The star investor who bet $ 500 million against Tesla :: Investor.bg

Elon Musk and Tesla have always divided stock market participants. Therefore, the shares of the electric car manufacturer are often targets of short sellers who bet on falling stock prices of the company. Now a particularly well-known hedge fund manager has made a bet against Tesla shares: Mike Bury.

Bury once became famous for anticipating the 2007 financial crisis and his successful bet against the hot housing market in the United States. The events were later filmed in the Hollywood movie The Big Short Bet. He also predicted the so-called Short-Squeeze on Gamestop shares in January. Bury is now counting on Tesla’s price cuts, according to a quarterly report by its hedge fund Scion Asset Management to US regulator SEC.

According to the declaration, Bury bought put options for shares of Tesla worth $ 500 million in the first three months. The put option entitles the buyer to sell the underlying asset – in this case Tesla shares – to the seller of the option at a predetermined price during the term of the option.

If the price falls, the buyer wins. If the price rises, it generates a loss. The publication did not disclose the price of the performance or the expiration date, and Bury has not yet commented on his bet, Bloomberg reports.

Bury has long been considered a skeptic on the subject of Tesla. He once criticized in a tweet that had already been deleted that Tesla was winning only because it sold environmental certificates to other car manufacturers.

Tesla generated record profits in the first quarter, avoided a shortage of industrial chips, improved its production and even made money from bitcoin, according to the results of its report in late April. Still, the shares went down as a sign of the high expectations that the company is now struggling with. Amid disputes with analysts, Tesla did not offer a specific estimate of vehicle deliveries in 2021.

It is impossible to know when the hedge fund Scion Asset Management of Bury made the bets against Tesla, at what price the checkers are and how much the company paid for them. The statement clarifies that the position is worth $ 534 million – an amount probably obtained by multiplying the share price of Tesla on March 31 by the number of shares pledged by Scion against Musk’s company.

“Tesla has depreciated by 14% since the end of the first quarter, so in the end these puts are profitable, although it is impossible to know for sure,” said Steve Sosnik, chief strategist at Interactive Brokers LLC. “He expresses the kind of skepticism that many feel about Tesla. I should believe that he has accumulated different Tesla options in different bets and some of them have probably expired.

Is Tesla’s biggest source of revenue running dry?

In fact, Tesla earned $ 1.6 billion from the sale of carbon credits in 2020. Without that income, it would have been at a loss by the end of the year. However, this source of money may dry up when more other car manufacturers step up their production of electric cars, as they will then need fewer certificates.

That’s why Tesla has long been criticized by many hedge fund managers. The pioneer of electric cars has repeatedly been the subject of the so-called. Short sellers before the dispute was apparently resolved last year: in a Tesla stock rally, short sellers lost about $ 40 billion with their speculation.

Since then, betting on falling prices has plummeted, but the tide has recently turned. According to financial data provider S3 Partners, short sellers are currently making $ 4.3 billion a year. Short-term bets on nearly $ 24 billion are currently being made.

The daily decline of about two percent on Monday alone brought short sellers a profit of $ 400 million. For the year as a whole, Tesla shares are currently generating a decline of 18% to just under $ 580. Compared to the highest value in the middle of the year, the decrease is even over 30 percent. For comparison: the leading US index Dow Jones has so far added 12% to its value this year.

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