Tesla’s $5B Capital Raise; A Wake Up Call for the SEC?

Tesla’s $5B Capital Raise; A Wake Up Call for the SEC?
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Whitney Tilson’s email to investors discussing Tesla‘s $5B capital raise; JB Straubel’s new venture; the secret adjustment factor Tesla uses to get its big EPA range numbers; Tesla 0.8% EV market share in Europe in July; Kass comments.

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Q2 2020 hedge fund letters, conferences and more

Tesla's $5B capital raise

1) Two tweets on Tesla’s $5B capital raise, announced today:

Fund Manager Profile: Zhang Hui Of China’s Southern Asset Management

investHistorically, the Chinese market has been relatively isolated from international investors, but much is changing there now, making China virtually impossible for the diversified investor to ignore. Earlier this year, CNBC pointed to signs that Chinese regulators may start easing up on their scrutiny of companies after months of clamping down on tech firms. That Read More

A friend’s comments:

At some level it sounds plausible, but I have not been in that room and really can't offer an opinion on that specific interpretation.

Generally speaking, of course, at this kind of totally insane valuation -- roughly 100 times what the company is really worth -- the company should have raised as much equity as possibly regardless of whether S&P 500 inclusion was in the cards or not.

3) An interesting WSJ article about JB Straubel’s new venture: One of the Brains Behind Tesla May Have a New Way to Make Electric Cars Cheaper

4) From my analyst Kevin (a Tesla car and stock owner):

Another TSLAQ conspiracy theory bites the dust.

They use an adjustment factor that is completely allowed but other automakers don’t use it because they are too lazy and don’t actually WANT to sell their EVs...

The Secret Adjustment Factor Tesla Uses to Get Its Big EPA Range Numbers

Doug Kass Comments

5) From a friend:

The dominant EV brand held a commanding 0.8% EV market share in Europe in July: http://ev-sales.blogspot.com/2020/08/europe-july-2020.html

Model 3 sales: 856 units

Total EV sales: 113,659 units

That's less than 0.8%.

(Model X and S too small to count)

6) Doug Kass’s comments:

I would add:

Despite protestations from @stoolpresidente and others, a Tesla stock split produces no new value -- and has led to a price increase of nearly $200 billion in market value.

Further, such a split will not add new investors.

People who think Tesla is too rich to buy a single share can already buy slices from Schwab, Fidelity and Robinhood.

One of the underappreciated sources of $TSLA price appreciation: Chinese hot

money. This blogger has 10 million followers and each day pumps out bullish premonitions that Tesla will continue to skyrocket. Chinese pump and dump schemes are not prosecuted in China for U.S. stocks.

Original Tweet, here.

This is just a massive manipulative game being played without any regulatory attention

Aug 27, 2020 | 12:05 PM EDT DOUG


A Wake Up Call for the SEC on Tesla


Look at the volume in the August 28 calls (expiring tomorrow!) in Tesla (TSLA)

25,000 August 28 $2200 calls.

31,000 August 28 $2250 calls.

32,000 August 28 $2300 calls.

By comparison there is little trading in Tesla August 28 puts.

Someone or some group of traders go in nearly every morning and buy large sums of Tesla calls.

This forces buying in the common.

Traders, like Robinhood, who sell their order flow to others who buy in front of them, and possibly think that there is good news ahead, aggressively buy Tesla's common.

In other words, the initial call buying creates much more artificial buying.

This has been going on for weeks.

Then the analytical community, with dramatically lower price targets, like Jeffries, doubles the target based on no new incremental fundamental news.

The SEC remains silent.

Position: Long TSLA puts, Short TSLA

Updated on

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. 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)www.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
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