TSLA Market Action: 2018 Investor Roundtable

[ZachShahan]

Methinks that tbirdbeta is actually the infamous Anton from SA, who BTW liquidated all of his short position before he composed his accusatory write-up today... almost the exact same questions he asked!

Anton got out of his short position this morning?

I heard from someone who apparently met him in person and he appears to indeed be super wealthy and have no problem gambling (real gambling) with enormous amounts of money. Is it possible he knew what was coming?

 

[Ugliest1]

I read the letter and I totally understand the reasoning. But if I were him, and I have full confidence in showing profitability from Q3 and onwards. I would not let the shorts down that easily. This is essentially offering them a “cap” in terms of their losses. Now if I’m having doubts about showing profitability, then I would think this is the way out.

But, you haven't had to live through the total BS from "analysts", shorts, and "journalists" calling you every black name in the book, while you're just trying to do good for the world. I believe THAT's his primary motivation, getting away from the short sellers and all their messaging partners in crime. No more distractions!

 

[bdy0627]

Maybe I am just a desperate short.....but my spidey senses are tingling that this whole thing is total BS


Early congrats to you longs if it is real

Sounds like you are experiencing stage 1 right now:

You should try and not judge how a person experiences their grief, as each person will experience it differently.

• Denial & Isolation. The first reaction to learning about the terminal illness, loss, or death of a cherished loved one (or a lot of $$$) is to deny the reality of the situation. ...
• Anger. ...
• Bargaining. ...
• Depression. ...
• Acceptance.

 

[Ugliest1]

Well today was a bad day to be away from information.

Trying to digest it all.

As a peraon who is all in....I am feeling somewhat dejected.

1. Seems all my Leaps above 420 will go to zero?

2. All of my holdings are in a canadian RRSP. Essentially a tax free retirement account until you withdraw the money. Tsla was my 10-15 year retirement plan. So know to keep my shares i would have to sell....take money out of account, get taxed 50 per cent and rebuy my position. Essentially losing half my shares. I do not have funds outisde this account to buy tsla. I hope i am misreading this...and please if someone has advice, i would appreciate it.

First lost out on short term calls after Elons squeeze tweet, and now on long term calls. Cant seem to win.

I have a question in to TDCT Waterhouse asking if RRSP/TFSA can just transfer shares within or have to liquidate outside the registered account.

 

[Boomer19]

What does this mean for call option holders with strike prices below $420? How will you play it?

if your premium plus strike is less than 420 then it’s posinle there’s more profit to made, right?
it’s all about how much you believe this deal will go through at price of at least $420..
you can sell some for profit, or exercise some in hopes of taking those shares private, whatever you wish.

example

if you paid $14 for these right now, and the price settled at $420 by sept 21, they’d be worth $25

but if the deal details come out and markets don’t like, they could be worthless by sept 21

 

[ZachShahan]

It seems were coming full circle. The IPO came way too early in Tesla history, anyone who read up on the history of the company and followed them soon after going public will have understood that it was Elon's last wish taking the company public, but they were so hard pressed for cash and were on the brink of going bankrupt so there was no other option. Ever since that day it's been clear that he has felt that being public has been a hassle, with all the FUD, the shorting, the short-sightedness of the market getting stuck on the next 3 months. He has basically been saying this for many years and it should come as no surprise to anyone that he would like to take Tesla private again, given the chance. Now it seems the stars are finally lining up: Model 3 production is taking off and they are confident that they've got it right, they are going to get to cash flow positivity and self-funded growth before this year is over so this is the right time to get big financial partners on board for a buy out. I'm looking back and found something I posted in the TSLA investment thread in May 2016, shortly after the earnings call where they announced that suppliers who weren't on board with very ambitious production growth for Model 3 would be cut out:

The thing is: Being on the stock market has been difficult, but how much has it 1) helped to raise Tesla's profile, 2) made customers into investors who have much more of a stake in the company's success and selling its products, 3) challenged Tesla to really be its best.

I think I totally understand the rationale for going private — and likely support it more than 50% — but I will be a bit disappointed at the losses in those three matters if it happens.

 

[Mike Smith]

From Ihor's new report:
https://www.s3partners.net/Research/TSLA17.php?v=1

'Surprisingly, with Tesla’s stock price up 29% since their August earnings report, shares shorted has not decreased appreciably, down only 316k shares or less than 1%. Even after incurring over $1.5 billion in mark-to-market losses in August, short sellers have kept their positions and conviction. If Elon Musk does take Tesla private at $420/share we might actually see a short squeeze in Tesla shares, the Teflon Short can only take so much punishment before it gives in. If the market believes that Elon Musk’s financing is in place and the chances of a buyout is high, we should see short covering in size, driving Tesla’s stock price higher in the short term as short sellers attempt to close out their positions at lower than the $420 takeout price.

In addition to voluntarily closing out their positions ahead of the possible buy-out, short sellers may also be forced out of their positions due to margin calls. Either way, shorts will be turbo-charging the rally to $420 as August mark-to-market losses continue to accumulate. If Tesla hits $420/share and shares shorted remains constant, August mark-to-market losses would be -$4.3 billion, 2018 year-to-date losses would be -$4.45 billion and losses since 2016 would be -$7.8 billion. It would be difficult to hold onto your short positions in the face of such losses.'

 

[wipster]

Anton got out of his short position this morning?

I heard from someone who apparently met him in person and he appears to indeed be super wealthy and have no problem gambling (real gambling) with enormous amounts of money. Is it possible he knew what was coming?

Well in his article on SA this afternoon, he stated:
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in TSLA over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: At the time of submitting this article for publication, the author had no positions in the companies mentioned. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.

So looks like he got out... what he lost or won I know not, very interesting comment section though!

 

[dakh]

There's essentially no way this deal can go through before Q3 results are reported in October. That would be super fast for what appears to be a pretty complicated deal.

Musk just wants to stop dealing with all the nonsense he's been dealing with with a public listed stock; he's said so before. I think he would love to buy out weak longs at a low price. If the stock skyrockets, well, that's enough reason to cancel the offer.

In short I think Musk and his private equity associates are trying to make a very sharp value investing purchase, basically. I am going to have to sell some for liquidity but I'll keep as much as I can.

One can think about this in even more simple terms. How much can Tesla gain in long-term value if it suddenly got relieved of all the on-going BS with shorting the stock, having to make short-term compromises to please investors, folks trying to put sticks into Tesla's spokes in various ways because they're short, etc.? If Elon can pitch this in concrete terms and say "look, if I'm free to do what I need to do, this is going to go this much smoother and long-term shareholder value is going to go up this much faster", it's a done deal. I think there would be big investors that would buy this story.

 

[Cosmacelf]

I am responding to you because I refuse to quote the poster you are quoting. I do not believe that former SEC chairman have any role in doing the right thing or being ethical. I remember James breeden, a former SEC chairman, in 2008 was chairman of sales (a jeweler store chain) with a very large investment in the company. He got sales put on a list of financial companies that at the time could not be shorted. In the end the puts I bought with a strike of $25 became quite valuable when stock hit 74 cents. Being a former SEC chairman does not make you smart or ethical.

Did you mean Richard Breeden?

 

[Boomer19]

That's my understanding of how SpaceX works for the employee stockholders. I know nothing about whatever deal it was they had with Fidelity.

fidelity is an investor in space x’s private equity i believe. is their vehicle different than the mgmt and member/employee ownership?
(meaning the early investors like fidelity get a different arrangement than employee/management/and member return on equity?)

does this matter much? i mean, i know it does to the extent EM used it as an example today. but i think many took it as they can call fidelity and request access to purchase spacex through a fidelity fund, which is not the case. i feel bad for fidelity. they must have receive 10,000 calls today.

 

[Boomer19]

Watching CNBC today, most of the talking heads were visibly pissed at this event. They couldn't help themselves. They were downright angry and kept insinuating there is no way this can be true. And if it was true it was a scam. Sounds just like a certain troll here. And they think everybody else is a manipulative liar like themselves. They looked like they were caught and there was absolutely nothing they could do except shout that the liar/cheat was Elon. It was a truly surreal yet satisfying thing to watch. Tesla goes private these idiots have no say that matters. Which is exactly as it should be.

because the tesla gravy train is over. sure they’ll still cover it. but they won’t be getting the access (albeit little now) theyre used to via quarterlies and shareholder meetings. EM will be back to doing his symposiums speeches and www interviews, ted, etc. all the best way to hear what he has to say, i miss those days.
not to mention the best use of his time. he doesn’t need to waste it on the defensive.

 

[Yonki]

Odds are 401(k) holders will be out of luck and will get cashed out. :-( 401(k)s can be ridiculously restrictive on what you can invest in, and private equity is super unlikely to be allowed, and the private equity fund probably wouldn't be allowed either.

Apparently those of us with IRAs have a chance though. I will have to research self-directed IRAs...

Maybe you could roll your 401(k) shares into an IRA if that's allowed for you?

I've found it easy to roll "old" (companies I don't work for anymore) 401(k)s into my Fidelity IRA.

I found it impossible to roll a current (company I am working for at the moment) 401(k) - you're locked in. In fact this was one of the factors that made me quit my last job - I could do more for my retirement by quitting and putting my 401(k) funds into TSLA (via the IRA) than I could have by sticking around!

 

[JRP3]

This Fidelity fund seems to be invested in SpaceX. Closed to investors. FDGRX - NA - Holdings - Zacks.com
Page 14 of the Holdings list.

 

[Reciprocity]

I've found it easy to roll "old" (companies I don't work for anymore) 401(k)s into my Fidelity IRA.

I found it impossible to roll a current (company I am working for at the moment) 401(k) - you're locked in. In fact this was one of the factors that made me quit my last job - I could do more for my retirement by quitting and putting my 401(k) funds into TSLA (via the IRA) than I could have by sticking around!

Many 401k allow loans. Borrow up to half your vested balance and buy shares. Not an advice. If you lose your job you must pay it back in short order.

 

[ZachShahan]

Imagine the shorts are taking a wait-and-see approach. Any who are short via puts can't participate anyway. Many probably don't know the news yet and won't know until their favorite trolls post on SA or Breitbart.

I did a poor job but I tried to make it clear on my last comment to Elon on the conference call last week: people who didn't believe him about the short tsunami of 2013 got flooded; trolls who didn't believe him this time around I expect are going to get the same (or worse); don't mind the cynical trolls and just carry on. Of course, I had no idea he had a plan in the works to really destroy them. Surprised he stayed so quiet after that and didn't drop any hints.

 

[mongo]

OK, say it peaks at $1000/share and I sell. It hits $650 and I buy. $650 is still less than $1000, right? So profit.

It seems to me if the market is not willing to sell, then the price would not be going down. If the price is dropping after a peak, doesn't that by definition mean that you can by shares at that price and SOMEONE is willing to sell at that price?

Yes, but if all the sellers were cleared out on the way up to 1k, you are relying on stock holders late to the game though...

Why would bid stay at $419.99? As long as not all shorts have covered yet, they'll put in their offers as BUY LIMIT orders, which will set the bid to somewhere between $420 and $3k - in the hope of getting a better deal than the current asking price of $3k.

I was speaking of the time after all short positions are closed (forcibly). No reason to pay more than the conversion 420 price for a share, unless you want to get into Tesla.

Or did you mean that you hope it executes, but at worst you cancel the order and should be able to get one filled at $420 later?

Yah, that's what I meant. You are guaranteed 420, but can try for higher. Working on our ask spread now (less than half position)...

 

[gringotuanis]

BTW., a better strategy might be to "wait and see":

• The shorts are not a homogeneous entity, they are a dozen bigger and a hundred smaller hedge funds I believe.
• The short positions won't be liquidated all at once, and the pain thresholds won't be the same.
• We do know that if the deal is voted on by shareholders, all 100% of the 35 million shares short will have to cover: the stock is getting delisted, all borrowed stock is recalled.
• The decision to cover and the process of 35 million shares covering in a comparatively thin market probably won't happen in a day or two days. If there's a big initial run-up in the price some shorts will decide to wait for a drop in the price.
  
• The percentage of short shares still outstanding can be estimated from the trading volume (this is over-counting them), or from Ihor Dusaniwsky's daily short interest report.
• The pool of stockholders willing to sell is probably depleted early on - so later on during the squeeze there will be higher prices.

I.e. "wait and see" is I think the right strategy, and doing this would also further decrease liquidity, which increases the price for the shorts.

You'd really hate it if there was a clear price spike to $5,000 and Jim Chanos used your $2,100 offer to get out cheaply, right?

Not investment advice.

Is this a danger if you hold options though to waiting and seeing? I hold deep ITM call options and isn't there some risk I won't be able to sell them? Can someone explain a bit more how call options might process in a situation like this? Is it wiser to just convert them to shares since you may not be able to sell them? Any chance you could lose your gains? -long TSLA via stock and options.

 

[ZachShahan]

Going private is probably an "event" for the purposes of the convertible bond prospectuses. I haven't read that part of the prospectus in detail (Brian has, perhaps?). I think Musk has to have worked things out with the major bondholders; he's made buyback deals and trade-for-shares deals before.

Actually in this kind of deal I think each class of bondholders has to approve the deal in *addition* to the shareholders approving the deal.... if I'm remembering correctly... so that's a lot of voting...

This is the kind of moment where you think: damn, Elon's a freakin' super genius.

 

[defc0n]

I still don’t understand how there could be a short squeeze from this. We have a known price point that Tesla may be sold at— it seems it shouldn’t go above that price point, since the market now knows what Tesla is worth? Is it worth the risk of holding shares at a price point higher than the private purchase price?

Assuming the deal doesn’t go through, also seems like it wouldn’t make sense for it to be worth more than $420 thereafter and could drop quickly below that.

Sheesh everyone on a disagree spree and I’m just trying to understand.