Short-Term TSLA Price Movements - 2013

[Soundart]

One more interesting thing to note: Some Aug puts bought two weeks ago as hedge/insurance when the stock was in the low 130's have now gone up even with the stock at 137.54... this too is due to increased demands for also puts as we are nearing the call. So my point is there is a lot of demand for both puts and calls right now, and the option premiums could deflate badly after the call even if the stock price rises a lot.

I know, I am looking to buy some short term puts as a hedge against a possible downside movement after earnings, but they are SO expensive. Anyone have any interesting put buys to recommend?...

 

[ysednev]

Soundart,
You can do a basic put debit spread
e.g. you buy AUG 125 put and you sell AUG 110 put. In this case you are buying expensive option and selling expensive option too. The maximum money you will make if TSLA goes down to the strike price which you sold

 

[Citizen-T]

Haven't heard a lot on here about Tesla's moves in China
Tesla Motors Inc (NASDAQ:TSLA) Is Planning Something Big In China | ETF DAILY NEWS

Does anyone think anything about China will be mentioned on the call? I'm guessing someone will ask but I wonder how much more Elon will be willing to share. There seems to be mixed opinions (ie. huge growth opportunity, terrible decision, etc) from a few articles I've read.

I think if something substantive is mentioned on the call about this that can possibly lead to a pretty positive reaction.

I've never read anything that said they thought selling cars in China is a bad idea. I'm sure it'll come up, but there really isn't much to say at this point. EU first, then Asia.

 

[Jonathan Hewitt]

What an awesome close! More intraday ATHs and a new closing ATH!

 

[deonb]

I was just reading this article about the chances of Tesla being added to the S&P 500.
http://seekingalpha.com/article/159...ly-but-could-trigger-short-squeeze?source=msn

This particularly struck me:

Founder Elon Musk is the single biggest shareholder of TSLA with a little over 28 million shares as of May 30th. This corresponds to almost 25% of outstanding shares, but still well below the 50% maximum in regards to the S&P 500 criterion. Other insiders bring the total insider ownership of the stock to a total of 38% shares outstanding. Institutional ownership, however is a different story. In the case of TSLA, around 68% of outstanding shares are held by institutions and mutual funds, but excluding insiders. Once we add the shares held by insiders we arrive at a number larger than 100%. This is possible due to the large short interest in the stock...

So I see the 68% institutional number, and Musk's 25% is well known. I don't however know where to see the rest of the insider ownership?

However, if it is true the implication of this is mind boggling - this effectively means that every share held by a retail investor, is held short by someone else.

 

[Jhall118]

I couldn't stay away. I put a small amount back in today on some high option calls, just in case. I hate investing by emotions, but clearly this stock is high in emotions.

I believe in Elon, but I have a hard time believing that there isn't going to be some pullback at some point....

 

[AlMc]

I couldn't stay away. I put a small amount back in today on some high option calls, just in case. I hate investing by emotions, but clearly this stock is high in emotions.

I believe in Elon, but I have a hard time believing that there isn't going to be some pullback at some point....

Understandable. Hopefully it will lead to another buying opportunity for a long holder like me.

 

[augkuo]

You can look at Yahoo's finance page for the insider owners -
http://finance.yahoo.com/q/ir?s=TSLA+Insider+Roster

The institutions can lend out their shares to shorts (ie Morgan Stanley, Wells Fargo, etc.) so that's where the supply is coming from (~30% shares short).

I was just reading this article about the chances of Tesla being added to the S&P 500.
http://seekingalpha.com/article/159...ly-but-could-trigger-short-squeeze?source=msn

This particularly struck me:

Founder Elon Musk is the single biggest shareholder of TSLA with a little over 28 million shares as of May 30th. This corresponds to almost 25% of outstanding shares, but still well below the 50% maximum in regards to the S&P 500 criterion. Other insiders bring the total insider ownership of the stock to a total of 38% shares outstanding. Institutional ownership, however is a different story. In the case of TSLA, around 68% of outstanding shares are held by institutions and mutual funds, but excluding insiders. Once we add the shares held by insiders we arrive at a number larger than 100%. This is possible due to the large short interest in the stock...

So I see the 68% institutional number, and Musk's 25% is well known. I don't however know where to see the rest of the insider ownership?

However, if it is true the implication of this is mind boggling - this effectively means that every share held by a retail investor, is held short by someone else.

 

[kevin99]

I was just reading this article about the chances of Tesla being added to the S&P 500.
http://seekingalpha.com/article/159...ly-but-could-trigger-short-squeeze?source=msn

This particularly struck me:

Founder Elon Musk is the single biggest shareholder of TSLA with a little over 28 million shares as of May 30th. This corresponds to almost 25% of outstanding shares, but still well below the 50% maximum in regards to the S&P 500 criterion. Other insiders bring the total insider ownership of the stock to a total of 38% shares outstanding. Institutional ownership, however is a different story. In the case of TSLA, around 68% of outstanding shares are held by institutions and mutual funds, but excluding insiders. Once we add the shares held by insiders we arrive at a number larger than 100%. This is possible due to the large short interest in the stock...

So I see the 68% institutional number, and Musk's 25% is well known. I don't however know where to see the rest of the insider ownership?

However, if it is true the implication of this is mind boggling - this effectively means that every share held by a retail investor, is held short by someone else.

I like seeing this piece of of information. Why is it concerning?

 

[deonb]

You can look at Yahoo's finance page for the insider owners -
http://finance.yahoo.com/q/ir?s=TSLA+Insider+Roster

The institutions can lend out their shares to shorts (ie Morgan Stanley, Wells Fargo, etc.) so that's where the supply is coming from (~30% shares short).

Yeah, Nasdaq.com has similar numbers but those are sales rosters so insiders without sales aren't shown. Either way, those represent about 29% of shares outstanding. Plus institutional ownership it makes to 97%. So with more complete sources I can see that insider + institutional could be slightly over 100%.

I'm aware that the institutions can lend out their shares to shorts, and that's where the short float comes from. However, someone has to "sell-to-open" that position and is on the hook for it.

Of course there are some frequently traded longs and shorts, but the most important metric for me is that there are not enough shares outstanding (by millions) to satisfy the current set of:
* Insiders
* Institutional investors
* Long-term long retail investors

And the ONLY way those 3 positions currently exist is because of short support, meaning you have millions of long-term positions that are purely backed by short-term traders. (All short positions are by definition short-term.)

For short interest to drop significantly, the short-term traders can't just buy their shares back from weak longs and day traders, but they have to go ransack 401k's and IRA's for them. And that's not going to be easy.

 

[DaveT]

So I see the 68% institutional number, and Musk's 25% is well known. I don't however know where to see the rest of the insider ownership?

You can view insider ownership in Tesla's Definitive Proxy Statement:
Tesla Motors - Definitive Proxy Statement

35% of shares is taken by executive officers and directors (as of 4/17/13):
Executive Officers & Directors
Elon Musk (1)- 33,076,212 (27.54%)
Deepak Ahuja (4) - 174,454
Jeffrey B. Straubel (5) - 483,492
Gilbert Passin (6) - 65,276
George Blankenship (7) - 163,296
Brad W. Buss (8) - 64,178
Ira Ehrenpreis (9) - 1,668,733 (1.46%)
Antonio J. Gracias (10) - 495,702
Stephen T. Jurvetson (11) 313,439
Harald Kroeger (12) 4,914,455 (4.30%)
Kimbal Musk (13) - 231,348
*All current executive officers and directors as a group (11 persons) (14) 41,650,585 (35.05%)

Harald Kroeger represents Blackstar (an investment arm of Daimler). And Ira Ehrenpreis represent Technology Partners Fund.

- - - Updated - - -

So with more complete sources I can see that insider + institutional could be slightly over 100%.

Can someone explain how ownership of stock of insiders + institutions be more than 100%?

I'm thinking it could be that some of the insiders are institutions like Daimler (Harald Kroeger) and Technology Partners Fund (Ira Ehrenpreis) and are being counted again in the institutional %. Those two equal almost 6% of the stock. So if you exclude them from the insiders and include them as institutions, then you have 29% insiders and 68% institutions (assuming Daimler/Blackstar and Tech Partners are included here), then you have 97% of the shares taken. That leave 3% to retailers.

But I don't see Blackstar and Tech Partners in the list of top institutional holders (TSLA Major Holders | Tesla Motors, Inc. Stock - Yahoo! Finance).

Other insiders bring the total insider ownership of the stock to a total of 38% shares outstanding. Institutional ownership, however is a different story. In the case of TSLA, around 68% of outstanding shares are held by institutions and mutual funds, but excluding insiders. Once we add the shares held by insiders we arrive at a number larger than 100%. This is possible due to the large short interest in the stock...

So, why would high short interest allow a greater than 100% ownership of stock by insiders and institutions?

 

[InTheShadows]

So does that mean that the only way any of us own stock is because someone else shorted it and that created a share for us to own?

 

[DonPedro]

Can someone explain how ownership of stock of insiders + institutions be more than 100%?

Easy. Insiders+institutions+float-shorts = 100%.

Or, rewritten: Insiders+institutions=100%+float-shorts.

 

[DaveT]

Easy. Insiders+institutions+float-shorts = 100%.

Or, rewritten: Insiders+institutions=100%+float-shorts.

It's my understanding that shares that institutions hold are part of the float unless the institution is an insider. In other words, the float is the total number of shares outstanding minus insider/restricted shares. Shares held by institutions (unless they're insiders like on the board) are not restricted and thus are part of the float.

- - - Updated - - -

Update: This article seems to explain how reported ownership can be over 100%:
http://www.investopedia.com/ask/answers/07/institutional_holdings.asp

"Let's say that XYZ Company has 20 million shares outstanding and Institution A owns all 20 million. In a shorting transaction, Institution B borrows 5 million of these shares from Institution A and sells them to Institution C. If both A and C claim ownership of the shares shorted by B, the institutional ownership of XYZ could be reported as 25 million shares (20 + 5), or 125% (25/20)."

 

[Soundart]

Soundart,
You can do a basic put debit spread
e.g. you buy AUG 125 put and you sell AUG 110 put. In this case you are buying expensive option and selling expensive option too. The maximum money you will make if TSLA goes down to the strike price which you sold

Thanks, ysednev. It's a good idea, but I actually can't sell puts in my account. I have another account set up at Options House that will let me do that. Maybe I'll have to transfer some money to that account. IN the meantime, I took some profitable OTM call options off the table. I'll probably regret it, but just wanted to reduce some risk/exposure. At least I still have Aug 150 C outstanding.

 

[DaveT]

Easy. Insiders+institutions+float-shorts = 100%.

Or, rewritten: Insiders+institutions=100%+float-shorts.

I think this might be it:
Total ownership = 100% shares outstanding (insider + float) + # shares shorted (since these shares are borrowed and sold)

So here's how ownership might be broken down:
Total ownership = 118.5 million shares outstanding (41.6m shares by insiders + 76.9m shares float) + 18.5m shares sold short = 137m shares

Institutions hold 68% of the 118.5m shares outstanding = 80.6m share
Retailers hold total ownership (137m shares) - insider ownership (41.6m) - institution ownership (80.6m) = 14.8m
So, retail investors own 14.8m of 118.5m shares outstanding (or of 137m total shares owned).
14.8m of 118.5m = 12.5%

So, retail investors own 12.5%.
Insiders own 35%.
Institutions own 68%.

 

[pGo]

Elon Musk (1)- 33,076,212 (27.54%)
Deepak Ahuja (4) - 174,454
Jeffrey B. Straubel (5) - 483,492
Gilbert Passin (6) - 65,276
George Blankenship (7) - 163,296
Brad W. Buss (8) - 64,178
Ira Ehrenpreis (9) - 1,668,733 (1.46%)
Antonio J. Gracias (10) - 495,702
Stephen T. Jurvetson (11) 313,439
Harald Kroeger (12) 4,914,455 (4.30%)
Kimbal Musk (13) - 231,348

Only thing I don't like here is JB and Gilbert Passin (the two most important silent heroes ) are having less than 500K shares. Elon, please make it a M or more please. They are a keeper at any cost.

 

[bonnie]

Only thing I don't like here is JB and Gilbert Passin (the two most important silent heroes ) are having less than 500K shares. Elon, please make it a M or more please. They are a keeper at any cost.

Oh, I'm sure they're all sitting on a nice big fat pile of options.

 

[deonb]

So, retail investors own 12.5%.
Insiders own 35%.
Institutions own 68%.

Right. My point . That adds up to 115%. Actually Yahoo has a nice breakdown here:
http://finance.yahoo.com/q/mh?s=TSLA+Major+Holders

The Tesla institutional ownership is 106% of the float (where float is everybody except insiders). Or, put another way, 100% of the float + 6% backed by shorts. Now add retail longterm investors to it. Hard to say how much those are but let's say another 4%, moving it up to 110%.

That means 66% of all open short positions are being held by investors that won't easily give up those shares again. (The rest of the 33% being made up by weak longs and speculative longs).

e.g. In my IRA I hold both Fidelity Contrafund and TSLA, which means I'm holding the same shares twice. So someone went and borrowed my shares from Fidelity and sold them back to me. So for the next 30 years or so, that person is going to keep paying interest to Fidelity and eventually start paying dividends to me.

Now at some point that may stop sounding like a great deal, and the short would want to close that position. However, they can't get the share back from me, so they'll have to go into the pool of the 33% of weak and speculative longs, or hope that another short seller would open a new position. I suspect the latter is what is happening most of the time. And that works... however, there is a word for a scheme that relies on new suckers coming in to buy out old suckers.

The situation will remained coiled up like this until a correction takes place where insiders + institutions + longterm retail investors drop to at or below 100%. Of course such a correction can happen with either a huge drop or huge rise in share price. A drop will scare longterm investors into giving back the short shares, a rise will entice them to. But either way it can't be corrected orderly. Insider and institutional holding hasn't budged since April. Longterm retail holding has only increased (driven by the fact that every longterm position ever acquired is showing a profit and there is a tax consequence for selling). The 2 attempts at a downward correction has only caused new longterm positions to move in. And unless Tesla faces a fairly catastrophic event I suspect every attempted future dip will similarly be propped back up. So scaring us didn't work. Let's try enticing, shall we?

I suspect this may be a setup for a worse squeeze than in May. Even though there is smaller open short interest now, there has got to be a significantly larger longterm lockup of the shares. Actually the smaller open short interests makes it worse - that means there are less weak and speculative longs in the market right now to get the shares back from. If short interest drops further - to 12 million, EVERY single shorted share will be held by a longterm investor - and that's not going to be pretty.

 

[Zythryn]

So does that mean that the only way any of us own stock is because someone else shorted it and that created a share for us to own?

As I understand it, it is the other way around.
The only way someone can short the stock is if someone else bought the stock in the first place.

or

Longs can exist without shorts, shorts can't exist without longs (willing to loan their shares).