TSLA Market Action: 2018 Investor Roundtable

[RiverCard]

I apologise for my tone. I am sure you have thought much more about institutional ownership of TSLA than me, and without digging deeper your evidence does look convincing. What I am trying to say is that these secondary sources all get their data from the 13F’s, and that the only way to determine if they made a mistake is to read the 13F’s yourself.

I dug into this some more, and here is what I found. The original 13F for end of 2Q 2018, filed on 08/10, has 5 entries for Tesla stock which add up to about 11M shares. The largest of these numbers is 9,873,586. The amended form, filed on 09/07, has only 1 entry for Tesla stock with 9,872,686 shares.

Now I guess there are two reasonable interpretations.

1. They forgot about almost 10M shares in the original report, so we should add this number to the total. Or
2. They revised the original number down by 900 shares.

I believe the sources you are quoting all went with option 1 (or one of them went with option 1 and the others are pulling their data from that source) but I think common sense dictates that option 2 is correct.

One way to try to determine which interpretation is correct is to look at the corrected data for other stocks. I picked 3 other stocks in the amended report at random with a large number of shares, and in each case I found a corresponding entry in the original report with a number that was very close.

I am not an expert on 13F’s. In fact I’ve never read one before in my life. So please let me know what I’m doing wrong.

Is your conclusion that the FMR group owned:
11,195,866 shares at 6/30/18 (after the correction in the largest holding) and
9,094,405 shares at 9/30/18 so
FMR group reduced it's TSLA holdings by 2,101,461 shares (18.8%) during the third quarter?

FMR group's TSLA holdings seem to have peaked at 3/31/17 when it reported owning 24,450,435 shares

 

[avoigt]

Tesla Options Traders Bet Stock Hits Record High

"Nearing Resistance
The chart suggests Tesla may rise further to its next level of technical resistance around $363, an increase of 4%. However, should the stock rise above that level of resistance at $363, then the shares should have a clear path higher towards $389, the previous high. The relative strength index has been steadily trending higher since April, and it suggests that bullish momentum is moving into the stock. "

Pretty consistent with my point of view. After 9 (!) daily white candles and approaching the resistance its no surprise we have seen a down day yesterday with a longer red candle in a weak tech environment.

Thats nothing surprising and nothing to worry about. The resistance at about 360 after a more than $100 up run was obviously not to manage on the first try. Still the situation remains positive even in case we go deeper today or even this week. The sentiment has cleared to the positive but on the way up we always will see profit taking and people who believe they can do swing trades.

That positive sentiment includes going down a bid to breath and swing up again to test the resistance or go above. Still I never do swing trades as people are usually confuse luck with being smart. You never know in the environment we are in where Tesla will go on a daily level. Much more easy to say that we will test $389 for sure in a not far future. Don't ask me when though.

 

[nursebee]

Nowhere does it say that number describes the number of Tesla shares. Indeed, it’s a “value”, not a share count. It’s the cover page for the actual form which is located here: SEC FORM 13-F Information Table

Indeed, there are 21 entries (one of them is Tesla). For completeness, here is the original 13F for the same period: SEC FORM 13-F Information Table

So on the form I reference, what is the 5, 21, and 21,749,000?

It sure suggests to me that 5 managers through 21 funds, own that many shares.

 

[scaesare]

That author's writing style seems SO familiar.

Very sly, he is.

 

[Reciprocity]

... and the instantly-applied countervailing tariffs hurt Tesla, just like the Chinese tariffs.

That's not 'bullish', but if you were to rearrange some letters in the second part, then I'd agree wholeheartedly.

Cheers!

Tilburg. I think Tesla avoids tariffs by doing final assembly in Tilburg. So Tesla is importing parts, not cars. I could be wrong though.

 

[Joe F]

CNBC just did an inside the Gigafactory piece, where Phil LeBeau did a very small video walkthrough of the automated process.

It was actually a positive piece from CNBC for a change...

 

[Reciprocity]

I do not understand that which you say.
The poster suggested Ark "dumped" 23K shares, then posted they had sold 11K.
The big issues is that FIDO sold 11.9 M shares!
View attachment 352117



Ark is a little fish.
Current holdings interesting as well, nothing like 11M...or close
View attachment 352116

Your fmr numbers are wrong. Someone fat fingered the entry last month doing fmr added 12M shares, your just seeing the correction this month. The reality is they are down only 2M shares net. PWC and ballie added way more then that.

 

[Fact Checking]

Now that prices are down again, and particularly if they go lower, I'm thinking about using some of that money to buy February call options, to capture the effect of the Q4 earnings report. I've only been in stock previously; for all of you experienced options traders, do you have any tips to suggest?

I'm thinking about building a spreadsheet to represent my view on the probabilities of the company being worth varying amounts at expiry, and then mapping that up against the projected profits (or losses) relative to the current strike prices.

If you are still open to suggestions to change your fundamental approach, the one you picked (trying to map probabilities to dates) is a perfectly fine textbook approach, but has several disadvantages:

• Mapping out even approximate probabilities of real-life events is hard, very hard - and mistakes compound along the Markov Chain you establish.
  
• Then assigning specific dates to those events is even harder, and adds more compounded mistakes.
• There's no reasonable way to establish how good your predictions were after the fact: the past has occurred with 100% probability and you can make profits for the wrong reasons which can skew your strategy with no good feedback loop.
  
• Markets are also fundamentally irrational, there's a lot of 'sentiment' and 'momentum', 'panic' and 'greed' and other deep psychological effects that have a very clear effect on prices but are almost impossible to model with probabilities.
• The options market is a zero-sum game - every dollar is earned at the expense of a counter-party. You are a small retail investor, while prices are set by the pros who have their own agendas, which are hidden most of the time. They have superior market position, superior capital, superior sources of market moving information and superior trading latencies. The only agenda you can count on for sure is that the deck is stacked and the system is rigged against you with one main goal: to take away your money, regardless of whether your predictions were right.
• This means that IMHO there's just two ways to make money consistently:
  • Identify mis-pricing that is Tesla specific and which takes real intellectual effort to uncover
  • Join the big guys and write options, covered by your stock position or by your cash.

From what you wrote your primary goal appears to be to increase probability adjusted leverage to the max for a given time-frame - which excludes the options writing variant which is relatively low return in comparison.

As for leveraged options bets I'd suggest a different strategy with a potentially more robust outcome:

• Instead of trying to time the market, try to determine "the market has not priced in this event occurring yet, I know it will happen with reasonable probability in the next 1-2 years, and I'm willing to wait for it to happen". You have a big advantage compared to 90%+ of the investment funds: you don't have investors or management to please, you don't have stable returns to produce.
  
• There's a sizeable list of Tesla events the market has not priced in yet, well known to readers of this thread: record Q4 revenue and cash flow, S&P 500 inclusion, faster China expansion, the "shorty stimulus" of buying 20-30 million shares in a possibly uncoordinated event, the Moody's upgrade, most of the EV competition still denying reality, etc. etc.
• Identify the cheapest call options for reasonably short-term expiries - at most 1-3 months out. Options prices are primarily set by trading activity supply & demand, fundamentals are only indirectly present, and only through the distorted lens of the (imperfect) opinion of options traders. So in every options chain for a given expiry you will have a couple of trading days where they will be nicely priced with really good leverage. Roll forward your position from expiry to expiry, not waiting too long before roll-over, unless a key event you are waiting for is underway. (Note that somewhat counter-intuitively rolling over call options is best done from a position of strength, shortly after a strong up-move - with uncertainty working in your favor and increasing the value of your current position.)
  
• Be opportunistic about when to roll over and be flexible about the target strike price, use the SP fluctuations caused by the big guys and macro sentiment to your advantage.
• Make sure that "being wrong" will only result in higher roll-over costs, not in a completely lost position. I.e. match your position size and roll-over cost to what you can easily afford to lose on an ongoing basis and think of it as a leveraged position maintenance cost, not as trading profits/losses. This makes it much more easy to tolerate being wrong - which you'll frequently be.

I.e. continuously invest not into a specific profit target or based on estimated probabilities, but into cheaply maintaining this rolling position with high leverage that is just beyond the standard bell curve of expected volatility.

The sum of time premiums you'll be paying for will be similar to buying long term options straight away, but it could be much lower if you do the rollover intelligently. You'll continuously have exposure with high leverage, so you won't miss any of the events. Once you think a particular positive (or negative) event's price effect has been exhausted, like you correctly guessed that the recent $350 was a temporary top, or you correctly guessed that $250 was probably a bottom, you can reduce or increase your options contracts or roll over accordingly.

Note what you won't be doing: you won't be trying to judge the exact probability and timing of the future, you'll only be looking for the cheapest leveraged exposure at any given moment. This I believe will result in a far superior outcome and might even generate steady profits from discrete events instead of just a single strategy decided right now.

Worst-case you'll lose all the accumulated costs of the rolled forward positions - which will be similar to losing any long term deep out of the money bet, but if you do reasonably well playing volatility (which you have a track record of doing) you'll be much better off - and you'll be prepared perfectly for the next unexpected move in the price.

As to the key decision of which strike price(s) to use: I'd use strike prices just beyond the standard Black-Scholes distribution of probabilities compared to the current stock price - that's where most of the long-tail mispricing is usually I think. You should also watch out for bid/ask spreads on options contracts: if you go for too high strike prices ($500, $600, $700) you can get insane leverage, but you'll be getting bad prices from market makers. Avoid sparsely bought expiry weeks, pick expiry weeks with good volume:

2018/Nov/16:  PUTs:   229,966 ; CALLs:   131,471
2018/Nov/23:  PUTs:    15,182 ; CALLs:    13,708
2018/Nov/30:  PUTs:    12,143 ; CALLs:     8,948
2018/Dec/07:  PUTs:     6,569 ; CALLs:     5,213
2018/Dec/14:  PUTs:    10,793 ; CALLs:     5,881
2018/Dec/21:  PUTs:   133,289 ; CALLs:    96,939
2018/Dec/28:  PUTs:     1,430 ; CALLs:       768
2019/Jan/18:  PUTs:   499,900 ; CALLs:   221,112
2019/Feb/15:  PUTs:    18,193 ; CALLs:    20,128
2019/Mar/15:  PUTs:   108,219 ; CALLs:    44,413
2019/Jun/21:  PUTs:    75,634 ; CALLs:    41,052
2019/Aug/16:  PUTs:    23,630 ; CALLs:    13,399
2020/Jan/17:  PUTs:   207,026 ; CALLs:    76,693
2020/Jun/19:  PUTs:     3,415 ; CALLs:     1,807
      total:  PUTs: 1,352,249 ; CALLs:   687,148

The ones with over 100k contracts are certainly good, December 7 with just ~11k contracts open is probably not. Use the max-pain price as the general price expectation and if you have 2-3 target expiries pick weeks with lower max pain values.

I.e. try to stack the various hard to automate factors and advantages in your favor, because you'll need it:

• your superior knowledge of potential positive Tesla events,
• your sense of overbought/oversold conditions compared to current fundamentals,
• your robust judgement of the effect of current news events on Tesla fundamentals, i.e. your FUD- and hype detection abilities,
  
• your opportunistic timing of roll-over or take-profits when you see a particular strike price being sold by someone and thus having an attractive price, or buying into a dip,
  
• your independence of external investors who require most other traders to produce stable returns.

Forget probabilities and Markov chains - that's IMO a losing battle due to the inherent complexity of the whole situation. Instead simplify your trading goal by identifying a target leverage (which can be a fixed number such as 50x) and just roll with the stock price as it goes and be opportunistic. This way you'll also better utilize all the continuous intellectual effort you are putting into this forum.

 

[Reciprocity]

I apologise for my tone. I am sure you have thought much more about institutional ownership of TSLA than me, and without digging deeper your evidence does look convincing. What I am trying to say is that these secondary sources all get their data from the 13F’s, and that the only way to determine if they made a mistake is to read the 13F’s yourself.

I dug into this some more, and here is what I found. The original 13F for end of 2Q 2018, filed on 08/10, has 5 entries for Tesla stock which add up to about 11M shares. The largest of these numbers is 9,873,586. The amended form, filed on 09/07, has only 1 entry for Tesla stock with 9,872,686 shares.

Now I guess there are two reasonable interpretations.

1. They forgot about almost 10M shares in the original report, so we should add this number to the total. Or
2. They revised the original number down by 900 shares.

I believe the sources you are quoting all went with option 1 (or one of them went with option 1 and the others are pulling their data from that source) but I think common sense dictates that option 2 is correct.

One way to try to determine which interpretation is correct is to look at the corrected data for other stocks. I picked 3 other stocks in the amended report at random with a large number of shares, and in each case I found a corresponding entry in the original report with a number that was very close.

I am not an expert on 13F’s. In fact I’ve never read one before in my life. So please let me know what I’m doing wrong.

Logic dictates you are correct. 12M shares being dumped would have tanked the stock. The 3rd qtr was rocky, but not 12M shares dumped rocky.

This has been proven on Twitter by @vgrinshpun who thought something didn't look right and recalled fmr adding 12M shares the prior qtr. There was actually an article about the subject I believe. There was an error somewhere that overstated the 12M and what your seeing now is the correction to that error.

 

[jeewee3000]

The fact is that different people will have different viewpoints about how a company's fortunes will evolve over time. The market is the average of these differing viewpoints. And with Tesla they differ greatly. Only one side can be correct. We have a series of dates and date ranges across which the various factors which clarify which side is correct will come to light.

The bears think that they're the ones who will be proven correct. We (bulls) think we're the ones who will be proven correct. Does the fact that opinions differ mean that we should just throw up our hands and say, "See, nobody knows?" and not invest in stock? Of course not. We do our research, decide what information we think is correct, and are rewarded or punished based on the accuracy of our assessment.



For the record: I entered the stock this year. My average buying price on TSLA was around $265. I had a couple bad buys (although no "funding secured" buys, I wasn't that stupid ), but a lot of really good buys.

It's not the company's "performance" that determines the value, but the balance of the opinions of the broader investment community over the long-term fate of the company, and thus the time-weighted rate of return. The Model 3 launch problems led to a stark division in views on this subject, and a major, if not predominant, view that major dilution and possible bankruptcy was in the cards. The death of this thesis was critical to profit on TSLA. Hence my investment window was from when prices first dropped low - my first buy was $262 - until when I expected this thesis to die or be severely injured (after the Q4 or Q1 reports). My profits or losses would be based around the accuracy of my views on this subject.

I expected a Q3 profit to weaken, but not kill, the hypothesis, and I feel I've been proven correct in this regard. The obvious reason being that they would automatically declare it a one-time engineered profit. Two profits in a row are required to kill off this excuse.

Sounds to me you are getting overconfident in your ability to predict short term $TSLA stock price movements after nailing it on Q3.

I agree there is a high chance of Q4 being exactly what TMC anticipates: second profit in a row, beating the estimates again, and basically proving Q3 was not a fluke. In this case I do agree we might reach ATH within a week after the Q4 ER conference call.

However, following, investing and swing trading this stock since IPO, I'd like to warn you that it is never that simple. @avoigt posted a similar warning right above my current post.

Caution is advised, especially when investing your hard earned cash in options, as they can lose their value instantly. (Yes, the 420 secured caused a lot of damage to my OTM calls. You simply state you "weren't that stupid", but nobody could have seen that coming, just as you now can't imagine what could happen between now and February 2019).

Just one example: let's say Q4 is NOT a beat, and is just break-even given some extra investments in China and let's say European gigafactories. Long term bulls could still applaud 'cause the stock retains its potential for growth. Short term option holders would be sugar out of luck.

TL;DR: nothing is certain. While it is of course OK to invest/trade as you see fit, other TMC members that are less experienced with trading/options should take all short term forecasts with a large grain of salt.

 

[Tslynk67]

Just received an invitation to view Model 3 here in Belgium - I assume they’ve sorted their homologation out now. As of tomorrow!

 

[jeewee3000]

Just received an invitation to view Model 3 here in Belgium - I assume they’ve sorted their homologation out now. As of tomorrow!

View attachment 352260

Can confirm. I got the same e-mail.

 

[Tslynk67]

Can confirm. I got the same e-mail.

As @SpaceCash would say: BAFBITCH!

 

[mutle]

Also received an email for Germany. Model 3 will be shown starting tomorrow in Düsseldorf (Königsallee store) and Munich. Guess I'll have to make a trip to the Tesla store tomorrow.

 

[vigleik]

Is your conclusion that the FMR group owned:
11,195,866 shares at 6/30/18 (after the correction in the largest holding) and
9,094,405 shares at 9/30/18 so
FMR group reduced it's TSLA holdings by 2,101,461 shares (18.8%) during the third quarter?

FMR group's TSLA holdings seem to have peaked at 3/31/17 when it reported owning 24,450,435 shares

That sounds about right. (I didn’t check though; I’m done reading 13F’s for a while.) Still a dramatic decrease, but over a much longer time span.

 

[Reciprocity]

That sounds about right. (I didn’t check though; I’m done reading 13F’s for a while.) Still a dramatic decrease, but over a much longer time span.

It's Deja Vu all over again:
Vladimir Grinshpun on Twitter

 

[schonelucht]

Also received an email for Germany. Model 3 will be shown starting tomorrow in Düsseldorf (Königsallee store) and Munich. Guess I'll have to make a trip to the Tesla store tomorrow.

Please check if it is a EU model and if so, what the charging port looks like!

 

[Krugerrand]

Also received an email for Germany. Model 3 will be shown starting tomorrow in Düsseldorf (Königsallee store) and Munich. Guess I'll have to make a trip to the Tesla store tomorrow.

Take supplies, in case there’s a line up. You don’t want to starve to death waiting in line.

 

[stef]

Just received an invitation to view Model 3 here in Belgium - I assume they’ve sorted their homologation out now. As of tomorrow!

View attachment 352260

Nothing yet in my inbox (Switzerland)
Finger crossed

 

[Huskyf]

@stef yes like V9 nothing
But I saw on others forum or Facebook pages the invitation is for Tesla store Zurich