A bearish Tesla Inc. bet by hedge fund manager Crispin Odey may be coming to fruition.
“Shorts like Tesla have been difficult to hold on to,” Odey wrote in a letter to investors. “However, Tesla feels like it is entering the final stage of its life,” he wrote, comparing Chairman Elon Musk’s behavior to that of Donald Crowhurst, the amateur sailor who set off in the 1960s on a solo voyage around the world and never came back.
Tesla’s shares have been on a wild ride of late as investors fretted that Musk may have violated securities rules by tweeting prematurely about plans to take his company private. After initially surging after his Aug. 7 tweet, they’ve since plunged, with losses deepening on Friday after Musk told the New York Times that no one saw or reviewed that tweet before he posted it. The billionaire frequently teared up in the interview and discussed the strain of heading the electric-car maker, the newspaper reported.
Musk has recently berated short-sellers. In the interview, however, Musk said they are “not dumb guys, but they’re not supersmart. They’re O.K. They’re smartish.” Tesla is Odey European Inc.’s second-biggest equity short position.
Representatives for Tesla didn’t immediately return requests for comment. An Odey spokesman declined to comment.
Odey has for years predicted a market sell-off and suffered as his predictions haven’t panned out, with his flagship hedge fund plummeting in 2016 and 2017. Odey European Inc. — which manages 202 million euros ($230.6 million) — has seen a recovery recently, posting positive returns every month this year. It rose 2 percent in July and is up 25.8 percent this year, according to the firm’s July investor letter.
“The path this fund has taken to reach this place was so painful but now I would not swap this portfolio for anyone else’s,” Odey wrote in the letter. “It is a pity you daren’t give it a try.”
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