Musk’s Twitter Proposal to Take Tesla Private Is a Short-Seller’s Nightmare

Telsa founder Elon MusktweetedTuesday that he is considering taking the publicly traded company private at $420 per share, stressing “funding secured.”

That would be a short-seller’s nightmare: the company whose stock they are betting against winds up getting taken over, generally sending shares soaring.

Indeed, Tesla’s stock surged more than 8 percent at one point after Musk’s tweet. It was up more than 7 percent to $367.25 when trading was halted late afternoon. The stock subsequently resumed trading and closed up 11 percent at $379.57, rewarding investors with long positions but rocking the shorts.

Tesla has been the most heavily shorted stock in the U.S. for some time, according to S3 Partners, a financial technology and analytics firm.

David Einhorn的绿灯首都is among the hedge funds short Tesla, and has been for several years. Almost every quarter, Greenlight devotes a portion of its client letter to reiterating why it thinks the stock is vastly overvalued.

然而，特斯拉今年是第二家公司，绿灯很短，已成为可能或真正的收购报价的目标。

In May, Paul Singer’s Elliott Associates offered to acquire health care software company Athenahealth for $160 per share, a 27 percent premium to the stock’s previous close at the time. Greenlight has been short the stock for several years.

Greenlight did not respond to a request to comment.

In the case of Tesla, Einhorn has plenty of company among investors who think the stock is too high.

[IIDeep Dive:Tesla Continues to Thwart Short-Sellers]

At the beginning of August, Tesla’s short interest stood at $10.53 billion with 35.33 million shares shorted, or 27.88 percent of its float, according to S3 Partners. “Short-sellers continue to have conviction in Tesla underperforming over the longer term,” it added in an August 1 report.

As亚博赞助欧冠has previously reported, several hedge funds have had bets against the stock, including Greenlight,安东尼Bozza莱克伍德的人均l Management, Jim Chanos’sKynikos Associates, and Nathaniel August’sMangrove Partners.

Mangrove refused to confirm or deny a short position.

When Lakewood posted a 4 percent loss for the first half of the year, Bozza blamed his short position in Tesla, among other losing bets, for his setback, according to his second-quarter letter obtained byII.

Likewise, Greenhight’s recently published second-quarter letter devoted three paragraphs to explaining why the company is not how bullish investors present it. “The odd thing is that while investors claim to be interested in the long-term growth of TSLA (as the valuation certainly can’t be supported by the current loss-making enterprise), the company is focusing investors on very short-term goals,” the letter stated.

Notably, one is hard-pressed to find a hedge fund with a significant long position in Tesla, according to regulatory filings. At the end of the first quarter there was no apparent hedge fund — at least none with notoriety — that disclosed a sizable position in the shares. In a week or so, funds willbegin disclosing their holdingsas of June 30.

At theSohn Investment Conferencein New York in August, Benchmark general partner Bill Gurley, who was talking up tech stocks, told the audience, “Elon [Musk] makes it too risky to own the stock.” He suggested they look at Tesla’s bonds, instead.