Tuesday, October 3, 2017

Whitney Tilson on Shorting Tesla (and other stuff) TSLA

We have a few hundred posts on Tesla, going back to before the IPO including some thoughts* on shorting TSLA.
A few links after the jump.

TSLA Tesla, Inc. daily Stock Chart
$336.09 down $5.44 last.

From ValueWalk
From Whitney Tilsons latest email
1) Michelle Celarier with an in-depth look at Tesla: Elon Musk vs. the Haters, http://www.institutionalinvestor.com/article/3756165/investors-pensions/elon-musk-versus-the-haters.html. It was my worst short ever in 2013-14 (from $35 to $205; thank goodness I was long Netflix, which rose a similar amount during the same time frame). Ever since I covered, I’ve been warning all of my short selling friends that it’s a bad short at any price. To be clear, forced to go long or short Tesla here, I’d go short, but we investors aren’t forced to make any investments. Here are my quotes in the article:
Tesla checks all the red flags short sellers look for, but, he shrugs, so what? “I can do the numbers and see how much the company is losing, but you’re short an incredibly maniacally driven CEO, with manically driven engineers assaulting the world’s largest industry. If they succeed, Tesla could be a $400 billion market cap company.”

Tilson has continued to follow the Tesla saga, but has resisted the urge to short it again. “Tesla is a good case study in how the world’s smartest short sellers can get sucked into something that’s just a bad short.”

…“I’d rather short something that’s a scam,” says Tilson. He applauds Tesla’s environmental mission and doesn’t want it to fail. “I don’t want to bet against that in an emotional sense.”

…As Tilson puts it, “I don’t want to be short open-ended situations. The tail risk is just too high.”
2) Good to see my fellow hedgies doing well (though we’re still trailing the market by quite a margin):...MUCH MORE
* April 1, 2013 
Why We Don't Short Tesla: The stock is up 16% On The Day (TSLA)

April 22, 2013 
Tesla Motors Trades At All-Time High (TSLA)
The stock is at $49.75, up 4%, after trading as high as $50.19.
The thing to remember with all-time highs is there is no overhead supply, no shareholders thinking "As soon as I get to breakeven I'm getting out"....
August 2015
Short Selling and The Information Embedded In The Cost To Borrow Stock (TSLA)

August 2016
...For the longest time we had a Don't Short Tesla policy because it showed signs of being a cult stock and cult stocks can kill shorts. Plus it can be very hard to locate stock and very expensive to borrow when you do,
From an August 2015 post:

Morgan Stanley Gives a $465 Target For Tesla, Stock Jumps 5%...
We've publicly shorted Tesla twice on the blog, both times worked out because nothing like this happened during the holding period.
For the most part this April 2013 headline is operative "Why We Don't Short Tesla: The stock is up 16% On The Day (TSLA)". That was at $44.00, up $6.11.
Recently $255.30 up $12.15.
Morgan Stanley was one of the firms that sold the recent half-billion stock offering....
However, after the SolarCity deal and Elon's purchase of SCTY debt (on top of his SpaceX buying SCTY debt) I'm more open to betting against the company, at least tactically if not to zero.
Remember, your mileage may vary, close cover before striking etc.

June 2017
"Einhorn Compares GM to Apple and Explains Why He’s Short Tesla" (TSLA; GM)
...It is just so dangerous to put valuation (as compared to fraud) shorts on in a bull market.
We have had a general rule, "Don't short Tesla" virtually since the IPO, that we've violated on three occasions, fortunately profitable but it is tough to tell if it was worth the risk.
Finally, don't be this guy (no, seriously, don't be this guy):