Friday , January 22 2021

TSLA: The Saudi Fund heats against Tesla's bet with a perfect moment

Saudi Arabia's sovereign wealth fund received a large stake in Tesla last year worth almost 5% of the company, but now they have hedged their stake on the carmaker and they did so at a perfect time.

After the fund took part in Tesla last year, Chief Executive Officer Elon Musk said Saudi Arabia is interested in taking private Tesla and the company is considering that move.

The deal has since fallen and we have now learned that the fund reduces the risk of betting on Tesla.

Financial Times (paywall) reports:

"The Saudi Arabian public investment fund has hedged most of its 4.9 percent stake in Tesla with the help of bankers at JPMorgan Chase after the market closed on January 17, according to four people with direct knowledge of trade."

They did not report exactly how they hedged their bet, but the time was interesting as it happened the day Musk announced that Tesla released 7% of its staff.

Tesla stocks (TSLA) declined significantly in the days following the announcement.

Musk told the newspaper he did not know about contact with the fund for months and thought they had sold their shares:

"As far as I know, there has been no communication with PIF for months. I thought they probably sold their shares. We do not know if they own such. "

Since then, the fund has invested in other electric vehicle projects, including a $ 1 billion stake on Lucid Motors.

Take "Electrek"

I will not read too much about it. Hedging large positions is not unusual for funds like this.

Time is undoubtedly worrying, but we need to keep in mind that the hedging of a multi-billion position does not happen in one day.

That's why it's likely to be a coincidence unless Tesla has predicted the news of the end of the hedge, which I do not think is likely because I just can not think of a reason for that.

Of course, the fund could have insider information and managed to overcome the hedge with the announcement, but we have no data that it is different from the moment.

What do you think? Tell us in the comment section below.

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