TSLA Market Action: 2018 Investor Roundtable

[GBleck]

I contacted my broker (Schwab) regarding having an IRA account full of TSLA shares, and what would happen should Tesla go private, and I was told Schwab does not allow private equity in its IRA accounts so I would need to sell all the TSLA shares. I promptly told Schwab, bzzz, wrong answer, that means I have to find another broker.

Question: has anyone found ANY broker who will allow TSLAP shares in an IRA post-going-private?I guess I'm also wondering if this is an IRS/IRA rule, or a broker policy.

If a private-equity IRA broker exists, I gotta start planning to move my entire IRA over to that broker.

Regular IRA or Roth IRA?

 

[avoigt]

I contacted my broker (Schwab) regarding having an IRA account full of TSLA shares, and what would happen should Tesla go private, and I was told Schwab does not allow private equity in its IRA accounts so I would need to sell all the TSLA shares. I promptly told Schwab, bzzz, wrong answer, that means I have to find another broker.

Question: has anyone found ANY broker who will allow TSLAP shares in an IRA post-going-private?I guess I'm also wondering if this is an IRS/IRA rule, or a broker policy.

If a private-equity IRA broker exists, I gotta start planning to move my entire IRA over to that broker.

Tesla will select the Bank e.g. Morgan Stanley that will manage all private shares. No private equity broker will be able to handle them nor will you be able to transfer private shares if Tesla defines it as such. Companies often do that to have full control who is invested and avoid attempts of unfriendly takeovers.

A sell and buy structure would cause tax related issues and its fair to assume therefore that shares will be changed in a different type which is not a sell but just a change of security type.

 

[Krugerrand]

Adam Jonas theory of Tesla of how to go private

"We believe Tesla could consider an auction for its shares in the private equity market, financed by existing shareholders, new strategics, divestiture of valuable captive assets (Tesla autonomous/shared), and possibly some help from SpaceX."

“We also believe that Tesla cars are about to go Terminator (or Autobot) on the planet.”

 

[neroden]

I wonder if there would be anything stopping Musk himself from buying at current prices.

Yes. For him to trade open-market at this time would be insider trading. He's in possession of material nonpublic information, namely *who* the funders he's lined up are. I believe his purchases a few months ago were the last.

He CAN, however, participate in the buyout/tender offer and be one of the people offering to buy shares at $420.

 

[tinm]

Regular IRA or Roth IRA?

regular IRA

 

[beachbum77]

I contacted my broker (Schwab) regarding having an IRA account full of TSLA shares, and what would happen should Tesla go private, and I was told Schwab does not allow private equity in its IRA accounts so I would need to sell all the TSLA shares. I promptly told Schwab, bzzz, wrong answer, that means I have to find another broker.

Question: has anyone found ANY broker who will allow TSLAP shares in an IRA post-going-private?I guess I'm also wondering if this is an IRS/IRA rule, or a broker policy.

If a private-equity IRA broker exists, I gotta start planning to move my entire IRA over to that broker.

It is an IRA rule, not a broker rule. What many people do is move their money into a self-directed IRA. BUT...again to invest in a private Tesla you will need to be an accredited investor. That means documenting to the broker's verifier you have assets in excess of $1 million not counting your personal residence, or an annual income in excess of $200k for the last two years.

I consulted for a couple of years to a firm that does private placements for real estate crowdfunding. The only way to avert SEC oversight and reporting requirements (which Musk seems to want) is to limit the participants to accredited investors.

This is why Musk's statement he would like all current investors to come along (impossible), sounds a lot like Obama pledging "if you like your doctor you can keep your doctor" when in fact Obama already knew that was not true. I am sure Musk knows the truth in this case as well.

 

[neroden]

That does not sound like a walkback to me: "First, I would like to structure this so that all shareholders have a choice. Either they can stay investors in a private Tesla or they can be bought out at $420 per share, (...)

He'd like to structure it like that, certainly. He can't structure it like that. He has zero influence over Canadian government regulations or employer 401(k) rules, for example.

 

[beachbum77]

Yes. For him to trade open-market at this time would be insider trading. He's in possession of material nonpublic information, namely *who* the funders he's lined up are. I believe his purchases a few months ago were the last.

He CAN, however, participate in the buyout/tender offer and be one of the people offering to buy shares at $420.

The SEC may still look at his recent trades too where he bought big blocks of shares. This idea of going private did not just pop into his head last week. He has been planning this for some time if he was already talking to the board several times.

 

[RobStark]

if so, not gonna be much ...
i honestly feel like either i'm insane or they're insane.

Insane people don't ponder their sanity.

Dey just be Cray Cray.

 

[Matias]

if so, not gonna be much ...
i honestly feel like either i'm insane or they're insane.

Those options are not mutually exclusive

 

[ckessel]

I feel like I should be dumping the money I have left into stock. The upside being $65-70 if the sale goes through, the downside if it fails being maybe $50 (and, presumably, temporary). But I already have about 75% of my discretionary (non-retirement) savings in TSLA, so I'm already heavily invested. Still, a ~20% gain in a relatively short time period is awfully tempting.

 

[GBleck]

I'm reading the Bloomberg article as speculation by institutional investors that Elon doesn't want the backer or backers to have a controlling interest. If to many institutional investors take a buy out rather then convert that might be an issue.

 

[neroden]

sorry @Fact Checking i didn’t mean we should assume all shorts will stay short into the close. if, for whatever dumb reason, some did, they would be closed at the $420 price

I don't think shorts will be allowed to stay short into the deal close. The person who lent them the shares will need the shares back in order to either go private or tender them for $420. That person isn't going to just abandon their shares. The short seller isn't going to be able to buy shares after the company goes private, so no lender of shares would ever leave a stock loan open past the go-private date, for fear of not getting the shares back.

ALL shares will be recalled and returned before the deal close. Regardless of deal structure. Even something as simple as a delisting with no other changes will chase out nearly all the short-sellers.

bottom line, we need to see offer structure. it’s kind of ridiculous that this is going on right now... unbelievable.
going private is a must at this point :/

This stock market action does mean that going private is looking like a certainty. The only thing which could stop it is a skyrocketing stock price.

i have to believe em was reacting out of necessity in order to torpedo something behind the scenes (saudi thing maybe). bc this clearly isn’t the desired result he was looking for. exhausting.

Yeah, it has to have been a reaction to the Saudi news because of the timing (within an HOUR). Not sure exaclty why he had to react to it with this -- multiple theories -- but there has to have been a reason.

 

[beachbum77]

He'd like to structure it like that, certainly. He can't structure it like that. He has zero influence over Canadian government regulations or employer 401(k) rules, for example.

Same applies here in the U.S. as well. He has no say on the matter. Only employees are given special options of investing in privately held firms if they are not accredited investors. Congress is not going to write new rules to allow small Tesla investors to go private with Musk.

 

[neroden]

I was thinking TSLA should do this. A lot of shares changed hands and I hope a good portion of those are committed to a TSLAP.

This should be followed by TSLA incenting holders to convert to TSLAP. A Model Y priority may be?

A few weeks down the line tesla should announce it has converted 105% of shares to TSLAP. They cannot sell until the next liquidity event in 2019. Delist, and watch the SP go to $3000 as the shorts cant help themselves. Issue 5% new shares at that price to put them out of misery.

All Tesla needs to announce is that it's got (a) some large percentage of shares outstanding signed up to continue with Tesla as a private company, and (b) funding to buy out the rest of the shares outstanding at $420, and the short-sellers *have* to get out.

 

[ZachShahan]

"I am about to run out of popcorn".

you still have popcorn?

you could probably get a lot of money for that right now.

 

[neroden]

This is helpful.

So only accredited can purchase private shares. But any common shareholder can acquire private shares through conversion in this transaction. That mean for non-accredited investors this is a rare opportunity to obtain private shares.

This MIGHT be true. I have heard from at least one person who said he did this during a go-private event. But I don't have any definitive evidence that this is true.

Regarding right of first refusal, does that work both ways? If I offer to sell too low, Tesla can step in buy the shares from me at that price. Or if I offer to buy too high, Tesla can step sell the shares to me at that price. Are both scenarios a right of first refusal? It seems that both interventions would capture value from potential mispricing and redirect it back to the benefit of all remaining shareholders. Of course, this limits price discovery too, and if the company is substantially off in its own self-valuation it can destroy value for remaining shareholders, buying too high (depletes cash) or selling too low (dilutes shares).

Noooo idea. The right of first refusal can be written in many different ways which differ in detail. I don't know what's used at SpaceX.

 

[neroden]

It is primarily to kill put/call premiums running into the weekend. Expect the market makers to nail the $355 at the end of the day unless Elon tweets something (than all bets are off)

....and you're right. Max pain I guess.

 

[defc0n]

This stock market action does mean that going private is looking like a certainty.

Not sure why you say this. All I'm seeing is a bunch of uncertainty still.

 

[Krugerrand]

Sorry I have to ask the 7 people who gave this a ‘dislike’ - do you disagree with the facts I stated (er, because they’re actually true...) or just the fact I said it? Seriously just curious.

Peace!

I disagree with your passive aggressive fear mongering.