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Roy Philipose
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Philosopher/Entrepreneur from Philadelphia. Right Brainer. My original SA stock blog has been moved to Recommended Youtube video - "How to Stay Out of Debt: Warren Buffett - Financial Future of American Youth (1999)" --- Quotes --- "Be aware... More
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  • You Bet Against Elon Musk, "Super Genius", And Lost! Twice!
    February 27, 2014

    (This was supposed to be my 2nd article attempt on Seeking Alpha, but was rejected. Why read the same kind of articles, over and over again?)

    Today, I would like to talk about those who shorted Tesla Motors and SolarCity. Here is some background on the companies.

    As you know, Tesla Motors makes premium electric cars and SolarCity is a solar electric supplier. Elon Musk is a major shareholder of both companies, with Musk being Ceo/Chairman of Tesla and Chairman of Solarcity.

    Tesla went public at $17 in June 2010 and Solarcity went public at $8 in Dec 2012. Both companies at the time were considered to be overvalued and thought to be future failures, especially Tesla. So naturally short-sellers (investors who bet against the stock) bought in short. There were of course people who believed in what there were doing and bought in long (myself included, though I bought in at later prices and traded the stocks).

    The companies went public, continued to progress (with some problems), and continued to grow. With each quarter passing, it was obvious the companies would not fail. Yet the short sellers continued to bet against the stock, primarily due to "gross valuation."

    Tesla eventually came down from its peak of $194 to $120, but quickly climbed back (thanks to short sellers and positives) to $194 the day before Q4 earnings. Again, both companies report positive news and the stocks continue to accelerate higher. On my blog postings, I recommended Tesla at $35 and SolarCity at $16. Last I checked, Tesla was at $253 and Solarcity $84.

    There were many opportunities for the short sellers to cover your bet, especially against Tesla. On April 1, 2013, an announcement was made by Elon that Tesla would be profitable. (Peter Lynch said, "Wait till the story improves.") At that point the stock opened at $42. That day was also a good day to "Buy", as the uncertainty was much lower. On Oct 11, 2013, SolarCity announced "double volume" of megawatts installation. The stock was at $47. Again, you had chances to cover, but didn't. Elon gave warnings too.

    The shorts have been winning the battles, but losing the war. I am not sure why they continue to bet against these companies. My observation is that "You short something that has no value." These companies had "some value" in the beginning and now they continue to have even "more value."

    For too long, many shorts and longs listened to critic, John Petersen. I know, a few times, he shook me out of my early Tesla long positions. He is a smart guy, but Elon is smarter and has proven that. One saying I have is, "Be careful of the know-it-alls who don't have-it-all." Academics are known for that.

    Both SolarCity and Tesla are "publicly traded startups." Normal "fundamental analysis" valuation was difficult to apply here. But should be able to do, at a later date. (This part was a concern to SA, so I corrected it.)

    Now to my main point; you bet against a "Super Genius." The only way you are going to win that bet is that you are a "super genius" yourself. And I guarantee that no one who shorted was a "SG". That is right, not one. Maybe a few geniuses and that is it. You shorted twice and now got burned twice. I would highly recommend to the "shorts", that you leave both companies alone and exit your positions. A fellow "SG" is giving you this advice. "We eventually learn from our repeated mistakes" and I hope that you will too.

    Again, I will continue to partner with Elon Musk. The current stock valuations seem high, but there is still plenty of growth available. Even if the stock prices come down, I will continue to partner with Elon. I have learned my lesson from that. We need energy and we need transport. Solarcity will be providing the energy and Tesla will be providing the transport. Their valuations will continue to increase and the stock prices will eventually reflect that (Warren Buffett).

    Disclosure: I am long TSLA, SCTY.

    Tags: TSLA, SCTY
    Mar 01 6:35 AM | Link | Comment!
  • Tesla Motors, TSLA, Shareholder Meeting 2012

    (May 2013, This was supposed to be my first article in July 2012, but was rejected by SA for some odd reasons. It is funny, how they allow many average articles to be written.)
    July 2012
    There seems to be great debate regarding the success or fail for Tesla Motors. One side seems right that the "current battery technology and strategy" will cause Tesla to fail. The other side feels strongly that, "Elon Musk, CEO of Tesla, and his team" will succeed in making Tesla Motors a great carmaker. Who is right?, Only time will tell or maybe not? (As there has been so much said on Tesla, I will keep this short.)
    As a concerned shareholder, I attended the recent shareholder meeting on June 6, 2012. There was good talk about company achievements and where the industry is going. I sensed no concern, only confidence from Elon Musk and the executives. (After the meeting, I felt compelled to write something, so I am sorry for the delay.) During the questions period, I asked Elon Musk about the Model S sales, it got to the point where I asked, "What if you sell only 10k?" (Model S), In which he replied, "8K is breakeven."
    - (Minute 45:00) /
    Once I heard that, I was less concerned. Today, after the unveiling a month ago and good reviews, I see no reason why they can't sell at least 8K cars. I remember when I asked him the question, he seemed bit annoyed. If that is the case, then I have nothing to worry about. I am an entrepreneur as well. I know what it is like to be criticized. I have no problem giving him my $10K or $10M dollars to invest with and you shouldn't either.
    There has been so much back and forth on Tesla, I find it annoying. So I just sit back and let the business take shape. That's what Tesla is, a business. If Elon says he can get it done, then I believe Him. I believe Tesla management is fully aware of the risks.
    I own both shares and options. The options will eventually be closed out, as I focus more on investment management, then investment trading. I would recommend TSLA as no more than 20% of your portfolio. TSLA is in the investment model I am currently building.
    If I were an analyst, I would rate Tesla Motors a "Buy" at the $30 price range. I see more positives, then negatives. I make this "buy call" before the Q2 earnings release this Wednesday, July 25, 2012. I believe Musk is annoyed with the negative analyst's press, to come out early with the results (truth).
    Thanks, Roy Philipose

    Disclosure: I am long TSLA.

    Tags: TSLA
    Mar 01 6:33 AM | Link | Comment!
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