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

[StarFoxisDown!]

Do we, though?

Yes, Tesla has a high amount of shares held by insiders and we all know Elon isn't selling. Then you take the big time investors such as Ron Baron who have publicly stated where they think the stock will be valued. You have multiple parts of Wall St finally accepting that Tesla is fairly valued at 600/share and recognizing future potential. And you think institutional investors are going to completely fine offloading their shares at 600 or even 700/share? I don't........and it's not like they would only have to offload a small percentage of their shares for the math to work out to match the index fund buying. They would have to offload a lot of shares.

Which bring me round to my other point which is that I don't believe hedge funds have been able to front run nearly enough shares to get even remotely close to the 120 million shares needed by index funds. It would have required those same institutional investors that we're speculating might sell after inclusion around 600-700/share to have been willing to sell in the 450-600 range.

 

[Unpilot]

Exactly! My Jan 15 calls were worth 50% more last Thursday at $617 than they are today.

I'm still way way up so it's not like I'm suffering. First world problems, LOL!

Ahh nothing like watching option's decay...yes so fun/s

 

[Pezpunk]

Long time lurker here.


After reading a lot here and elsewhere it becomes clear to me that this scenario becomes more and more likely:

1. The inclusion spike is already behind us ($150+ rise since the announcement)

2. Front runners have had enough time during the spike to accumulate shares (eventually partly by exercising call options) and will be happy to sell them at a profit to the index funds.

3. Bench mark funds don’t have to buy Tsla to beat the S&P 500. But if they want to, they can wait for a post inclusion dip.

4. As a result there won't be a further spike

5. Short term call option players (like me) are caught like a deer in the headlights.


I hope I’m wrong but I’m afraid not.

the funds still have to buy many millions of shares they don't currently own. there's no way around that.

 

[lafrisbee]

at 12:28 it looked to me as if a smart slow buyer has come to the chowline

 

[Johan]

Bench mark funds don’t have to buy Tsla to beat the S&P 500. But if they want to, they can wait for a post inclusion dip.

But if big benchmarks funds put huge buying pressure on the stock during the "post inclusion dip" won't that dip then be turned in to a new run-up?

In other words what @Pezpunk says:

the funds still have to buy many millions of shares they don't currently own. there's no way around that.

 

[StarFoxisDown!]

Long time lurker here.


After reading a lot here and elsewhere it becomes clear to me that this scenario becomes more and more likely:

1. The inclusion spike is already behind us ($150+ rise since the announcement)

2. Front runners have had enough time during the spike to accumulate shares (eventually partly by exercising call options) and will be happy to sell them at a profit to the index funds.

3. Bench mark funds don’t have to buy Tsla to beat the S&P 500. But if they want to, they can wait for a post inclusion dip.

4. As a result there won't be a further spike

5. Short term call option players (like me) are caught like a deer in the headlights.


I hope I’m wrong but I’m afraid not.

The inclusion spike can't already be behind us if the index funds haven't done any buying yet.

I don't get why some people continue to say this. Today was the first day SOME index funds could even start buying. And just look at the volume throughout today, They're not buying yet. Probably the only time so far this morning looked like it could potentially be some index fund buying is the volume that came in at 10:22 am that was total about 1.5 million shares bought. So 1.5 million shares.....out of 120 million needed.

 

[Johan]

The inclusion spike can't already be behind us if the index funds haven't done any buying yet.

I don't get why some people continue to say this

The only way this concept could be somewhat coherent would be if, through some big money shenanigans, the index funds already have "done their buying" through some kind of arrangement where for example a managed fund under the same umbrella has bought shares and has a deal to sell these to the index fund when they're set to buy. Or if the stock is so heavily "over bought" (never liked that term but it could maybe apply here) that there are millions and millions of shares currently held by short term speculators (the "front runners") who are just waiting to sell.

 

[Rhoon-NL]

the funds still have to buy many millions of shares they don't currently own. there's no way around that.

Yes, during the closing cross from front runners.

 

[Knightshade]

The inclusion spike can't already be behind us if the index funds haven't done any buying yet. .

Sure it can.

If front runners bought lower than this and are happy to sell for this on Friday close.

 

[StarFoxisDown!]

The only way this concept could be somewhat coherent would be if, through some big money shenanigans, the index funds already have "done their buying" through some kind of arrangement where for example a managed fund under the same umbrella has bought shares and has a deal to sell these to the index fund when they're set to buy. Or if the stock is so heavily "over bought" (never liked that term but it could maybe apply here) that there are millions and millions of shares currently held by short term speculators (the "front runners") who are just waiting to sell.

Don't get me wrong, I do think there was front running and there will be sell side volume from that. But if you read through my other posts, considering how much of Tesla's available float is held by insiders and investors that won't sell at these share prices, there simply isn't enough float available to come close to front running this thing.

 

[Big Time]

The inclusion spike can't already be behind us if the index funds haven't done any buying yet.

I don't get why some people continue to say this. Today was the first day SOME index funds could even start buying. And just look at the volume throughout today, They're not buying yet. Probably the only time so far this morning looked like it could potentially be some index fund buying is the volume that came in at 10:22 am that was total about 1.5 million shares bought. So 1.5 million shares.....out of 120 million needed.

I agree. Until I see Tesla in IVV and Spyder I wouldn’t be certain any movements up till that moment in time are relevant at all

 

[Johan]

Don't get me wrong, I do think there was front running and there will be sell side volume from that. But if you read through my other posts, considering how much of Tesla's available float is held by insiders and investors that won't sell at these share prices, there simply isn't enough float available to come close to front running this thing.

Sure it can.

If front runners bought lower than this and are happy to sell for this on Friday close.

I tend to agree with @StarFox here...

 

[TheTalkingMule]

The math doesn't add up though for that to be possible. If the stock stays in the mid 600's by Tuesday/Wed of next week, that'll mean index funds have bought all 120 million shares they needed to buy. Which means there would have been 120 millions shares front runned and/or shares willing to be sold by institutional and big whale investors. Considering how much of the float is held by insiders and institutions/big whales that we all know for a fact will not sell at any price right now (well at least not under 1,000), the available float of Tesla simply doesn't allow the math to add up for there to be 120 million shares essentially taken out of actively traded hands and it NOT rally and then sell off.

The profit taking and the front running sell volume will get eaten up by the index fund buying. Even if that equals out (which I do not think its remotely possible), at the end of inclusion, there would be no more shares left for selling from profit takes and hedge funds that front runned the stock. We would be looking at a situation where a very, very strong new base floor has been set and the stock will rally going forward( albeit at a slow pace)

Some of these conviction levels in this post are a bit exaggerated, but on the whole I feel it's accurate. I've seen nothing so far that tells me this buying demand can be absorbed at close Friday. Not even remotely. Does that mean we see some mega-spike to $1200, I highly highly(like 99.5%) doubt it. But that doesn't mean buyers won't be scrambling on Monday after the supply at close Friday is exhausted.

And the biggest thing not being mentioned enough here is these shares ARE NO LONGER ON THE MARKET after being bought by an indexer. That impact alone squeezes us up the week of the 21st so long as literally all the longs don't sell at $675.

I think longs are willing to start selling around $800, and not significantly below something like $950. Personally, I don't think Tesla should be worth anything close to $1T right now, but I know for a fact that it'll be valued at least $1.5T in 3-5 years. Why would I sell for under $700B market cap if I had that level of recession proof certainty?

I guess we'll find out soon enough! I'm gonna keep buying 12/24 $700's if and when they get cheaper.

 

[Sanny]

Sure it can.

If front runners bought lower than this and are happy to sell for this on Friday close.

So here's what I can not understand in this theory: they probably could start seriously buying only after Dec 11, correct? And the price since Dec 11 did not go substantially lower than $610, correct? So what's the deal with buying for $610, then skipping $640, $650 and then selling on a pre-arranged trade for let's say $615?

 

[JBRR]

I tend to agree with @StarFox here...

Yep.
Focus less on being right/wrong and more so on estimating what outcomes will branch from right/wrong.

 

[corduroy]

This S&P inclusion is not going the way many of us expected, but we may get some help from big macro tailwinds if the stimulus package goes though by Friday.

 

[Rhoon-NL]

But if big benchmarks funds put huge buying pressure on the stock during the "post inclusion dip" won't that dip then be turned in to a new run-up?

In other words what @Pezpunk says:

Don't think it is a given, because IF they wan't to buy they are not time constraint. They can buy carefully over a longer periode of time.

 

[Knightshade]

Don't get me wrong, I do think there was front running and there will be sell side volume from that. But if you read through my other posts, considering how much of Tesla's available float is held by insiders and investors that won't sell at these share prices, there simply isn't enough float available to come close to front running this thing.

I think you are greatly overestimating the amount held by people who won't sell... (and I think from an earlier post you even included Elons shares- which are already explicitly excluded from counting as float when S&P figures the # of shares needed for the index)

So here's what I can not understand in this theory: they probably could start seriously buying only after Dec 11, correct? And the price since Dec 11 did not go substantially lower than $610, correct? So what's the deal with buying for $610, then skipping $640, $650 and then selling on a pre-arranged trade for let's say $615?

Not sure I understand the question?

The idea is the front running is how we got from the mid 400s to the mid 600s.

All those folks who front ran in the 400-500 ranges will be happy to sell at whatever the closing price is friday to the funds who need to buy.

 

[Tyler34]

You all acting like there are back room deals for funds that are meant to mimic the S&P 500 as if they are competing with each other to eek out .001% more profit than the other S&P 500 funds. THESE S&P 500 FUNDS DO NOT CARE. THEIR BUSINESS ISN'T ABOUT BRAGGING TO THE PUBLIC ABOUT THEIR RETURNS. Their business is about practically no management fees to mirror the S&P 500.

 

[enzo]

The funds cannot wait until the Fri close to buy, because they will not know whether these benevolent, infamous front-runners show up with enough sell orders until 5-10 minutes before. For sure it will be a big close, but it will also be a big up day.