Jun

23

 Tesla's bid for Solar City should be interesting. SCTY is up 20%. I wonder if Chanos will roll his short over to Tesla.

Gordon Haave writes: 

It's impossible to know which companies shareholders are getting screwed, but with this massive conflict of interest where neither board can really expect to be acting faithfully, you can be assured that one of the companies' shareholders is getting a raw deal.

anonymous writes: 

Hypothetically, if SCTY was an Enron, then was this not a masterstroke in staying off the regulators? If there were no public shareholder or lender losers then there is nobody who is going to sue. They all got paid out at a premium. That action was far cheaper than a defense Musk would have had to have worked to defend his main entity. He paid cheap early without settling with regulators or losing his reputation. He also looks to have hurt the man who had it in for him.

Now Musk can turn around and sue for not knowing what he just bought and recoup some of the premium he paid. That will pay his costs when the shorts go after him again. He gained time and space.

Maybe the Chairman figured it right that shorting is a losing game that will lead to an early grave. Musk's server will not have email on it but Solarcity's will. I doubt you can sue for shortsale profits that you did not rightfully earn due to Musk's actions. There will have to be a roll as suggested.

Paul Marino writes: 

The lesson for me is to not short bad credits like SCTY during a bull market in playgrounds where billionaires like Musk play unless you have Chanos' AUM.

anonymous writes: 

I think the lesson should be "don't bet against those with fat wallets". The short game is not one about logic or company earnings, but about supply and demand for outstanding shares. A few years ago we saw a similar scenario play out between those shorting OPK and Phillip Frost, a very wealthy majority owner of OPK. Frost won.
 


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2 Comments so far

  1. FTR on June 23, 2016 8:28 pm

    If existing shareholders accept, they’re admitting SCTY is headed to bankruptcy. Otherwise why take a buyout that’s a fraction of the price 6 months ago? It does have the nice value of keeping the Musk brand unsullied, although the martingale is not typically a good betting strategy in the long-run.

  2. Anonymous on July 9, 2016 1:06 am

    A great irony that so many well known modern age stocks - with incredible market caps - actually lose money on an annual fiscal basis. Same can be said for all these VC backed ‘unicorns’, regardless of several recent ‘down rounds’. Seems like the more money you lose the more people think you are valuable. Maybe it’s a gross reflection of our US Govt balance sheet. Seems to me their is a legalized Ponzi scheme going on in tech land with billions of institutional money chasing. Going to end badly.

    I did a recent study lately of what the 1999 Dow and other leading indices would be valued at today if the constituency and weighting a were the same as in 1999. Daily Spec should do this and publish on the website. I’ll donate $500 anonymously to the site when the results are published. Heading to Sweden for a few weeks but will contact list when I get back to US ground.

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