50,000 people have registered for my webinar; What to do when a stock runs against you; Fraud in the Bull Market conference; LYFT – The Amateur Short; Tesla is now a 'show-me' stock

By Whitney Tilson

Thursday, April 11, 2019
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1) 50,000 people have registered for the free webinar launching my new newsletter, the Empire Investment Report, which will take place this coming Wednesday, April 17 at 8 p.m. Eastern! You can sign up here.

In doing so, you’ll immediately get access to my three videos on Berkshire Hathaway, our reports on why we think Facebook (FB) and Amazon (AMZN) are likely to double, and Glenn’s report – which is getting an incredible response on Twitter – on why Tesla’s (TSLA) stock could collapse (click FREE RESOURCES at the top of the page). And if you enter your cellphone number to receive a text reminder before the webinar, you’ll also get our report on Alphabet (GOOGL).

Again, click here to get immediate access to all of this for free. After the webinar, this content will only be available to paid subscribers.

2) Continuing the series of articles I’m publishing leading up to next week’s webinar, in this one, A Simple Three-Step Process to Combat This Investing Mistake, I discuss how to avoid the costly mistake of selling a big winner too early – plus how to make the right decision when a stock is running against you.

3) I’m already on a flight home, but really enjoyed catching up with a lot of old friends at the Fraud in the Bull Market (#fraudfest) conference yesterday in San Francisco: Jim Chanos, Herb Greenberg, Carson Block, Roddy Boyd, Jesse Eisinger, Lynn Turner, and Bethany McLean.

What a treat it was to meet Business Insider reporter Linette Lopez, who’s done some first-rate investigative journalism on Tesla – so good, in fact, that CEO Elon Musk went after her in a vicious and unhinged way. (To read about it, see: Elon Musk Needs to Stop Tweeting Things He Can’t Prove. And Grow Up.) She and Chanos had a good laugh about Musk’s accusation that he was paying her to write negative things about Tesla.

Lastly, it was fun hearing from the authors of three of my favorite books about notorious fraudsters: John Carreyrou (Bad Blood: Secrets and Lies in a Silicon Valley Startup, about Theranos) , Tom Wright (Billion Dollar Whale, about Jho Low, the mastermind of the 1MDB scandal), and Diana Henriques (Wizard of Lies, about Bernie Madoff).

Best line: When Carreyrou was asked why Theranos’ board didn’t pick up on the fraud, he replied: “They were literally asleep. One person told me that at a board meeting, Henry Kissinger and George Shultz were snoring!”

At the end of the day, they showed the documentary about Theranos founder (and total sociopath) Elizabeth Holmes, The Inventor: Out for Blood in Silicon Valley, which I highly recommend. It’s available now on HBO.

Overall, an incredible group of people, fighting the good fight every day to expose fraud in every corner of our markets!

4) My friend Andrew Left of Citron Research recently published a five-page report, LYFT – The Amateur Short. Believe it or not, this famed short-seller is long the stock of ride-sharing service Lyft (LYFT). He invested two years ago and has added to his position since it went public on March 29.

While the stock is down ~25% since then, I agree with his point that it’s extremely dangerous to short “money losing companies with high growth and large TAM [total addressable market].”

You might wonder, therefore, why I’m comfortable taking the other side of his bullish bet on Tesla. There are many reasons, but a key one is that I think it has made the jump from being mostly a “story” stock to primarily a “show-me” stock today.

If you’re going to do any short selling, it’s critical to understand the difference.

It’s extremely dangerous shorting a story stock because its valuation isn’t tied to any fundamentals. There’s just a pie-in-the-sky story with a lot of hype and dreams.

With no quantifiable expectations, the company can’t miss its numbers – which is what’s usually required for the stock to go down.

Tesla was like this for many years, which is why I warned all of my friends not to short it – until last month… While its silly valuation in the face of collapsing fundamentals shows that the story stock element isn’t completely dead, I think the scales are finally falling from more and more investors’ eyes. As proof that Tesla is now more of a show-me stock, look at how it tumbled when the company recently reported horrible first-quarter delivery numbers.

Going forward, Tesla’s stock is likely to trade on how the business performs. On this point, Left and I agree. He told me last month that he thinks there will be a ton of demand for the lower-priced Model 3, whereas I think the big miss in the first quarter is a harbinger of more big misses to come.

Time will tell who’s right… and who will have to make a $7,000 donation to the other’s favorite charity (per our bet, outlined in my e-mail last month, whether Tesla would report a profitable quarter this year).

Best regards,

Whitney

Whitney Tilson

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About Whitney Tilson

Prior to creating Empire Financial Research, Whitney Tilson founded and ran Kase Capital Management, which managed three value-oriented hedge funds and two mutual funds. Starting out of his bedroom with only $1 million, Tilson grew assets under management to nearly $200 million.

Tilson graduated magna cum laude from Harvard College with a bachelor's degree in government in 1989. After college, he helped Wendy Kopp launch Teach for America and then spent two years as a consultant at the Boston Consulting Group. He earned his MBA from Harvard Business School in 1994, where he graduated in the top 5% of his class and was named a Baker Scholar.

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