February 14, 2019
By Kate Duguid
NEW YORK (Reuters) – Billionaire investor Stanley Druckenmiller bet against electric carmaker Tesla Inc during the fourth quarter, wagering that its share price will fall, according to quarterly filings released on Thursday.
Druckenmiller’s family fund, named after the hedge fund Duquesne Capital that he founded in 1981, bought put options on Tesla shares worth $99.8 million, a Security and Exchange Commission filing revealed.
The option contract allows the fund to sell the shares at a set price before a set time, implying Druckenmiller believes Tesla’s share price will fall before the contract expires. Neither the strike price nor the maturity of the contract is public.
Tesla’s shares have fallen 6.61 percent since the start of the year after a volatile 2018 in which its price vacillated around $134.
Tesla has $920 million in convertible debt coming due on March 1, which is expected to put pressure on the company, which has previously struggled to maintain a positive cash flow.
Convertible issues give bondholders the right to trade their debt for equity after shares rise over a certain price. Tesla shares are currently more than $50 below the $359.87 conversion price after closing on Thursday at $303.77.
Quarterly disclosures of hedge fund managers’ stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are one of the few public ways of tracking what the managers are selling and buying. But relying on the filings to develop an investment strategy comes with some risk because the disclosures come 45 days after the end of each quarter and may not reflect current positions.
(Reporting by Kate Duguid; Editing by Dan Grebler)