Individual Stock Discussions

market opens at 4am, you need to view the “extended hours” chart on Yahoo. It was as high as $54. You have to really zoom in to see the highest part of the move, which happened when his proposal was filed around 6:10am.

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TWTR Musk Buyout is officially agreed. Long.

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how long could it take until the final transaction takes place? There’s still a discount of few percent in the price.

Not sure. Just says this year in the PR

The transaction, which has been unanimously approved by the Twitter Board of Directors, is expected to close in 2022, subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions.

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Looks like Elon raised $4B in TSLA sales over the last two days, making his position more secure for the TWTR merger. You can see when the selling started Tues and Wed, and is done now it seems.

I added more TWTR stock around $48, as well as selling lower priced near term puts and some longer term $50 puts (current ITM for the buyer, but hopefully not by the medium term).

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TWTR background

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bump

The SEC went after Hwang for fraud and market manipulation, although really all he did was lie to his investment banks about how much risk he was taking at other investment banks on the same positions. And he bought a shit ton of a relatively small number of stocks (which of course went up due to his aggressive buying, until they didn’t when he stopped buying and blew up from margin calls, leaving the slower, non-Goldman investment banks holding a $10B bag).

You know what they say - on the way up, high leverage results in beating the market by a mile, and on the way down the beatings go the other way.

  1. Its long positions tended to be both highly leveraged and highly concentrated. Archegos traded on margin extended by its Counterparties, maintaining leverage ratios of between 400% and 700%, and sometimes as high as 1000% (meaning if it invested $100 in capital, it had $1000 in exposure). It took long positions in only about 100 issuers, with typically between a third and half of its overall gross exposure concentrated in just its ten largest positions.
  1. As of March 31, 2020, Archegos had approximately $1.6 billion in invested capital, on gross exposures of approximately $10.2 billion… as of March 22, 2021, Archegos had over $36 billion in invested capital, on over $160 billion in gross exposures.

You can see what happened to the stocks in my earlier post, although VIAC is now paramount (PARA) and Discovery got merged into Warner Brothers (WBD). This is 3 years so you can see the covid dip followed by the big squeeze in early 2021 before crashing when the banks sold all his stock.

Here’s the highlight -

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TWTR good news on the financing side

Elon Musk Is Discussing Preferred Equity Contributions From Private Equity Firms, High Net-Worth Individuals For The Twitter Deal; Musk Has Started Conversations With Some Twitter Investors, Including Jack Dorsey, About Rolling Their Stakes In The Deal

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Good news that he’s asking others to join in? Bad news if nobody wants to…

He’s got enough assets to do it himself, but he’d rather let a few other people take a billion or two so he doesn’t have to fund all of it. The good news is that they’re listening, and if interested, makes the merger more likely to succeed on the financing front than before. If they’re not interested, we’re still just back to where we were when he said he would fund it all himself.

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TWTR - Musk is trying to convince enough existing shareholders or others to join in the private ownership of Twitter that he won’t need the margin loan to fund the buyout. That sounds like a great idea, given how the margin is going these days. TSLA was $1100 when he announced this and fell just below $700 earlier today before recovering somewhat.

image

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Didn’t I read somewhere that the margin loan would not be an option of TSLA fell below some number, like $740?

I’m not up on the exact specifics, but things have been changing. Like originally the margin loan was going to be $12B, now it’s only $6B b/c he sold some TSLA stock and raised cash so he needs less (and given he was putting up 5x the value in TSLA shares for the loan), so at some point it makes sense to just sell some shares and not take the risk of a down market.

And this most recent update is about how many he wont need the margin loan at all, if he can convince ppl to put up their own money (or existing TWTR shares) to be continuing shareholders with him in the private Twitter.

I think he also had the option to pledge more TSLA shares to the margin loan if the price fell too much, but there are TSLA rules on how much he can pledge for margin (although probably those could be changed if he asked nicely, given he runs TSLA too).

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It’s now trading 20% under the offer price. He seems to be moving forward, though I suppose it’ll cost him a lot less ($1B?) to walk away than to buy it… which I guess is why it’s still discounted. People still think he might walk. I don’t see any other reason for the deal to fall apart.

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