Tracking short interest

[GenIIIBuyer]

OK, I can actually track the fee rate as well. It looks like 0.4268%. Is that annual?

Yes, that's annualized. During the great squeeze of April/May 2013 the rate peaked at over 100% annualized. Was nice having TSLA pay a 100% dividend out of the pockets of the shorts..

If zero shares are truly available across all brokers, then the rate can get pretty volatile. GPRO was a popular short being lent out at 100% this summer. However, that time the shorts were right.

 

[InTheShadows]

Yes, that's annualized. During the great squeeze of April/May 2013 the rate peaked at over 100% annualized. Was nice having TSLA pay a 100% dividend out of the pockets of the shorts..

If zero shares are truly available across all brokers, then the rate can get pretty volatile. GPRO was a popular short being lent out at 100% this summer. However, that time the shorts were right.

How does that interest rate effect me as a share holder? A call options holder?

 

[jhm]

How does that interest rate effect me as a share holder? A call options holder?

In the extremes put/call parity can break down, which means you can buy a synthetic long (buy a call and sell a put at the same strike) for less than a share of stock minus the stike in cash. Thus an investor who intends to be long can sell share, buy a synthetic long, and hold the cash. Then when the options are quite nearly expired can close the synthethic long and buy back shares. In the process, the investor has bought the long at below parity and sold it at parity. Thus the investor collects a nearly risk free premium. Of course, the bid/ask spread can offen exceed the arbitrage opportunity, but in the extreme the the arbitrage opportunity can exceed the illiquidity. So what is happening here is that demand for shares to short so exceeds the supply that shorts are willing to pay quite a premium for this position. Thus, the pay a premium for a synthetic short position as it gives them equivalent exposure. So if shorts are paying a premium for synthetic shots, then longs can collect this premium by selling a synthetic short (i.e., buying a synthetic long). Basically, calls are cheap and puts are dear in this extreme situation. There are other ways longs can take advantage of this.

 

[uselesslogin]

I wanted to check to see if the fee rate was moving at all today but apparently TSLA is back to 0 shares to short at IB.

 

[vgrinshpun]

What is also interesting is that during the last three months of the 2014 there was a huge increase in institutional ownership of TSLA - from 69M shares at the end of Q3 to 79M shares at the end of Q4. It looks like these institutional investors saw a very attractive value proposition in buying TSLA throughout the downturn. I bet that the institutions that now own TSLA are not about to sell it on a $20 pop - it seems that they recognize the long term potential and I doubt that any of them will be selling before TSLA goes toward $300.

Another big group of shareholders are the insiders, which are also long term holders - total of 28.9M shares.

Adding the institutional and insider shareholders and substracting this number from the total outstanding shares is owned by the retail shareholders.

It is logical to assume that retail shareholders would be the group that is on average more likely to sell shares on a relatively small runup. So this is the group that shorts can get shares for covering in case of the squeeze most readily.

And here lies the problem for those that hold TSLA shares short. During the last reporting period, at the end of Q3 retail investors held almost 6M shares more that the total short interest. So in the event of unexpected runup in SP, the availability of shares for covering was pretty good. At the end of Q4, however, due to a very sizable increase in the institutional shareholding, the total short interest was almost 8M shares HIGHER that total shares held by retail investors. So covering short interest became so much harder! I think that this could spell real trouble for those with short positions, as I think that institutional investors are well aware of this situation and are much less likely to sell to the shorts in need...

 

[Johan]

Quite right vgrishpun. And this trend has been building since 2012. The secondary offering contributed to institutional ownership. This is why when you take some steps back and look at the share price a part (big I suspect) of the rise is a drawn out short squeeze playing out over several years.

 

[jhm]

What is also interesting is that during the last three months of the 2014 there was a huge increase in institutional ownership of TSLA - from 69M shares at the end of Q3 to 79M shares at the end of Q4. It looks like these institutional investors saw a very attractive value proposition in buying TSLA throughout the downturn. I bet that the institutions that now own TSLA are not about to sell it on a $20 pop - it seems that they recognize the long term potential and I doubt that any of them will be selling before TSLA goes toward $300.

Another big group of shareholders are the insiders, which are also long term holders - total of 28.9M shares.

Adding the institutional and insider shareholders and substracting this number from the total outstanding shares is owned by the retail shareholders.

It is logical to assume that retail shareholders would be the group that is on average more likely to sell shares on a relatively small runup. So this is the group that shorts can get shares for covering in case of the squeeze most readily.

And here lies the problem for those that hold TSLA shares short. During the last reporting period, at the end of Q3 retail investors held almost 6M shares more that the total short interest. So in the event of unexpected runup in SP, the availability of shares for covering was pretty good. At the end of Q4, however, due to a very sizable increase in the institutional shareholding, the total short interest was almost 8M shares HIGHER that total shares held by retail investors. So covering short interest became so much harder! I think that this could spell real trouble for those with short positions, as I think that institutional investors are well aware of this situation and are much less likely to sell to the shorts in need...

View attachment 72600

Wow, vgrin, this is a wonderful view! It looks like shorts are overreaching and have not exit strategy as a group. This is playing the greater fool theory amongst shorts. Smart shorts think they can get out by buying from dumb shorts.

One minor point, I think you need to add the number of share short back to retail. The total number of shares long is outstanding shares plus shares short. Shorts expand the number of long positions by means of credit. So in the short run shorts are able to dilute shares by creating them out of credit, but when they have to cover in aggregate this decreases the number of long positions availabl, which reduces the dilution. This is why short squeezes can be so spectacular. You have panic buying that simultaneously reduces the gross number of shares.

 

[vgrinshpun]

Wow, vgrin, this is a wonderful view! It looks like shorts are overreaching and have not exit strategy as a group. This is playing the greater fool theory amongst shorts. Smart shorts think they can get out by buying from dumb shorts.

One minor point, I think you need to add the number of share short back to retail. The total number of shares long is outstanding shares plus shares short. Shorts expand the number of long positions by means of credit. So in the short run shorts are able to dilute shares by creating them out of credit, but when they have to cover in aggregate this decreases the number of long positions availabl, which reduces the dilution. This is why short squeezes can be so spectacular. You have panic buying that simultaneously reduces the gross number of shares.

Thanks for the correction; I did not think about it, but now that you mentioned it, the shorted shares indeed need to be added back into the mix, because they will be available for purchase when shorts need to cover. So the total net of shares readily available for covering will be more than I calculated by the short interest. The overall point, namely that pool of shares readily available for covering got significantly reduced since the end of Q3, is still valid...

 

[tdiggity]

I'm surprised that some big names on the insider list have so few shares. Very interesting.

 

[jhm]

I thought I might post the institions adding the most shares to their position.

Owner Name Date Shared Held Change (Shares) Change (%) Value (in 1,000s)
PRICE T ROWE ASSOCIATES INC /MD/ 12/31/2014 5,989,943 2,238,236 59.66 1,220,571
J&P(CHINA)CAPITAL MANAGEMENT CO.,LTD 12/31/2014 1,854,855 1,854,855 New 377,964
GOLDMAN SACHS GROUP INC 12/31/2014 2,655,083 1,633,033 159.78 541,026
WINSLOW CAPITAL MANAGEMENT, LLC 12/31/2014 1,190,052 1,190,050 59,502,500 242,497
CAPITAL WORLD INVESTORS 12/31/2014 2,529,200 1,065,000 72.74 515,375
DEUTSCHE BANK AG\ 12/31/2014 1,248,494 843,271 208.10 254,406
BAILLIE GIFFORD & CO 12/31/2014 6,030,685 840,390 16.19 1,228,873
TIAA CREF INVESTMENT MANAGEMENT LLC 12/31/2014 1,896,150 482,963 34.18 386,378
TWO SIGMA INVESTMENTS LLC 09/30/2014 303,103 303,103 New 61,763
STATE TREASURER STATE OF MICHIGAN 12/31/2014 623,321 290,000 87.00 127,014
CREDIT SUISSE AG/ 12/31/2014 479,185 271,822 131.09 97,644
VANGUARD GROUP INC 12/31/2014 3,395,745 240,625 7.63 691,951
MORGAN STANLEY 12/31/2014 4,303,356 226,530 5.56 876,895
BAMCO INC /NY/ 09/30/2014 1,033,460 195,909 23.39 210,588
AMERIPRISE FINANCIAL INC 12/31/2014 2,064,711 159,464 8.37 420,726



Read more: http://www.nasdaq.com/symbol/tsla/institutional-holdings/increased#ixzz3S9SgjhDN

 

[Causalien]

What is also interesting is that during the last three months of the 2014 there was a huge increase in institutional ownership of TSLA - from 69M shares at the end of Q3 to 79M shares at the end of Q4. It looks like these institutional investors saw a very attractive value proposition in buying TSLA throughout the downturn. I bet that the institutions that now own TSLA are not about to sell it on a $20 pop - it seems that they recognize the long term potential and I doubt that any of them will be selling before TSLA goes toward $300.

Another big group of shareholders are the insiders, which are also long term holders - total of 28.9M shares.

Adding the institutional and insider shareholders and substracting this number from the total outstanding shares is owned by the retail shareholders.

It is logical to assume that retail shareholders would be the group that is on average more likely to sell shares on a relatively small runup. So this is the group that shorts can get shares for covering in case of the squeeze most readily.

And here lies the problem for those that hold TSLA shares short. During the last reporting period, at the end of Q3 retail investors held almost 6M shares more that the total short interest. So in the event of unexpected runup in SP, the availability of shares for covering was pretty good. At the end of Q4, however, due to a very sizable increase in the institutional shareholding, the total short interest was almost 8M shares HIGHER that total shares held by retail investors. So covering short interest became so much harder! I think that this could spell real trouble for those with short positions, as I think that institutional investors are well aware of this situation and are much less likely to sell to the shorts in need...

View attachment 72600

Interesting. Seems that the volume driving the sell off is basically just a transfer of shares from retail to institution. Did they pay all those articles in order to buy more shares? Do they know something that will definitely happen that give them the confidence to do so?

 

[TSLAopt]

Wow, no shares available at IB as of now. 90K this morning. The lending rate hasn't gone up yet. If this is for real, then the rate should go up tomorrow. Otherwise could be just a temporary TSLA shortage at IB.

- - - Updated - - -

keep in mind that the securities lending market is very different....the borrow rates are not necessarily determined by supply/demand of how many shares are available to short or not.
There are often stocks with many shares available for borrow that have high borrow fees and then stocks with very little available to borrow with still very low borrow fees

 

[ggr]

I'm surprised that some big names on the insider list have so few shares. Very interesting.

They mostly have options rather than shares. While there is some incentive to exercise options and then hold them, it can be risky and capital intensive, so most people just keep them as options until they want to turn them into money.

 

[chickensevil]

What about stock options for other current employees that have already vested over time? Are they counted in the retail shares since they don't hold a big enough stake in the company in order to get listed and/or important enough position in the company? From having talked with their hiring department I made it far enough to find out (sadly, didn't get the job... ah well, tough market apparently) that they make up for any minor loss in salary with stock options. I mention this only because while they might not be true insiders, most employees are strong believers in the company and would hold their shares rather than sell. I don't know if there is a way to quantify this value, but if the major employees are all given stock options (think, managers and people who work at corporate and such, not necessarily the lowly store clerk) that is likely to have been a significant number of shares given out over the years. What I am getting at is the number of available shares is likely even smaller than you are postulating.

- - - Updated - - -

I thought I might post the institions adding the most shares to their position.

Owner Name Date Shared Held Change (Shares) Change (%) Value (in 1,000s)
PRICE T ROWE ASSOCIATES INC /MD/ 12/31/2014 5,989,943 2,238,236 59.66 1,220,571
J&P(CHINA)CAPITAL MANAGEMENT CO.,LTD 12/31/2014 1,854,855 1,854,855 New 377,964
GOLDMAN SACHS GROUP INC 12/31/2014 2,655,083 1,633,033 159.78 541,026
WINSLOW CAPITAL MANAGEMENT, LLC 12/31/2014 1,190,052 1,190,050 59,502,500 242,497
CAPITAL WORLD INVESTORS 12/31/2014 2,529,200 1,065,000 72.74 515,375
DEUTSCHE BANK AG\ 12/31/2014 1,248,494 843,271 208.10 254,406
BAILLIE GIFFORD & CO 12/31/2014 6,030,685 840,390 16.19 1,228,873
TIAA CREF INVESTMENT MANAGEMENT LLC 12/31/2014 1,896,150 482,963 34.18 386,378
TWO SIGMA INVESTMENTS LLC 09/30/2014 303,103 303,103 New 61,763
STATE TREASURER STATE OF MICHIGAN 12/31/2014 623,321 290,000 87.00 127,014
CREDIT SUISSE AG/ 12/31/2014 479,185 271,822 131.09 97,644
VANGUARD GROUP INC 12/31/2014 3,395,745 240,625 7.63 691,951
MORGAN STANLEY 12/31/2014 4,303,356 226,530 5.56 876,895
BAMCO INC /NY/ 09/30/2014 1,033,460 195,909 23.39 210,588
AMERIPRISE FINANCIAL INC 12/31/2014 2,064,711 159,464 8.37 420,726



Read more: http://www.nasdaq.com/symbol/tsla/institutional-holdings/increased#ixzz3S9SgjhDN

Just to point at that as long as Goldman is a buyer we all should be too. They have been historically the ones to scream sell while secretly buying up shares and then screaming buy when they get ready to offload their shares. They currently hold a pretty neutral rating on the company if memory serves but they just grew their position by 160% from whatever the previous reporting period was which is quite significant. I would think that this is also why the share price refuses to go down below certain buy-in thresholds for these guys. Just a thought.

 

[ggr]

What about stock options for other current employees that have already vested over time? Are they counted in the retail shares since they don't hold a big enough stake in the company in order to get listed and/or important enough position in the company? From having talked with their hiring department I made it far enough to find out (sadly, didn't get the job... ah well, tough market apparently) that they make up for any minor loss in salary with stock options. I mention this only because while they might not be true insiders, most employees are strong believers in the company and would hold their shares rather than sell. I don't know if there is a way to quantify this value, but if the major employees are all given stock options (think, managers and people who work at corporate and such, not necessarily the lowly store clerk) that is likely to have been a significant number of shares given out over the years. What I am getting at is the number of available shares is likely even smaller than you are postulating.

Vesting just means that the employee has the right to turn the options into shares ("exercise") by paying the strike price per share. Before vesting they are just paper money, that can't be turned into coin. They don't automatically turn into shares. "Expiry" is the point at which, if the employee doesn't exercise the options, they just disappear. It is a major mistake on the part of the employee to ignore the warnings about upcoming expiry, because the company is absolutely unable to roll back the clock once the employee realizes what they've done.

 

[GenIIIBuyer]

Shares available to short is back up to 500,000 at IB.

 

[jhm]

Interesting. Seems that the volume driving the sell off is basically just a transfer of shares from retail to institution. Did they pay all those articles in order to buy more shares? Do they know something that will definitely happen that give them the confidence to do so?

Institions gained 10.1M shares. 3.3M came from shorts and the remaining 6.8M came from retail.

I suspect that institutions have some degree of influence on the media. I'm not saying they are intentionally manipulative like some short hedge funds are, but they can choose to be vocal about their acquisition or quietly accumulate. I think they have been taking the oil crash and other factors behind the recent decline in the stock to quietly accumulate. The oil crash was a huge buying opportunity because it moved the price with practically no impact on Tesla's fundamentals. Think about how hard it would be to buy 10M shares without driving the price up. Once the institutions are done loading up they may become more vocal.

Regardless, eventually the shorts will realize that they are selling at a discount into the hands of institutional investors. Wiley E Coyote has not reallized yet that he has run himself off the cliff.

- - - Updated - - -

Come to think about it, some institutional investors may not want to be vocal even after loading up. If they really want the longterm gains, they don't benefit from creating an unstable run up in price. Hyping the stock could lead to very bad performance next year. But this stock can gain 30% to 40% for many years to come, and any money manager would want that kind of stable growh.

 

[kenliles]

Institions gained 10.1M shares. 3.3M came from shorts and the remaining 6.8M came from retail.

I suspect that institutions have some degree of influence on the media. I'm not saying they are intentionally manipulative like some short hedge funds are, but they can choose to be vocal about their acquisition or quietly accumulate. I think they have been taking the oil crash and other factors behind the recent decline in the stock to quietly accumulate. The oil crash was a huge buying opportunity because it moved the price with practically no impact on Tesla's fundamentals. Think about how hard it would be to buy 10M shares without driving the price up. Once the institutions are done loading up they may become more vocal.

Regardless, eventually the shorts will realize that they are selling at a discount into the hands of institutional investors. Wiley E Coyote has not reallized yet that he has run himself off the cliff.

- - - Updated - - -

Come to think about it, some institutional investors may not want to be vocal even after loading up. If they really want the longterm gains, they don't benefit from creating an unstable run up in price. Hyping the stock could lead to very bad performance next year. But this stock can gain 30% to 40% for many years to come, and any money manager would want that kind of stable growh.

Agree with this. The behavior of the stock is reflects this exactly along with some short covering. Nice post jhm. Thanks

 

[Bgarret]

I thought I might post the institions adding the most shares to their position.

Owner Name Date Shared Held Change (Shares) Change (%) Value (in 1,000s)
PRICE T ROWE ASSOCIATES INC /MD/ 12/31/2014 5,989,943 2,238,236 59.66 1,220,571
J&P(CHINA)CAPITAL MANAGEMENT CO.,LTD 12/31/2014 1,854,855 1,854,855 New 377,964
GOLDMAN SACHS GROUP INC 12/31/2014 2,655,083 1,633,033 159.78 541,026
WINSLOW CAPITAL MANAGEMENT, LLC 12/31/2014 1,190,052 1,190,050 59,502,500 242,497
CAPITAL WORLD INVESTORS 12/31/2014 2,529,200 1,065,000 72.74 515,375
DEUTSCHE BANK AG\ 12/31/2014 1,248,494 843,271 208.10 254,406
BAILLIE GIFFORD & CO 12/31/2014 6,030,685 840,390 16.19 1,228,873
TIAA CREF INVESTMENT MANAGEMENT LLC 12/31/2014 1,896,150 482,963 34.18 386,378
TWO SIGMA INVESTMENTS LLC 09/30/2014 303,103 303,103 New 61,763
STATE TREASURER STATE OF MICHIGAN 12/31/2014 623,321 290,000 87.00 127,014
CREDIT SUISSE AG/ 12/31/2014 479,185 271,822 131.09 97,644
VANGUARD GROUP INC 12/31/2014 3,395,745 240,625 7.63 691,951
MORGAN STANLEY 12/31/2014 4,303,356 226,530 5.56 876,895
BAMCO INC /NY/ 09/30/2014 1,033,460 195,909 23.39 210,588
AMERIPRISE FINANCIAL INC 12/31/2014 2,064,711 159,464 8.37 420,726



Read more: http://www.nasdaq.com/symbol/tsla/institutional-holdings/increased#ixzz3S9SgjhDN

Does anyone else love that the State Of Michigan owns 623,321 shares and added shares during this period.....while the state bans Tesla from selling there? Do what I say, not what I do.

 

[vgrinshpun]

Does anyone else love that the State Of Michigan owns 623,321 shares and added shares during this period.....while he state bans Tesla from selling there? Do what I say, not what I do.

Yes, I've got a kick out of it too.