Whitney Tilson’s email to investors discussing Tesla temporarily freezing store closures and layoffs in chaotic sales strategy change and questions for the bears thread from VIC.
1) This is beyond absurd: https://electrek.co/2019/03/08/tesla-freezes-store-closure-layoffs-chaotic-sales-strategy/
Seth Klarman: Investors Always Need A Strategy To Guide Them
"Many investors lack a strategy that equips them to deal with a rise in volatility and declining markets," Seth Klarman told his audience in a speech at MIT in 2012. Q3 2020 hedge fund letters, conferences and more Klarman was talking about the benefits of having a strategy, such as value investing, to provide a Read More
2) Latest VIC posts (read from the bottom up):
507: hkup88 - China Fraud Subsidiary
Does anyone find the whole 8-k confusing.
They are doing a $500m unsecured 1-year loan from a consortium of Chinese banks. They just put $600m in Singapore most likely for use on the China Giga. So that's $1.1b net for a $2b+ facility before even adding in associated working capital and it takes 2 years to build.
- Why would Chinese lenders do a 1-year unsecured note to a company that's insolvent?
- Why would they do a 1-year note if it takes more than a year to build it with no mention of how they refinance it into something secured?
- Is DB really backstopping the Chinese loan (both tranches are $500m)
- Where does the other half of the capital come from?
- Why did a $200m tranche of the ABL refuse to play along and extend the ABL?
- Why would a company in the death throes of a liquidity crisis spend $600m or about half their total cash balance on a white elephant project that has no hope of ever showing a profit and likely won't be completed before the BK?
It's all very confusing. Besides blatant frauds, who secures half the construction money for a project and have the maturity set a year before the project completes?
Even in the nuttiest party of the Miami condo bubble in 2008, these sorts of deals were at least funded mostly to completion...
2) If they were to do a Chapter 11 bankruptcy, could they come out of it as a profitable mass market company, or would they be relegated to a niche upper end producer (asking this from the bear's perspective)?