Offbeat George Soros' bet on Tesla could see other investors follow suit

02:16  17 may  2018
02:16  17 may  2018 Source:   reuters.com

Billionaire Ron Baron: We're going to make '20 times our money' in Tesla

  Billionaire Ron Baron: We're going to make '20 times our money' in Tesla Buy and hold billionaire Ron Baron on Monday defended his investment in Tesla."I think we're going to make 20 times our money because the opportunity is so enormous," the 75-year-old founder of Baron Capital told CNBC's "Squawk Box." "People say, 'Gee, they're spending a lot of cash.' Of course, they're spending a lot of cash. They're building factories.

Renowned investor George Soros and other hedge funds have embraced the Netflix story. Should you follow Soros ' lead? We examine the stock's pluses and minuses, to see if Soros made the right call.

According to , Soros lost about billion on wrong-way bets following the stock market's rally after Trump's election victory. George Soros and hundreds of other wealthy Americans: Don’t cut our taxes. The billionaire investors that made a bet on Snapchat George Soros , BlackRock took large

George Soros wearing a suit and tie: FILE PHOTO: Soros Fund Management Chairman Soros speaks during panel discussion at Nicolas Berggruen Conference in Berlin© REUTERS/Thomas Peter/File Photo FILE PHOTO: Soros Fund Management Chairman Soros speaks during panel discussion at Nicolas Berggruen Conference in Berlin If Tesla Inc (TSLA.O) Chief Executive Elon Musk needs to raise even more money, there may be a way.

On Tuesday billionaire investor George Soros disclosed a $35 million stake in Tesla convertible senior notes during the first three months of the year.

Convertible notes give investors the right to trade their debt for equity at a conversion rate and are more appealing to the risk-averse, allowing them to benefit from Tesla's stock price rising while guarding against the risk that it might not.

SEC's fake coin offering site shows what scams look like

  SEC's fake coin offering site shows what scams look like HoweyCoins.com looks like a legitimate website letting investors get in on a digital-coin offering at a discounted rate if they act quickly.So who created it? The Securities and Exchange Commission.

When an investor like George Soros suddenly increases a bearish position by 605% in a quarter, it raises more than a few eyebrows. If that figure declines, gold could see a rally, but that doesn’t appear to be Soros ’s line of thinking. Following In Soros ’ Footsteps.

The famous investor and chairman of Soros Fund Management is doubling his bet against the S&P Plan Your Retirement Future. What You Need To Know About Cannabis. Tesla Hype. George Soros , the man who broke the Bank of England by short-selling the British pound, is at it again.

Tesla's stock price hit a high of $386 last year but has since slipped to close at $286.48 on Wednesday.

While Musk has said the electric car maker would not have to raise more cash this year, Wall Street disagrees, with analysts saying the company would need to borrow if it continues to fail to meet its own production targets for building new, lower-cost Model 3 electric sedans.

Investors who evaluated Tesla's junk-bond offering last year now say a convertible offering appears a more likely option than returning to the high-yield market.

"It's a wonderful trade," said Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management, who earlier this year bought Tesla convertible bonds due in 2022 and said he is interested in buying more notes.

Tesla's Musk admits Model 3 braking issue, promises fix

  Tesla's Musk admits Model 3 braking issue, promises fix Tesla Inc's Chief Executive Officer Elon Musk admitted late on Monday there was a braking issue with the Model 3 sedan, pointed out by Consumer Reports, and said it can be fixed with a firmware update that the electric car maker will be rolling out in a few days. "With further refinement, we can improve braking distance beyond initial specs. Tesla won't stop until Model 3 has better braking than any remotely comparable car," Musk wrote in a tweet.Musk said that Consumer Reports had an early production car and would request them to test a newer model.

Investing . George Soros Bets Against Trump: 13F. Some of Soros ' holdings are likely to profit if stocks fall as a George Soros : The Philosophy Of An Elite Investor . See why a privately arranged hedge fund may decide to take its fund public, and how the investing public at large can gain

Is Elon Musk Making Things Worse for Tesla ? George Soros spent decades as one of the world's elite investors . He didn't always come out on top, but when he did, it was spectacular. Investing . Soros Bet Big on Altaba Last Quarter, According to 13F. George Soros saw a significant increase in

Tesla investors fretted in late March about the company's ability to produce the Model 3. A crash involving Tesla's autopilot technology and its falling bond price also took a toll.

"The company is burning cash at such a rate that a capital raise is nearly inevitable at some time in the next three quarters," Henry Peabody, co-portfolio manager for Eaton Vance Multisector Income Fund, who said Tesla would likely use a convertible bond to raise funds.

Tesla could not be reached for comment.

"Given how volatile the stock is, there are a lot of convertible players out there that would clearly like this type of paper," said a portfolio manager at a firm among Tesla's top-10 bondholders. The investor, who declined to be named because they were not authorized to speak for the company, said they could be interested in such bonds.

RISK AND REWARD

If Tesla's stock price stays around current levels, convertible investors, such as Soros, can reclaim the notes' face value when they come due, a profitable trade if Soros bought them at a discount when the bonds were under pressure.

Glassdoor, the iconic job-hunting website, has been bought for $1.2 billion

  Glassdoor, the iconic job-hunting website, has been bought for $1.2 billion The buyer: Recruit Holdings, a Japanese human resources company that owns multiple job sites. The job-huntingThe job-hunting website Glassdoor has been bought for $1.2 billion in what is one of the largest U.S. tech acquisitions of 2018.

George Soros ’ Bets on Rovi Corporation (ROVI), Adecoagro SA (AGRO), & Two Other Stocks? Earlier this year, George Soros returned to trading and to manage his fund more actively, seeing Among the funds we track, the number of investors bullish on Caesars Acquisition Company

George Soros spent decades as one of the world's elite investors . Is Elon Musk Making Things Worse for Tesla ? Find the best broker for your trading or investing needs. See Reviews. He makes massive, highly-leveraged bets on the direction of the financial markets.

Soros Fund Management LLC took a $35 million stake in the Tesla convertible bonds due in March 2019 (88160RAB7=), according to a filing with the U.S. Securities and Exchange Commission. Soros' spokesman did not respond to questions.

In the case of the Soros' Tesla notes that rate was initially set at a conversion price of $359.87, higher than the $286.48 per share the stock trades at today.

If Tesla's stock rallies past its conversion rate, Soros could swap his Tesla notes into more than 97,000 shares of Tesla common stock, according to the bond's prospectus and Soros' filing. That could make for an even more lucrative trade.

Either way, convertible noteholders pocket interest totaling 0.25 percent per year in the meantime.

Hedge funds also like convertible bonds because they can use them to amplify or mitigate the risk of a short, or bet against, a company's stock.

By contrast, with a junk bond, an investor's best-case scenario is full repayment. Stockholders enjoy fewer protections if the company's finances deteriorate.

Some wary investors said a convertible is a better option for Tesla than a junk bond, but not by much.

After raising $1.8 billion in its first junk bond issuance in August 2017, the 12.6 percent price decline of that bond (88160RAE1=RRPS) since it was issued means markets will demand a higher premium on future debt.

Thomas Graff, head of fixed income at Brown Advisory Inc, said a convertible would probably succeed although he would probably not participate.

"A convertible would make a lot more sense given where they are," said Graff.

(Reporting by Kate Duguid and Trevor Hunnicutt; Additional reporting by Alexandria Sage in San Francisco; editing by Clive McKeef)

NTSB investigating emergency response to Tesla crash .
A fatal crash of a Tesla Model S in Florida on Tuesday left two people dead. Authorities and Tesla say Autopilot was not involved. Two people died Tuesday evening in Fort Lauderdale, Florida, after a gray 2014 Tesla Model S ran off the road and collided with a concrete wall. The vehicle then caught on fire, engulfing the car in flames, local police said.

—   Share news in the SOC. Networks

Topical videos:

This is interesting!