BoaML was reiterating their position. They have had this position for a little while now however now they have even more examples to cite and back up their thought process. I've been long and short TSLA many times throughout its trading and have done well with it. The thing about the high short interest on the float is also because of all the short against the box positions.
For those of you who aren't that educated on trading.....How do you think the PPS has continued to rise even with short interest. The exchange of shares from institutional investors to retail has been staggering. That is an EXTREMELY high figure and as of a DJI report earlier today institutional long share holdings have now decreased from about 84% to 62%.
When fund companies have massive gains like they do in TSLA from positions they are holding since the 30's, 40's, 60's, 80's and even 100's.....they open up what's called a short against the box position.
Your fund owns 3,000,000 shares of TSLA at average PPS of $60, as of today your fund is sitting on a $363,000,000.00 short term capital gain that is going to have to pay somewhere around 35% on average for a capital gain. 35% on 363million is short term capital gain tax of 127,050,000.00.
So what you do is sell short 3,000,000 share of TSLA so that you are both long and short the stock. What this does is lock in your gain. If the stock goes down you make money if it goes up you make what you lose. The idea is you hold this for another 2-6 months or whatever it takes so that when you "close your short against the box position" its now at a the point where the realized gain is long term, effectively saving you from only having to pay 15% or so in long term capital gains instead of 35%. The cost to borrow the shares is minimal to the tax savings.
It makes sense for retail people to do this all the time, forget institutions. All these people who think these "shorts" are getting squeezed don't have a clue.
The tax rules regarding "short against the box" changed in the late 90's enough to discourage the use as mentioned in your post. If you're going to give such a detailed example regarding shorting against the box, you might as well tell the story in it's entirety. Probably should mention closing the short position rule before Jan 30 and the 60 day waiting period for the original long position and its tax consequences. SATB is not bullet proof as you mentioned.
Now that it has been established that the convertible notes can be converted during 4Q13, what are your thoughts on what institutional note holders may do, and how this will affect the share price? Does the $184.48 strike price for the warrants factor in at all? Thanks.
(Your recent participation in this boards discussion is gradually improving the posts' substance to trash ratio.)
All these funds are doing is re-driving the price up to continue to be able to lock in their gains at even higher prices against different lots that their fund accountants are telling them will pair best against other losses on different positions. This is how the game is played folks. Big money always wins. The show is just about over and the recent spike in volume is a testament. DB upgrade was a joke and an inside deal. Anyone who cant see between the smoke and mirrors on this one is blinded by greed.
Sentiment: Strong Sell