my other provider (Share.com) hasn't sent me anything, but they're about to merge with someone else, so that MAY be a factor, although it shouldn't be. Or it was sent by post and I haven't opened the letter yet.

Indeed, they're not mentioning the meeting next month, perhaps as it's USA based.

 

[smorgasbord]

The best part of the article is the title.

‘The Longest
Unprofitable Short
I’ve Ever Seen.’
Betting against Elon Musk’s Tesla
is the widow-maker trade of 2020.


‘The Longest Unprofitable Short I’ve Ever Seen.’

I was wondering about this Spiegel quote:

“Some entity — I don’t know who — was executing a strategy of buying massive quantities of out-of-the-money call options,” forcing call-option sellers to buy enough stock to hedge their exposure, Spiegel, founder of hedge fund firm Stanphyl Capital Partners, suggested by phone. “This thing just kind of spiraled its way up.”

Which makes me wonder if instead of just "some entity" it was partially us longs buying out of the money call options as lottery tickets actually ended up driving the share price higher. Wouldn't that be sweet?