TSLA Market Action: 2018 Investor Roundtable

[beachbum77]

It would be interesting to evaluate if “accredited investors” have been more a barrier then a protection mechanism for the “little guy.”

As this system funnels retail investors to the public stock market only, where big banks/funds get the first dibs on any new upstart before the public market.

Structurally, the little guy always gets seconds or whatever is sanctified by accredited investors who always get to benefit first off the rush of little guy investors when it goes public.

Lol... It has been that way since the beginning of the stock exchanges dating back to Cornelius Vanderbilt's days. The Great Depression was the first smack down of the small investors. Then we had the Dot.com bubble. In 2008 the Big Boys got bailed out and everyone else took it in the shorts. So here we go again, just on a smaller scale.

 

[mongo]

Is there some kind of consensus in this thread among longs - as to why the stock price is at a big discount from what I view as the floor price - $420 ? I'm wondering whether to buy more (for eg. move some of my fidelity 401k to brokerage link and buy TSLA on Monday).

I posted my opinion on this up thread. Regarding your transfers, it may take a day to close existing fund positions (they usually lock in at the end of day price) before you can buy on the brokerage side. Just a head's up.

 

[tander]

Is there some kind of consensus in this thread among longs - as to why the stock price is at a big discount from what I view as the floor price - $420 ? I'm wondering whether to buy more (for eg. move some of my fidelity 401k to brokerage link and buy TSLA on Monday).

I would guess because it's not a done deal. Regarding the price, the "funding secured" source might be just a starting point if they are not that picky about who comes to the table, and there may be a go shop period. So it's possible that Musk may have no intention of actually doing a deal with whoever the 420 price is, he might just be using it as a starting point for bidding.

I have same question as you, I wish someone really know this, I have Jan 350 Put written(sold) at premium of 7000, my worse case I would own stock at 280.00, one possible outcome would be if deals goes through, option holder must close their position what ever price stock is on last day of trading on Nasdaq. Premium remain on time will be calculated based on historic volatility and other factors used in calculating option prices.

Yeah I don't know either. I would guess the Dell deal probably answers most of these questions but I haven't looked into it.

 

[Reciprocity]

I wonder if Elon will personally deliver the 100,000th Model 3. It's the sort of thing he would do.

What do the think Elon's been doing. I bet he drivered 20+ at defcon. He was sleeping on the factory floor, now I bet he is driving the BAMF and delivering cars.

 

[Open Interest]

Done. Thanks for the link.

WEEKEND MODERATION -

First, there has been, as expected and as appropriate, a considerable amount of postings regarding the continued misleading and just plain wrong information coming from any number of news sources. Now, although a lot of that has been in the articles’ headlines rather than the stories themselves, that is a topic for another time.

The point is - - - - most unfortunately but also UNNECESSARILY - - - - there also has been a plethora of that emanating within this thread’s posts (and in other “Investor” threads, too). Yes, we Moderators are aware that a good amount of that has been from those who wish Tesla ill; that we deal with separately.

It is the other kinds of posts that are the problem addressed here. Everyone is excited; most everyone is confused (and the few who aren’t probably ought to be.....); many have opinions. MOST of you are posting somewhere between twice and five or even ten times the amount that you “should” be.

Now, Moderators are not going to initiate some kind of daily posting limit (ooooh, how I’d love to do that.....). Here is a Modest Proposal, however. Aside from having each of you sit on your collective hands rather than responding to each and every post that titillates you one way or another, and from asking the SAME QUESTIONS for the umpteenth time, and most importantly of all, stating in dogmatic fashion something that is absolutely nothing more than a belief of yours - and so many times one without any evidence backing it up -

Then HOLD OFF! Or, most specifically in that lattermost case, write that you are presenting your opinion, your thought, your belief...your hope. If you do not do so, you are as guilty of obfuscation as all but the most incorrigible of the FUD-makers.

Finally, write succinctly and write CLEARLY. A rule of the TMC forum is that grammar and spelling mistakes are not cause for correction. Unfortunately, by extension, so also is the case with bad (read: contorted, illogical, and in general stream-of-unconsciousness writing ofttimes typed by someone who just can’t wait to let everyone else know his or her inchoate thoughts).

Is what you are going to post advancing the tenor of this thread? If not, please don’t post. Jokes and so forth - especially mine - remain fertile ground, of course.

i would like this 100 times if possible! And extra points for “inchoate thoughts”.

 

[brian45011]

someone earlier in the thread said that the cnbc guy who on air, said he was buying the august 365 calls and then suing if he lost his money, was terranova..

so what did seymour do?

Maybe my mistake--IIRC neither Seymour or Terranova are big Tesla bulls, compared to Adami (a visage only a mother could love.)

 

[Chickenlittle]

I find comments about the 420 purchase level interesting. For those who think it’s low, buy more shares to convert to private shares. For those who believe it’s over priced buy more shares to be converted to cash.

 

[brian45011]

He won't(?) reveal the source of his funding right now, so if it turns out there is no funding, that can be considered market manipulation and he can get in serious trouble.

Not to be argumentative, but "market manipulation" is a more difficult cause of action for the regulators/DOJ--requires proof of intent, aka mind reading from circumstantial evidence.

Whether those two words were a materially false statement (an element of a fraud cause of action) is somewhat more objective, but still grey enough for "pin dancers" to run up billable hours.

Regardless, IMO that injudicious sequence of tweets during market hours now have become a time-consuming, expensive diversion from what matters: profitable execution with the M3.

 

[jhm]

yes



below is a general description of what goes on when a corp action takes place;
again, forget tesla and the private share option for a moment.

the broker is in that position that you suggested above (to supply the longs election)
their customers fully paid long shares are segged, unless enrolled in lending program. for these, id expect those customers would recall their shares. even if they don’t, they can still elect to exchange for whatever the offer terms are. same with their customers long margin shares. both are entitled to the offer terms.

say a broker is net 100 long shares;
50 fully paid and in lending program
100 margin
50 shares short customers.
- and all longs want to exchange in offer

let’s say 75 of the shares were lent out to counter parties. (50 from the fully paid guy and 25 from margin shares - which are free excess position at dtcc that broker has carte blanche with because they supplied the margin)

the leaves only 25 at dtcc
the other 50 long are offset against ahort internally

for the long elections, the broker can only elect 25 at dtcc.

to pay the remaining 75 long customers they will swap corp actions charges with collateral on the stock loan contracts, and colllect the rest from the internal short clients



i don’t know where the credit risk is? it’s not from having shares loaned out when a corp action is going, as i explained above.

now, the real problem in the specific case of tesla is the private shares.

because of this option, i believe there has to be a way to structure the offer to force shorts out, because they obviously can’t be short private shares.

@Fact Checking for dell, what was it? if you didn’t participate you were just cashed out, and did not receive private shares??? i don’t remember that, specially but it seems the most simple explanation.

is it possible that tesla will book cash for all o/s on their books (i’ve said this before but wasn’t clear in my explanation)
...but for those electing private shares, the $420 is used to execute an exchange booking into the private shares?
meaning if you elected private shares you’d never actually see the cash. it’s just a bookkeeping thing. i’d like opinions on that

@MP3Mike you disagreed a couple times to what i was blabbering about earlier. i tried to explain my thoughts more clearly today that i wasn’t wrapped up in work. also @jhm @neroden @Fact Checking is that a possible outcome? i know you guys had some points about a street wide recall..
i’ve never actually seen that enforced for a corp action event (although you could easily argue that shorts would be wise to split). in a normal event when there’s new publicly traded shares the shorts sometimes just stay put and hedge around it, ending short the new stock (obv can’t do that here)

what i should really do is ask my friend to research dell and see if there were short positions still open when that privatization went effective. this might help explain.


also, side note, to clarify a comment i made yesterday in heat of moment, i don’t actually hope all shorts burn in hell apologies to the sensible ones and traders. it’s the lying, manipulating ones who are detrimental to society that have a special place in hell waiting. apologies again

The credit risk is this. Suppose I hold 100 shares of Tesla in my brokerage account. And my broker has lent out a lot shares of shares. My broker does know know before hand whether I will cash out or demand private shares. Suppose I demand private shares and they have insufficient common shares or private shares with which to fulfill my demand. They must be able to get shares back which they have lent out. That technically is the credit risk. If the short cannot supply the shares, then they are now in position where they must go into the open market to buy private or common shares to be converted into private shares.

So when I demand private shares, the broker becomes short private shares. If shorts cannot return actual shares, then that is a credit risk. Or if the broker accept cash in lieu of actual shares, that cash may be insufficient to cover the cost of buying shares on the market, that's market risk.

So all these kinds of risks are made much more daunting that private shares are illiquid, that a short squeeze could make share prices astronomically high and that all of this could happen at exactly the same time. The risk is not worth taking.

 

[ggr]

Now I don’t know what to think

My advice is to try not to worry about it.

 

[jhm]

Option theoretic implications of taking Tesla private

I'd like to invite people here to this new thread. An option theoretic analysis is very helpful in illuminating how the take-private transactions work financially. For example, it shows how Musk and friends can use put option to provide funding for the cash out option. Also it suggests potential trading strategies to optimize the value of the take-private offer. Very worthwhile to think through this.

 

[hellnoICE]

I am learning more about intricate financial arrangements than I ever dreamed of.
It's a guessing game which is kind of entertaining. Can one of us find the clue?
Patience grasshopper, all will be revealed.

 

[dmckinstry]

Elon also needs less money to take Tesla private if he finds a way to let the small investors stay with Tesla. That alone is enough reason to solve this issue.

And he can probably tell how much support he has from us by looking at previous voting by us.

 

[scaesare]

Here's some more advise, that I give emphatically.

Don't take advise from some random person on the internet.

Edit: not saying previous advise was not good advise.

I advise saying "advice" when you are referring to the noun, and "advise" when using it as a verb.

This is advice.
Mod: You mean: “Not an advise”.

 

[dondy]

Is there some kind of consensus in this thread among longs - as to why the stock price is at a big discount from what I view as the floor price - $420 ? I'm wondering whether to buy more (for eg. move some of my fidelity 401k to brokerage link and buy TSLA on Monday).

It looks like Fidelity FFC is selling (3mln+ in 3 days), drugging a bunch of smaller investors with weak stomach along. (it's like more than 100 of small companies already zeroed their accounts). You guys are just too small to absorb such giant.
Price T Rowe, Vanguard, Baillie, etc. have their accounts frozen.
BlackRock is actively buying: 400+k shares so far. It looks the only active big+ investor in last 3 days.

The all necessary info for proper understanding is up there and is as trivial as financial info can be, ....
Musk will need 20bln. I won't be surprised if this buyout will cost less than 10bln for Tesla and friends...

Engineering.

 

[Boomer19]

Anybody have any experience with what happens to options/LEAPS if they go private? I guess Dell is probably a pretty good recent example but I wasn't paying attention to that.

i posted this days ago, but its probably tough to find now. probably 100 pages ago!

leaps will amend to an accelerated expiration (to the effective date of the corp action) and will deliver whatever the corp action terms are.

if cash, than cash, etc. they won’t deliver private eq shares obviously.

 

[Boomer19]

It looks like Fidelity FFC is selling (3mln+ in 3 days), drugging a bunch of smaller investors with weak stomach along. (it's like more than 100 of small companies already zeroed their accounts). You guys are just too small to absorb such giant.
Price T Rowe, Vanguard, Baillie, etc. have their accounts frozen.
BlackRock is actively buying: 400+k shares so far. It looks the only active big+ investor in last 3 days.

The all necessary info for proper understanding is up there and is as trivial as financial info can be, ....
Musk will need 20bln. I won't be surprised if this buyout will cost less than 10bln for Tesla and friends...

Engineering.

how can you tell this?
regarding who is buying and who is selling?

 

[Boomer19]

I would guess because it's not a done deal. Regarding the price, the "funding secured" source might be just a starting point if they are not that picky about who comes to the table, and there may be a go shop period. So it's possible that Musk may have no intention of actually doing a deal with whoever the 420 price is, he might just be using it as a starting point for bidding.

Yeah I don't know either. I would guess the Dell deal probably answers most of these questions but I haven't looked into it.

@Ratanpara

you won’t be “forced” to close your options position unless someone exercises against you prior to expiration, it expires ITM or worthless, or corp action eff date occurs.

here is dell
https://www.theocc.com/webapps/info...e=201310&lastModifiedDate=09/13/2014+09:49:55

 

[Boomer19]

Maybe my mistake--IIRC neither Seymour or Terranova are big Tesla bulls, compared to Adami (a visage only a mother could love.)

haha. yeah @Familial Rhino posted it a couple days ago, and was looking for cnbc website to post the video but i guess he/she couldn’t find it. i know i couldn’t

 

[sundaymorning]

Seems is not the Saudis...

Exclusive: Saudi Arabia's PIF has shown no interest in bankrolling Tesla buyout
https://mobile.reuters.com/article/amp/idUSKBN1KW0FA

Anyone who knows anything about business and these sorts of transactions will NOT admit to being “interested” publicly, and here’s why: if the Saudis come forward and confirms they want to take this company private, then share price will automatically shoot up overnight closing near or over the $420 level, making it more difficult for them to buy us out straight, at the price level they want...

Consider buying a car for example. If you want to buy someone’s car, in order to get a great deal you can’t admit to loving their car. You have to downplay it by telling them the color isn’t what you’re looking for, or that you wish the interior was darker, etc. Then the haggling process can begin. If the Saudis admit to financial support today, they’ll find themselves buying Tesla shares at $450-500 when this is all said and done, instead of $420. This is business, you can’t trust anyone except Elon at this point. And you definitely can’t trsut Reuters.