Teal Linde discusses Tesla
Michael Burry, the investor who rose to fame for making billions off bets against mortgage securities during the financial crisis, has placed a sizable wager against Elon Musk’s Tesla Inc.
Burry’s Scion Asset Management owned bearish puts against 800,100 shares of the electric-car maker as of March 31, according to a regulatory filing Monday. The puts give Scion the right to sell Tesla shares on or before an unidentified date in the future.
Tesla shares closed at an all-time high of US$883.09 on Jan. 26, after a yearlong rally jolted the stock higher by almost 700 per cent. It had lost a quarter of its value by the end of March, and is down 35 per cent from its peak as of the close Monday.
The bet against Tesla isn’t Burry’s first. He said in a since-deleted tweet in early December that his firm was short shares of the EV maker. The hedge fund manager also advised Musk to sell shares to raise capital while his stock, then on a torrid run from the pandemic lows, was at what Burry called “ridiculous” levels.
Tesla earned record profit in the first quarter, sidestepped an industry chip shortage, improved its manufacturing and even made money off Bitcoin, its earnings results showed in late April. Yet shares fell in a sign of the lofty expectations the company now contends with. Among the quibbles from analysts: Tesla didn’t offer a specific estimate for vehicle deliveries in 2021.
It’s impossible to know when Burry’s Scion made the bets against Tesla, at what price the puts are in the money and how much the firm paid for them. The filing, a quarterly rundown of holdings required of hedge funds of a certain size, said the position was worth US$534 million -- an amount likely derived by multiplying Tesla’s share price on March 31 by the number of shares Scion bet against.
“Tesla is down 14 per cent since the end of the first quarter, so on balance, these puts have been profitable, though it’s impossible to know for sure,” said Steve Sosnick, chief strategist at Interactive Brokers LLC. “He’s expressing the type of skepticism that many have on Tesla. I would have to believe that he accumulated various Tesla options at various strikes, and some of them probably have expired.”
Burry was played by Christian Bale in the film version of Michael Lewis’s best-selling account of the 2008 financial crisis, “The Big Short.”