I came across this piece this morning. It claims that traders are taking up huge short sale positions in Tesla and they are paying a hefty penny in fees for the privilege of doing so. There are a few points in this that interested me. Whenever a financial journalist claims something is happening it is worth having a look at the raw data to see whether what they are on about is actually happening or is just an overblown figment of their imagination. I therefore downloaded the latest short sale interest data for Tesla to see if there had been a big spike in shorts. As one might expect over the past few weeks short sales have actually declined as can be seen. Short interest is robust but not spiking.
With a big of digging I found that a similar story appeared in the WSJ a few weeks earlier. The second point that interests me is as always the power of the personal narrative when linked to the conviction trade which seems to be what is driving these shorts. In many ways this is an ego based condition – I think it should go down therefore by dent of personal conviction I will make it go down. I dont follow Tesla (other than being fascinated by a their cars) so I have to look at a chart to see what was actually happening.
A quick an nasty look tells me that I might go short on a break blow $200 but the moment everyone starts talking about going short something I worry about a short squeeze. In some instances it is actually best to keep your gob shut….