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Jul 27, 2018

Big Short’s Eisman is shorting Tesla for ‘execution problems’

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Steve Eisman, the Neuberger Berman Group money manager who famously predicted the collapse of subprime mortgages before the 2008 financial crisis, is shorting Tesla Inc. because of the automaker’s negative cashflow.

“Elon Musk is a very, very smart man but there are a lot of smart people in this world and you’ve got to execute. He’s got execution problems,” Eisman said in an interview with Bloomberg Television. “He’s nowhere in autonomous driving, as far as I can tell, and big competition is coming in his space next year.” Representatives for Tesla didn’t immediately return a call for comment.

Tesla, whose eroding cash position has alarmed investors, recently asked some suppliers to return a portion of payments for parts to help the electric-car maker to turn a profit. Musk, who’s CEO, has said that Tesla will be profitable in the third and fourth quarters of this year because it will produce 5,000 of its Model 3 sedans a week. The firm exceeded that threshold in the last week of June, but has yet to prove it can continue to meet those numbers.

In a wide-ranging interview, the fund manager said he’s also betting against Banco Bilbao Vizcaya Argentaria SA and UniCredit SpA because of their exposure to Turkey. He likes General Motors Inc. because of its investment in autonomous vehicles.

Eisman’s bets against the housing market before the 2008 crisis were chronicled in Michael Lewis’s 2010 book “The Big Short,” which highlighted money managers who foresaw and profited from the market turmoil. A character based on him was played by Steve Carell in the movie of the same name.

--With assistance from Tom Keene and Nejra Cehic