Gene Munster, Loup Ventures co-founder, discusses Elon Musk’s plan to take Tesla Inc. private. He speaks with Bloomberg’s Scarlet Fu and Taylor Riggs on “Bloomberg Markets.” (Source: Bloomberg)
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ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
Loup's Munster Sees Greater Than 50 Percent Chance Tesla Goes Private
Transcript
Gene Taylor and I were looking through the stories here one line kind of stuck out at us which is the billionaire founder Elon Musk would prefer to amass a group of investors who could each contribute a part of the funds because he wants to avoid having one or two large stakeholders in the company. So again he wants to or tasseled the company wants to avoid concentrating ownership of this stock. As we were just saying between the two of us this does not sound like funding secured the way that he'll must have indicated in his tweet earlier this week. Is that going to be a problem for him and does that change your sense of whether this take private plan is feasible.
Surprisingly I don't think it's a problem. And by the way that was my initial reaction when I heard your breaking news is that that doesn't seem consistent with the tweet that talked about funding secured. They wanted to take one minute and talk about that is that that we even though it suggested implies that all of the funding is secured. The legal standard is that that in fact is not the funding secure doesn't mean all funding is secure. And so I think that there is some if you will wiggle room around that. And so I don't think that you should be concerned about any legal risk. Let's take the case that I'm wrong and have in that case if in fact I'm wrong I think that it would essentially just be a fine. It would be but it would be a hit to his credibility which is probably the bigger issue.
Very interesting as we digest more of these headlines. One of the ones as well was that he wanted to avoid concentrating ownership of stock which is why he was really looking to a larger group. Of banks or asset managers here. I mean is that because I think he has about 20 percent control and he doesn't want any other investor to have a large chunk. Why does he wants a broad group here.
This one is easier. And that's exactly it is that he has 22 percent share. Now he doesn't have any super majority like some other tech companies have. But that's when you have these grand vision companies the the founders the leaders don't want to have some of their investor have control so it make a ton of sense. And I would I would consider that a given that he would not give up any sort of control. He's still going to be the largest shareholder in the company.
How does this fit in with what you had been thinking because you had mentioned in your latest report that when you look at where the money would come from to take TESL private it could come from a number of sources whether it's existing investors strategic investors and here of course are talking about those cash rich big tech companies or foreign partners. How do banks and asset managers fit in here.
Well the banks don't make a ton of sense in my from my view because banks typically this is in an investor and a banker. Investors tend to have a better tolerance for a lot of the uncertainty. Were bankers want to be well collateral. So in this case I don't feel like the Tesla story lines up as well to have a leveraged buyout through debt. So there are four basic potential funding sources. One is debt which I think is less likely than the other three are existing shareholders outside of foreign investors with sovereign funds. And lastly corporate investors. I think it's going to be the latter three in equity so this that piece of it surprised me.
I want to talk a little bit about how this plays into that board meeting next week. What are you expecting to hear from the board to get from the board meeting next week. You already say there's more than a 50 percent chance you believe that Tesla goes private. Do we get more details on that next week.
You probably know a lot more that's going to come out than what you're reporting today. You're breaking news today.