
Frustrated with Tesla and GM, David Einhorn Amps Up Pressure - jtraffic
https://www.bloomberg.com/news/articles/2017-05-08/frustrated-with-tesla-and-gm-david-einhorn-amps-up-the-pressure
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phkahler
Unless you have a seat on the board, your investment in a company should
reflect your implicit belief that what they are doing is worth your
investment. To buy stock and then jump up and down in public trying to move
your investment up or down seems inappropriate.

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an_account
When you are a ~4% _owner_ in a company, you should (and do) have say in how
that company is managed.

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Retric
If you have a ~4% stake in a local car dealership you don't have meaningful
control. This does not change with a public company outside of a few votes
because majority or often super majority rules.

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russelluresti
In case anyone was wondering whether or not "professional asshole" is a career
- here you go.

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excalibur
Finkle is Einhorn! Einhorn is Finkle!

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forgotmysn
laces up

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CountSessine
How could a company break its stock up into a 'dividend stock' and a 'capital
appreciation' stock?

Valuing the 'dividend stock' would be pretty easy, but what about the 'capital
appreciation' stock? What value does that take on? I'm assuming that voting
rights would still be split between the two - otherwise the company's board
wouldn't concern itself with dividend issues.

But really - without dividends or the future promise of dividends, how would
anyone value the 'capital appreciation' stock?

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markvdb
No answer to your question, but... I would totally buy a capital appreciation
stock, depending on how the fiscal details are worked out.

If I buy US stocks, I get taxed 15% US witholding tax on the dividends, then
30% Belgian withholding tax, leaving me with 59.5% net after dividend
taxation. But if the share appreciates, I pay zero capital gains tax when I
sell.

OK, I get that this was not the point of the operation, but it would
definitely be a side benefit. Lots of Belgians buying Irish registered ETFs
for similar fiscal reasons...

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CountSessine
Actually, this is brilliant. It's a very different sort of investor self-
interest, though. I hadn't thought of tax-planning at all.

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tuna-piano
For those interested in this kind of thing, I think David Einhorn's book is
excellent.

It tells a story of when Einhorn realized a company was more-or-less
fraudulent, and his fight against the SEC and the company to release the
truth. He had the incentive for this fight because of his short position.
Einhorn was ultimately proven correct, and the company collapsed. The book is
equally interesting, informative and infuriating.

[https://www.amazon.com/Fooling-People-Complete-Updated-
Epilo...](https://www.amazon.com/Fooling-People-Complete-Updated-
Epilogue/dp/0470481544)

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zwieback
Is this just an investor looking out for his fund or doing his duty pressuring
companies to get their act together? The two examples, GM and Tesla, certainly
seem to have a "wrong" stock value.

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sergiosgc
Is TSLA stock at the wrong value? Let's layout the numbers:

\- Market cap: 50B

\- Expected return on capital: 10%

\- Expectable profit margin: 10%

\- Expectable average unitary price: 50k

50B*10%/10%/50k = 1 million vehicles.

Tesla is selling about 80k vehicles yearly (at about double the above average
sales price): [http://www.ibtimes.com/tesla-motors-
tsla-1q-2016-sales-14820...](http://www.ibtimes.com/tesla-motors-
tsla-1q-2016-sales-14820-model-s-model-x-cars-were-delivered-first-
three-2348000)

The current valuation requires an increase in volume of five to ten times.
Given the sales volume evolution of the current product lineup and the entry
in a lower segment, it's definitely not out of reach in a five year horizon.
Add up to five years to pay accrued debt (it should amount to about 10B before
Tesla reaches steady state in the known product lineup).

All numbers are order-of-magnitude precision, but they surely do not point to
a «certainly "wrong" stock value».

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vkou
It can also be argued that:

The market for ~$70,0000 sedans is not so great that increasing volume 10x is
reasonable, within 5 years.

The margins for ~$30,000 sedans are lower then 10%.

So, volume may go up 10x, but returns might not.

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Animats
What seems to be happening is that the price of the Model 3 is creeping up.
The base model is supposedly $35K, but you get an undersized battery, no self-
driving sensors, and probably give up some other things. The typical model is
currently expected to be around $50K. This is not unusual in automotive; the
profits are in the overpriced upgrades. (There is now a $60,000 Ford F-150
pickup. The base price of that line is $27,110.)

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bjelkeman-again
No self-driving sensors? Really? Got a source for that?

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edsouza
I can't remember where source, but the model 3 will have sensors,
unfortunately you need to pay extra for autopilot software to be enabled. Not
sure if the pricing will be higher that the other models.

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sbierwagen
The self driving sensors are optional extras on both the model S and the model
X. Cost is $8,000.

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bjelkeman-again
The sensors are not optional, they are included, but the software for
autopilot and full autonomy is optional.

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draw_down
Investor Upset Market Not Rational

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zimbatm
It's more like: investor tries to influence the market to benefit himself.

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Fricken
Why not both?

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CodeSheikh
"Einhorn, whose Greenlight Capital owns 3.6 percent of GM, was equally tough
in the letter he sent to shareholders..".

Someone help me understand how come a person/entity who merely owns 3.6% of a
company has the right to be this aggressive about the future growth and
policy-making of the company?

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aerovistae
"Merely 3.6%"? You realize the largest institutional shareholder of Apple
stock is Vanguard, owning ~330 million out of 5.3 billion shares? A "mere"
6.2% or so?

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CodeSheikh
Yeah 6.2% of APPL shares not the % stake in the company.

