TSLA Market Action: 2018 Investor Roundtable

[dakh]

My question from before might have been lost in the pace of this thread.

Is anything stopping these investors (funding secured) from accumulating shares now that this has been announced? Insider trading laws?

It seems smart that they would NOW. Similar to Porsche and VW.

The whole point is value of Tesla goes up once it goes private (due to efficiencies of not having to accommodate all the BS that comes with it being public). So if the deal doesn't go through, they'd be overpaying. It's a transactional deal, either it's done or not.

 

[wipster]

If this ends up wiping out the shorts, how am I gonna get my daily update on the Lathrop lot?!

Not to worry, there will still be a lot of bears and a$$holes out there... especially on Twitter and Reddit.

 

[neroden]

For Canadians, it seems tax free vehicles can be used to hold share in private companies:

"It's a well-known fact that shares in publicly traded companies are generally eligible investments for an RRSP. But what about private company shares? Our tax law will allow an investment in a privately owned small-business corporation where you own less than 10 per cent of the issued shares of any class or, if you own more than 10 per cent, you're still arm's-length to the corporation and your total cost of the shares you own is less than $25,000. The rules are complex, so visit a tax pro if you're thinking of making an investment in a private company with dollars from a registered plan."

From: Creative RRSP investments: they could lead to a tax hit

Nope. Turns out such businesses *must be incorporated in Canada, must not be controlled by non-Canadians, and must primarily engaged in business in Canada*. :-( I actually tracked back to the regulations out of curiosity.

Income Tax Folio S3-F10-C1, Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs - Canada.ca

Basically Canadians with TSLA in RRSPs are forced out by the buyout offer. They'll have to cash out unless Tesla sets up something very specific for them, like a market-listed fund which owns TSLA (an Altaba type situation). Which I seriously doubt.

 

[lunitiks]

Opening bell in 6 ...

This is going to be a looong day

 

[EngRyan]

Nope. Turns out such businesses *must be incorporated in Canada, must not be controlled by non-Canadians, and must primarily engaged in business in Canada*. :-( I actually tracked back to the regulations out of curiosity.

Basically Canadians with TSLA in RRSPs are forced out by the buyout offer. They'll have to cash out unless Tesla sets up something very specific for them, like a market-listed fund which owns TSLA (an Altaba type situation). Which I seriously doubt.

Son of a, damnit Neroden...well, I guess thanks. *grumble grumble*

 

[neroden]

Yeah, anyway, there are a lot of people with good reason to vote against the offer. If you're going to be forced out and you think it's lowball, or if your friends are gonna be forced out and you don't want them to be... I'd vote no.

Maybe Musk will come up with something for all these scenarios, but I doubt it.

 

[cricketman]

If the market opens at less than $390 then I am buying another 100 shares this morning. Worst case scenario is they get bought at $420 in a few months time. Only reason deal wont go through is if the share price rises way above $420. If there is a short squeeze there is a good chance of that. Win-win with hardly any risk.

 

[WarpedOne]

If you're going to be forced out ...

Be careful with repeating this meme of being forced out... Musk:

Def no forced sales. Hope all shareholders remain. Will be way smoother & less disruptive as a private company. Ends negative propaganda from shorts.

 

[sundaymorning]

I’ve been trying to read back over all the pages I missed this afternoon, and I have seen very little discussion of “financing secured”. This financing seems critical to me but there has been no disclosure by Tesla as to who is providing this financing. Isnt a legal disclosure necessary when a public company secures financing? Or, maybe not when it is under consideration but once it is actually done.

Besides Larry Page, who do we think might provide financing? WS banks are excluded, public companies would have to disclose, so maybe a consortium of private investors who can fly under the radar?

When Tesla raised capital during the S&X says Shorters we’re spreading FUD that no one is buying, or interest was lacking/undersubscribed. To their surprise the deal went through and the stock took off and Tesla always managed to sell more than they originally planned. Throughout the entire process Tesla never revealed who the subscribers were, until after the deal was done.

 

[hobbes]

@Zhelko Dimic @SebastianR @Runarbt @Johan @avoigt @Matias @Lycanthrope and everyone else (just picked a few people I saw posting here):

Regarding the situation of shareholders outside the US if Tesla goes private, I started a new thread here:
Holding shares in a private Tesla outside the US

 

[lklundin]

If the market opens at less than $390 then I am buying another 100 shares this morning. Worst case scenario is they get bought at $420 in a few months time. Only reason deal wont go through is if the share price rises way above $420. If there is a short squeeze there is a good chance of that. Win-win with hardly any risk.

This morning I spent my last dry powder. When the time comes, I will cover the payment of my Model 3 by liquidating other assets.

 

[W84M3]

Anyone knows what happens with Elon's CEO Performance bonus which is based on market caps & EBITDA's?

If wiped out, why would he gives this up?

 

[EVMeister]

Anyone knows what happens with Elon's CEO Performance bonus which is based on market caps & EBITDA's?

If wiped out, why would he gives this up?

Because he hates the negative press and shorts THAT much? Some of the tranches would still be achievable even if the company were private I think. But I too wonder about the true implications. Elon is really not motivated by money, I think this proves it.

 

[lklundin]

I hope Musk really has figured out a way to let *every* stockholder stay in private equity, but I just can't imagine how.

Is it possible to delist TSLA while keeping its ISIN unchanged?

I assume that this could simplify matters.

 

[pz1975]

For some possible perspective on the timing of all of this, Tesla announced the proposed merger with Solar City on June 21, 2016. They set the date of the shareholder vote as November 18 and this date was announced on October 12. The shareholder vote did take place November 18, and the SCTY shares were converted to TSLA shares on November 21.

I predict that this current situation will occur much faster.

 

[Zhelko Dimic]

Nope. Turns out such businesses *must be incorporated in Canada, must not be controlled by non-Canadians, and must primarily engaged in business in Canada*. :-( I actually tracked back to the regulations out of curiosity.

Income Tax Folio S3-F10-C1, Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs - Canada.ca

Basically Canadians with TSLA in RRSPs are forced out by the buyout offer. They'll have to cash out unless Tesla sets up something very specific for them, like a market-listed fund which owns TSLA (an Altaba type situation). Which I seriously doubt.

Explanation that I got awhile back is that in my self directed accounts, I can hold anything securitized, whether that's a right to the royalties of the song, or a mortgage to myself (that one may have been specifically excluded recently).
Shares of TSLA will be securitized, whether private or public, basically the way I understand it, that's the whole concept of the share.

Having said that, document you produced seems to say otherwise... I'll look into this further...

EDIT: YOU SEEM TO BE RIGHT 90% of my TSLA is in tax free vehicles

Suspended from trading or de-listed
1.21 Shares of a corporation resident in Canada that were listed on a designated stock exchange in Canada but that have been suspended from trading or delisted will generally retain their qualified investment status on the basis that such a corporation continues to be a public corporation. As discussed in ¶1.23, shares of a public corporation are qualified investments. Qualified investment status could be lost, however, if the corporation elected (or was designated) not to be a public corporation. In most other situations, the suspension or delisting of a security will result in loss of qualified investment status, unless the security also qualifies under another provision.

 

[Tslynk67]

$376 in pre-market folks, for those that have dry-powder.

Seriously, who would be selling now - even if this deal falls-through, the SP is likely to be going to $420 very soon...

I don't get it.

And BTW, @FirebirdAlpha - you said you were shocked that we were all believing Elon - I'm shocked that you'd imagine we wouldn't. Sorry, but I would have so much money invested in a company if I thought the CEO is a liar and neither would most people here.

 

[shlokavica22]

A friend asked me if I thought Musk was bluffing.

Here's my response:

Absolutely not. I think Musk is fed up with Wall Street and the Short Sellers and the outright lies reported in the media. He probably does have the funds to take Tesla private at $420. I had believed Tesla would be a $1000 stock in 2020 (and had positioned myself accordingly in the options market). So getting some Silicon Valley friends together to come up with 20-30 billion to make a 10X return is totally doable for Musk. But I don't think it will go for only $420.

25% of the float is sold short. Once shares are recalled by mutual funds that are required by their bylaws to vote on the buyout, 30 million shares will need to be purchased. Musk set a floor of $420 for the market. Any long should hold out for $420, so where do the shorts get the shares? They will be bidding up the price -- if it was a linear equation 25% on top of $420 is $525, but there will be many longs who won't even sell for that. This could be the next equivalent of the VW short squeeze. $1000 a share is not out of the question.

If the market bid shares up to $1000, Musk wouldn't take Tesla private, but he would have accomplished the same goal -- the shorts would be out and he can focus on his businesses without the constant day to day distractions of the short sellers and the misinformation and sabotage they pay for.

So if you have LEAPS above $420 don't sell them for pennies now, this was the opening shot in the war to obliterate the shorts. Things are just starting to get good.

the mechanics of the deal, the financing, and the subsequent deleveraging and re-levering by market is yet to be seen. everyone was caught off guard. and the way it was revealed was unorthodox, and incomplete. so the fact that the street doesn’t know how to price this deal yet isn’t out of the ordinary either. there is still arb to be had here.

I think that Elon was forced to react today (the plan was there, but the timing was forced). The obvious reason for that- hostile takeover. He had to react fast and set a price that still seems reasonable, when reassuring the current investors and convincing them to keep the shares.

If the above assumptions is correct, the price we are going to see will depend less on the shorts covering and more on the valuation done from the "hostile" entities. We might see a bidding war, where multiple parties with forward looking valuation way higher than $420, try to get their hand on as much TSLA shares as possible.

What is the value of a company with total control of the BEV market in 5-10 years? Virtual Power plants? Transportation? With unlimited funding Tesla will dominate every market in a very short time (from the perspective of long term investment).

So for the longs the question is- what is the paycheck I will be satisfied with (with $420 being the absolute floor).

For the shorts the question is- why are you still short? The very least you can do is cap your losses and buy some calls.

Final point- If I had a long position in any of the big Autos- I will have a very hard look in my holdings. If TSLA fighting the shorts, with limited funding was successfully grabbing share left and right, then imagine what will happen once they have "unlimited" funds.

 

[shlokavica22]

Something else I forgot (after looking at this table :https://www.s3partners.net/images/TSLA17.png). It might be a good idea to examine who holds a simultaneous short position on TSLA, AMZN, NFLX, etc.). If TSLA bombs their portfolio/fund and their margin get's decimated, what are the chances they choose to cover some of their other positions?

 

[SebastianR]

$376 in pre-market folks, for those that have dry-powder.

Seriously, who would be selling now - even if this deal falls-through, the SP is likely to be going to $420 very soon...

I don't get it.

For what it's worth, I think we have seen this time and time again: Many here (including myself) made a bit of money in the Solar City merger. The FUD was so strong that nobody took the arbitrage opportunity. Look at Mark B.S & Co - they are all so far gone, nobody believes this will happen.

What's more: my bank advisor (who is clueless) just told me with conviction that this will never happen... All of this together? Go figure why the share price is not higher...