TSLA Market Action: 2018 Investor Roundtable

[Unpilot]

Wow after reading every post in the last several day's I have come to this conclusion.
I. arn't. dat.smart. So i am confused ....but I have a lot of company with all you smart folks!

 

[schonelucht]

Your argument has been based on speculating on the current composition of common shares. This tells us nothing about the value of a private share. It is the value of private shares that will drive the price of common shares, not the composition of the current shareholder base.

The news that Elon is trying to take Tesla private, is out there. Therefore some percentage of the future value as a private company carries backwards to the current public share price. We don't know how much certainty the market lends to the deal, but it is false that there is no information at all about Tesla as a private company in the current valuation of the public stock.

 

[tinm]

Not even Elon may be able to magically create a scenario whereby non-accredited investors can participate in a private Tesla.

Seems to me (and this is "NOT an advice") that it would be prudent for TSLA longs who fall into non-accredited status to consider, as a safety-net, to rig their accounts now to place good-til-cancelled orders to sell everything they own in TSLA, limit set at high prices above $420, however higher above $420 you think it might go, or that you would be at least partially satisfied that you got a good return on your TSLA investment. For example, set some to $450, some to $550 or $700, or $1000 and higher if you're really feeling adventurous, and perhaps a squeeze or other panic-buy will come along in the course of the next few months and trigger your limit sell orders to go into effect.

I truly hope Tesla can find a way to enable non-accredited investors to stay on board even in a private scenario. I mean, think about it, it's likely that many non-accredited TSLA longs are counting on TSLA to turn them into accredited investors, amirite?!

 

[Fact Checking]

Bailie Gifford's manager, James Anderson, thinks the $420 is a LOWBALL bid.

They own about 13,171,000 shares currently, about 7.7% of Tesla.

His exact statement is:

James Anderson, a leading fund manager at the Edinburgh-based Baillie Gifford, which owns $4 billion worth of Tesla stock, told The Times that while the company’s prospects were uncertain, its value was “much higher than $420 a share, probability-adjusted”.​

and:

In a series of communications following the initial tweet, Musk told Tesla shareholders who wanted to stay invested in the firm that they could do so through a private special purpose fund.

However, Anderson indicated this could be a problem for his trust. 'It’s not clear that most of our clients could own [Tesla] privately, though it would be fine for Scottish Mortgage,' he said.​

I'm wondering what his main concern is:

• If he's worried about whether his clients can keep their Tesla shares, then Tesla could create some sort of investment vehicle directly in the UK, which would make it easier. They could do something similar in the EU as well, to help European shareholders who bought through Frankfurt keep their shares.
  
• If he's worried about the $420 valuation, then I'm not sure what his argument is: new investors today can already purchase TSLA shares for $350. What Anderson thinks about valuation makes little difference if he doesn't want to sell - in fact he should be happy that bought out investors are paid less than what he thinks the stock is worth. I.e. his valuation argument only makes sense if he's worried that he has to cash out.
• If Anderson genuinely believes that Tesla will perform better as a public company then he has not voiced that opinion so far, AFAICS.

I.e. I believe he wants to stay on board and is worried that the (U.S.-centric) SPF set up by Tesla won't allow him to do that.

I.e. it looks more like a negotiation position and "think of UK shareholders!" shout-out than a genuine "no" vote.

I'm also wondering why he did this publicly and not in private. I suspect when Anderson is calling then Elon picks up the phone.

 

[winfield100]

I think the alternative mutual fund could have one stock, if the manager was willing to structure it that way. It would not work like regular mutual funds with daily prices, diversification, etc. It could even limit liquidation events to correspond to TSLAP. But it would aggregate current individual shareholders into a large group that is a single shareholder. This type of fund would not have much appeal to the typical mutual fund investor because it is not diversified. But it could be an SPV to accomplish Elon's stated objective. And it might not need to be limited to accredited investors - what I read on the SEC site suggests that it would not require accredited status.

Fidelity, under normal circumstances, probably would not have much interest in that. Doesn't appeal to their target investors who are looking for diversification. But it would require little management (nothing to manage, really) and would allow them to stay in the game as the stock appreciates and is ultimately re-listed. Honestly out of my depth on this theory, but I don't know why that wouldn't be an option.

Think bigger, No, bigger than that. What has Elon Musk said he wants to do? I 'm pretty sure one of those is make us _multiplanetary_.
Mars Colony, BFR. Read a bit of Science Fiction he seems to have been inspired by, perhaps the Ian M. Banks "Culture" (here is a quick overview for those whom may wonder A Few Notes on the Culture, by Iain M Banks ) It will give you an idea into his thought processes. then think even bigger, Sleeper Service perhaps.
edit: and think longer term, like 20-40 years at a minimum.

 

[Dan Detweiler]

Well, I guess I answered my own question...at least partially. Down almost $10 in very early trading.

Dan

 

[matejpi]

And it goes down . It seems that the market decided that Elon can't make this deal... Waiting for a little dip then buy.

 

[ggr]

It doesn't take many. Most of the stock is owned by large institutions.



You're arguing against the very tenets of the laws of supply and demand. Nobody is going to hold on for $420 when they can sell for $420,01. You're dreaming if you think they will.

There are (at least) three different classes of institutional investors.
1. Those who can continue to hold after Tesla goes unlisted (and presumably will)
2. Those who will have to sell at some point, and have discretion as to timing
3. Those who will have to sell, but don't have discretion. For example, funds in 401k plans that are not actively managed, which work on just proportions of various stocks or sectors.

1&3 don't sell until the deal goes through. How many fit into category 2? Regrettably I have no idea.

But about timing: All of the above will recall their shares for voting, if they've been lent out. This may be enough to trigger serious short covering all by itself. This will be before it is certain that they will have to sell. So they should not begin the "race to the bottom" until after the vote, which will be some weeks after the recall.

(I sound, even to myself, like a total short squeeze fanatic. But I'm positioned exactly as I think you would advise, if you were giving advice, which neither of us is. I have stock and calls that will be profitable if TSLA tops out at $421. Upside from that would be very nice, but not necessary.)

 

[bhtooefr]

OK, that seems to be wrong. It looks like maybe non-accredited investors *can* be offered shares in an illiquid, non-traded public company? I'm not sure? Does anyone know the rules?

AFAIK, the SEC's reporting requirements for public companies are what removes the risk that the SEC perceives for non-accredited investors - not the liquidity - so therefore non-accredited investors can be offered those shares.

 

[MP3Mike]

They'll only hang onto their stock to vote it if they think that they can actually derail the decision to go private.

Actually most of them are required to vote their shares. So they will have no choice but to recall them prior to the vote.

 

[ggr]

I hold some DITM J20 250€ calls. Any suggestions as to whether convert them to stock or keep for now?

Why decide now? Doing nothing is often the right answer.

At the moment they still have significant time value. You'd be better off selling them and using the proceeds to buy stock on the market. If you wanted to convert them at all, that is.

 

[generalenthu]

As much as the stock market is dislocated, the options market is even more so. Wild mispricing going on with what looks like risk free money up for grabs. Where is the advanced options thread when you need it.

 

[Starno]

Hmm... Either we have one of the most " easy money" scheme right in front of our eyes, or, we're just being naive and EM won't make it private.

 

[ggr]

Speaking of market action: TSLA is down this morning but only in line with the broader markets, whereas usually it amplifies gains and losses. It's holding its own.

 

[JRP3]

Elon actually sent shorts to Einhorn

 

[Unpilot]

Elon actually sent shorts to Einhorn

Pictures....tweet...I want proof!

 

[Runarbt]

Pictures....tweet...I want proof!

twitter has it. ;-)

 

[ggr]

As much as the stock market is dislocated, the options market is even more so. Wild mispricing going on with what looks like risk free money up for grabs. Where is the advanced options thread when you need it.

"Over there, in a box." ObMonty.

 

[Unpilot]

Not seeing it.

 

[dailo]

David Einhorn on Twitter