In The Money
Cash is King - origin unclear, but said after the ‘87 market crash by Pehr G. Gyllenhammar, CEO of Volvo (Fate Loves Irony)
I wasn’t planning on posting about Tesla again until the end of February, but this comment from @heister"...
"heister" Is it still not obvious? He wants out of Tesla, shit is not going well there. He wants to get forceably removed so he doesn't have to pay taxes on the full amount of capital gains.
…”inspired” me.
If Musk was serious about tax efficiency, he would have taken his ~$200mm PayPal windfall and rolled it into a VC or PE fund.
No one who risks their entire 9 figure net worth on the dark triad of clean energy, electric cars and rocketships is thinking of risk-adjusted return.
Sometimes You Bet The Jockey
“You know, he’s landing rockets on robot drone rafts in the ocean. And you’re saying he doesn’t know what he’s doing. You ever land a rocket on a robot drone? Who are you?” - Larry Ellison, after disclosing a large stake in Tesla
Jeff Bezos began his studies at Princeton as a physics major, but quickly realized he was outclassed intellectually and switched to EECS.
Bill Gates went to Harvard intent on studying pure math, but gave up once he discovered many people were “quite a bit better” than him, and switched to the applied stream.
Elon Musk, however, finished his physics undergrad at Penn, and was accepted to Stanford (top 3 program worldwide) for a PhD.
Now I’m not sure if Musk is “smarter” than Bezos/Gates, but I think it’s clear that the guy doesn’t quit.
By all accounts he had no desire to sell Zip2 or PayPal, and bankruptcy would have been easier than keeping SolarCity, Tesla, and SpaceX alive during the 2008 credit crisis.
So far the guy is batting 1000.
Now You See Me, Now You Don’t
Come on, this is funny.
People point to the fact that whenever Tesla is in trouble, Musk becomes Houdini, shifting attention away from his beleaguered electric car company to hyperloops & rocketships, or neuralinks & tunnels…
And they’re right.
But I think it’s a good thing.
Every entrepreneur I know has pulled some sleight of hand to get through hard times (Patrick @WallStreetOasis.com" perhaps you can weigh-in?) and watching Musk pull it off at scale is dazzling.
Good Reasons
A man always has two reasons for doing anything: a good reason and the real reason. - J.P. Morgan
This might come as a shock to many on Wall Street, but sometimes, some people do some things for some reasons other than money (and to be clear, I am for sure one of the greediest assholes on this forum).
Whether you buy Musk’s official mission of “accelerating the world’s transition to sustainable energy,” or you think he’s a wounded little boy trying to prove his worth is immaterial.
People do strange and often wonderful things when unbound from economics.
2 + 2 = 5
“I like products that people think about with a different part of their brain.” Warren Buffett
Case in point, the Tesla fan base continues to show unbridled support by:
- Helping deliver cars during the Q3 delivery crunch
- Providing interest free loans to Musk in the form of deposits
- Launching social media counteroffensives against the shorts
- And on and on and on and on
Perhaps the only people louder than the Tesla supporters are the Tesla detractors, and they too appear to be unbound by economics.
Too Short by Half
This graph is taken from S3Partners.
Nearly 30% of outstanding TSLA shares were sold short on Friday.
If I were feeling conspiratorial, I would point out that this WSJ article was released at a very convenient time, that partnering with journalists is a very effective technique to depress stock prices, and that the market typically overreacts to litigation…
And STILL $TSLA was up 5% on Friday.
The last 2 times Tesla beat on cash flow & earnings the stock skyrocketed and short sellers were annihilated.
And it looks like history is going to repeat itself.
What am I missing?
Is Tesla just a house of cards built on accounting fraud? Was this quarter an aberration?
Can any L/S HF guys weigh in?
Next up is Microsoft.
Cheers,
CC
