During the two days of the weekend, Wall Street did not have Market Open, but the discussion about Era Vanguard and Tesla was more lively than during the trading day.
In every Trading Room on Midtown Manhattan, every country club on Greenwich, and even several top VC Lounge on Silicon Valley Sand Hill Road, the topic cannot avoid the same name.
The focus of the debate is divided into several factions.
The most optimistic group of bulls--
Mainly retail investors and small and medium-sized institutions have repeatedly forwarded screenshots of the two positive lines of Tesla from 178 to 195 on trading forums and Twitter, with only two words in the text: "Short Squeeze".
They believe that Era Vanguard caught all the selling near 178 US Dollar, then turned around and used 3.4 million shares to supplement the pledge. This signal is clear enough:
The main bulls do not intend to stop at this position.
If Era Vanguard continues to buy goods at Secondary Market, and Short Sellers cannot close the position in time, then once the stock price breaks through a certain key position,
Short Sellers Stampede covering will instantly push the stock price to a height that no one can imagine.
The other group is much more cautious.
Several veteran Hedge Fund strategists repeatedly emphasized the same judgment on Bloomberg and CNBC's online program: Short Squeeze is difficult.
Tesla's Fundamentals didn't get any better – it lost 700 million in the first quarter, and its delivery volume fell quarter-on-quarter.
The shadow of Model 3 demand peaking is still there. Although Morgan Stanley's extreme target price research report of 10 US Dollar was scolded by Elon Musk,
But the debt and demand issues it revealed have not gone away.
Under this Fundamentals background, it is difficult to form a sustained Short Squeeze market simply by increasing the holdings of an offshore fund.
But while they were cautious, they also had to admit a fact that made Short Sellers extremely uncomfortable:
If Short Sellers starts internal strife and someone runs away first, the stock price may be pushed up far beyond what Fundamentals can explain.
After all, every Short Selling is a potential bull, and when the bulls and the defecting Short Sellers buy at the same time, it is not impossible for the stock price to be pushed above 250 US Dollar in the short term.
There is also discussion about what will happen if the stock price rises back to 300.
Some people think that the old bulls above 300 US Dollar who were trapped in the privatization incident will take the opportunity to unwind and form a new Selling Pressure;
Some people also pointed out that Short Position of Tesla has always been at the top of the NASDAQ rankings. The heavier the Short Position, the greater the space of Short Squeeze.
If Era Vanguard is really determined to fight this battle to the end, 300 US Dollar is not the ceiling.
But these are just guesses.
What really prevented the whole Wall Street from completely relaxing on the weekend was a report letter.
Saturday In the afternoon, a registration record of a non-public report appeared in the SEC's EDGAR System. The content of the report directly pointed to the source of funds of Era Vanguard--
The whistleblower claimed that the funds used by Era Vanguard in this round of increasing its holdings of Tesla and supplementing the pledge were "suspected to come from illegal financing from offshore structures",
Request the SEC to launch a formal investigation into the source of funds of Era Vanguard.
The news leaked from an SEC insider and initially appeared in a crypto trader group. Within hours, it was verified and reported by Bloomberg reporters.
The SEC has not yet formally responded, neither filing nor dismissing the case.
But the whistleblower letter itself - whether or not it ultimately triggers a formal investigation -
It's enough to give Short Sellers some respite from the anxiety of the weekend.
If the SEC really launches an investigation, Era Vanguard's capital channel will be put under a regulatory magnifying glass.
Any cross-border fund transfer requires a reexplanation of the source, which will bring huge uncertainty to Era Vanguard's subsequent ammunition replenishment.
As soon as Lin Shicheng received the news from Bloomberg, he rushed to Zhao Chen's Suite and analyzed the known contents of the report letter one by one.
The SEC's current silence can be interpreted as procedural --
Any reports involving more than a certain amount of money will be automatically recorded. The SEC's internal system has a strict hierarchical processing process.
It usually takes several working days from registration to decision on whether to file a case, and being closed on weekends means that a preliminary conclusion cannot be made until at least the middle of next week.
Although the wording of the report letter itself uses destructive words such as "suspected", "violation" and "offshore structure",
However, there is no strong substantive evidence, which is more favorable to Era Vanguard.
He judged that Short Sellers was most likely trying to use regulatory procedures to slow down Era Vanguard's replenishment of ammunition by reporting it.
If this can make potential investors wait and see for days or even weeks, then their goal has been achieved.
Lin Shicheng After dismantling the known contents of the report letter one by one, he closed the folder and leaned on the back of the sofa.
His tone was deeper than when he reported the pledge data just now, and his speaking speed was also slowed down by half a beat, making every word carry the weight of having been deduced layer by layer of legal risks.
"Zhao Zong, this report letter, regardless of whether something is found in the end, is a signal in itself.
Although the SEC has not officially responded, in their internal processes, reports involving active funds holding more than 10% of the shares are usually marked as 'high priority'.
If the SEC formally files a case, even if it is just a preliminary investigation, the funding channels may be temporarily frozen--
It is not a permanent freeze, but any new cross-border fund transfer during the investigation period requires a complete source statement, and the review cycle can take weeks to months."
He opened his notebook and continued to deduce the worse possibilities:
"In addition, Era Vanguard has just increased its holdings on Tesla and added pledges, and the second revised declaration of 13D will be submitted soon.
When the SEC is examining Schedule 13D Amendment Filing, if they receive a report about the source of funds at the same time, they have the right to require us to supplement the disclosure of detailed information on the source of funds--
Including the lender, pledge terms, and cross-border routes of each fund.
Schedule 13D Amendment Filing itself is public, but if the supplementary disclosure of the source of funds is required by the SEC to be disclosed and attached to the amended filing, all Wall Street will see our trump card.
By that time, all the depth of our financial strategy will be exposed to Short Sellers."
He closed the notebook and made a compromise judgment:
"Fortunately, the compliance foundation for previous declarations and this holding increase is strong enough.
Unless the Department of Justice Antitrust Department or major cross-border clues are added to the investigation channel, there will not be any sudden unfounded conclusions.
The safest strategy at present is to complete the 13D declaration process step by step, and at the same time be proactively prepared to submit a source of funding statement to the SEC--
Prove that the funds come from Hong Kong, a Family Office that is not related to Wall Street, and attach the official document of Hong Kong Stock Exchange pledge registration.
Let the regulators see that our money is clean."
Zhao Chen was silent for a few seconds, and his voice was more determined than Lin Shicheng expected, with a clear sense that there was no time to hesitate.
"13D's second revised declaration, Friday's holdings have triggered the disclosure threshold again--
Submit directly before market opens on Monday.
When the market opens on Monday, without waiting for market digestion, Short Sellers's reaction, or the SEC's next move, we will directly enter the market to purchase goods.
Before the SEC files an investigation, get all the shares that can be increased.
By the time the regulators came to their senses and wanted to investigate the source of the funds, our positions were already so large that they did not dare to freeze them easily--
To freeze the capital channels of a shareholder who holds more than ten percent of Tesla, the SEC needs to consider not just the whistleblower letter, but the chain reaction of the entire market."
He moved his gaze away from Lin Shicheng's face and landed on the clouds gradually dispersing outside the window.
There is only such a narrow window of time left, and all chips must be put on the table before supervision is initiated.