The Many Times That Elon Committed Fraud; Tesla Pissing Contest

Whitney Tilson’s email to investors discussing Tesla Inc (NASDAQ:TSLA) pissing contest; why people believe “Elon Committed Fraud” why I have no a**holes in my life.

Elon Committed Fraud

I got a chuckle out of this pissing contest on the VIC message board. There’s actually some good insight on both sides.

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Q3 2019 hedge fund letters, conferences and more

It also reminds me of how fortunate I am. Holland1945 is an a**hole. Most people have to deal with assholes in their lives – like a boss, relative, sometimes even a spouse (if you really screwed up and/or got really unlucky)! But I don’t. I’ve given it real thought and can’t think of a SINGLE person of note in my life who I consider to be an a**hole. I think there are a few reasons for this:

  • Luck (I’ve had an astounding amount in my life, for which I am grateful every day);
  • How I treat people (funny how if you’re nice to people, they tend to reciprocate);
  • I’ve had enough success that, for example, I haven’t had a boss in 20 years and am financially secure (I’m not crazy rich like so many of the folks around me in the investment industry and on the upper east side of Manhattan (the wealthiest Census tract in the U.S.), but I do have “f**k you money”); and
  • I’m pretty ruthless about cutting a**holes out of my life.

Tesla bulls vs bears

Regarding the latter, my daily investing email goes out to ~35,000 people. This email list (Tesla) goes to over 1,000. And I have roughly two dozen more email lists covering other topics that are interesting to me, ranging from a dozen readers (a few stocks I follow closely) to 7,500 (education reform). Other active ones include fitness/adventure sports, politics, criminal justice reform, and Africa (where I lived for three years as a child and where my parents and sister live).

When I’m sending out so many emails every day – some of quite provocative/controversial (that’s deliberate), you can imagine that, on occasion, some random person sends me a nasty and/or obnoxious email. I don’t tolerate this kind of idiocy – life’s too short. I either reply with a warning.. or not – I simply remove them from whatever list(s) they’re on and block their email. Asshole removed from my life and problem solved! It actually happens very infrequently, believe it or not – but it’s healthy…

Digression over (boy I had fun writing that!), here’s the Tesla pissing contest:

Holland1945 (everyone is anonymous) started it by posting this:

God I LOVE Elon. He is a brilliant hustler with a great personality. He is interesting x1000. How can anyone not love this guy and root for him? Tesla is probably going to be wildly profitable one day and all of these haters are going to make a million excuses for why they were wrong while they're eating boxed ramen noodles from their mom's basement.

Elon Committed Fraud?

I can't even begin to explain the satisfaction I get from seeing shorts lose money and get torched by Elon on twitter, and I don't even own the stock. Maybe I should. It still blows me away that most of the haters are microscopic fund managers with lousy track records, and they still make it a full-time job to dump on Elon. It's like Ryan Leaf tweeting all day making fun of Tom Brady for each incomplete pass…

Other VIC members then flamed him for being a juvenile jerk:

There is a reason they call the stock market **the great humiliator**. In the long run, the stock price doesn't care about your, my, the long trolls, or the short trolls opinions. The stock price only cares about the performance of the business. If you want to antagonize somebody, do it on Twitter. Let's try to be pros in this forum.

To which Holland1945 replied:

Seriously though, come on, how can you not like messing with these short trolls every once in a while? They're all crazy. It's good to see Elon having some fun at their expense considering what gets said about him… The TSLAQ twitter trolls came here so fair game once in a while, this isn't their safe space.

And jcoviedo replied:

Ken Lay was a genius until Enron collapsed due to massive leverage and revealed fraud

Aubrey McClendon was a genius until natural gas prices collapsed and CHK's massive leverage became a problem

Elizabeth Holmes was a visionary genius until Theranos was revealed to be a fraud

Dick Fuld was a gritty fighter of a CEO until Lehman collapsed due to massive leverage

I could go on.

Musk like Holmes?

Elon committed fraud with Funding Secured in 2008 -- even issuing a fake press release that funding had closed when it hadn't and wouldn’t for another 3 months. He committed fraud again when he lied about having the DOE loan secured in early 2009 -- it closed in 2010. He committed fraud again when he lied about funding secured for his fake takeover offer in 2018.

Elon committed fraud when he took "deposits" for products that didn't exist and wouldn't exist for year. Additionally, Elon committed fraud when he said that Tesla would be producing 10,000 Model 3s/week by the end of 2017 to get the HY debt deal done. Elon lied about the 1mm robotaxis by the end of 2020 to get the May 2019 equity/convert financing done.

Elon committed fraud when he used Tesla to bail out himself, his brother, and his cousins in Solarcity. Solarcity got its factory in Buffalo by bribing all sorts of state and local officials.

Elon lies and lies and lies and lies. He lies about everything. Tesla is massively levered (and increasingly so with Tesla's increasing use of off balance sheet forms of financing.) Tesla operates in a highly cyclical industry. Bankruptcy is inevitable so long as Elon continues to run the company as he is arguably the most reckless CEO in the U.S.

Elon committed embezzlement when he had Spacex spend its money (which came partially from government contracts) to build the Boring Company's demonstration tunnel.

Administrations change. At some point the government will stop tolerating Elon/Tesla's lies and cavalier attitude towards public safety.



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver