After another brutal year in 2021, Tesla Inc. TSLA short sellers are off to a strong start to 2022 with a 14.3% drop since the start of the year after the company was forced to call back 53 822 vehicles that included full self-driving beta functionality that allowed cars to automatically drive past stop signs.
Spiegel Auto Pair Trade: One of Tesla’s most vocal short sellers has been Mark Spiegel, managing member and portfolio manager of Stanphyl Capital Partners.
In Stanphyl’s January letter to investors, Spiegel discussed his bearish view of Tesla and how he uses long positions in General Motors Company GM and volkswagen VWAPY like the long end of an auto value stock pair with Tesla.
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Spiegel said he still views Tesla as grossly overvalued and maintained his short positions in the stock despite closing a long short position in the stock. ARK Innovation ETF ARKK after a gain of about 50% on the position. The ARKK fund is down about 50% from a year ago.
“VW sells nearly 10 million vehicles per year compared to around 1.2 million per year for Tesla. Yet the diluted market capitalization of Tesla is more than 8 times that of VW, which means that an investor pays about 70 times more for each Tesla sold than for each VW sold! said Spiegel.
Bet on value: Spiegel said Volkswagen and GM are “relative value matched trades” against Stanphyl’s short Tesla position. GM shares are trading at just 8 times 2022 earnings estimates, and Spiegel said the company is making all the right investments in electric vehicles and self-driving technology.
“Keep in mind that unlike Tesla, which sells a LiDAR-free cheat to Rubes, Cruise already operates a fleet of fully self-driving cars in San Francisco,” Spiegel said.
So far in 2022, the long GM and Volkswagen and short Tesla trade is working: Tesla shares are down 14.3%, while GM shares are down only 8.7% and Volkswagen shares are up of 4 %.
Benzinga’s opinion: Spiegel is getting a lot of flak for his bearish view of Tesla, which certainly came at a high cost in the long run. However, Stanphyl reported a 25.9% annual return in 2021, suggesting that Spiegel apparently managed the fund well enough overall to almost completely offset his misfires on Tesla.