Goldman Sachs on S&P 500, Model Y Range, Tesla Police Vehicle


Everybody rob our here today. We were talking about tessa. Stock and the s. and p. five hundred inclusion process. We have an updated note from goldman. Sachs talking a little bit about funds that may need to purchase tesla. We also have some news on the model y and then a recently published study by the fremont police department on using tesla as a police vehicle. All right so i up on the stock tussles. Green streak has come to an end finishing down one point nine three percent today to four hundred eighty nine dollars. Sixty one cents that compared to the nasdaq down zero point four percent and two again quickly. Check on the volume. As we've been doing for the last few days it was quite a bit lower today. Only about thirty two million shares traded hands. That was the two hundred and first highest volume rank day for the last year. So very low. That's out of about two hundred and fifty trading days was actually even below the one month average of thirty three million shares and well below the three month and twelve month averages around sixty million shares debt. If you're curious why. I keep talking about volume. It's because i anticipate a lot of shares needing to be purchased. So i do want to keep an eye on volume as we head into the snp inclusion. I do expect most of the related buying four. That will happen around inclusion. But who knows how much for there's going to be so i think if we see a lot of really heavy volume heading into that that might indicate a little bit more front running. So it's not normally something i watched super closely and i'm definitely not a technical analysis based investor. But just something. I'm kind of finding interesting for less period time. Quick related note next week. Is the week of thanksgiving. So the nasdaq will be closed on thursday november twenty. Sixth all day and then on friday the twenty seventh. We closed early so reopened until one pm eastern time. As for my schedule. I'll probably take thursday off and potentially friday. We'll see on that. But hopefully the seven episodes that. I put out this week as well as two interviews that i did the most recent of which is on the talking tesla podcast. By the way we'll make up for that next week. Okay so we've got a bit of an update here on the s. and p. five hundred situation a new note from goldman sachs. Has shed a little bit of light. On that. portion of funds that is benchmarked to the s. and p. five hundred remember. This is the portion of funds that their compensation is impacted based on the relative performance to the performance of the s. and p. five hundred versus the tracking funds. They're literally trying to replicate the performance of the s. and p. five hundred identically. So if we look at our little spreadsheet here that we've looked at many times based on today's closing price for the s&p five hundred and four tesla. It looks like the waiting would be about one point two five percent for tesla and the s&p index so the p last update. They gave us said that there was about four point. Six trillion in assets tracking the index. Saw one point two six percent of that should be allocated to tesla shares. That's about fifty eight billion dollars. Almost one hundred nineteen million shares and then additionally there is six point six trillion in benchmarked assets. So that's what we're talking about here with this goldman sachs update and one point. Two six percent of that six point six trillion would be eighty three billion or a hundred and seven million shares so focusing on that slice for now goldman sachs in an updated note. Overnight said quote of the one hundred and eighty nine large-cap core funds in our universe one hundred and fifty seven funds that manage around five hundred billion in assets under management did not hold tesla on september thirtieth and quote. Okay presumably here then. The one hundred eighty nine funds that goldman is referring to here are benchmarked against the s. And p five hundred. I don't have the full note. So i'm not sure if they stated that clearly but i do think it's the best assumption we can make so they're saying five hundred billion in assets under management for those one hundred and eighty nine funds. That's five hundred billion of the six point six trillion that we're talking about here so that's about seven and a half percent of the slice so then golden is saying that of those one hundred and eighty nine funds. One hundred and fifty seven of them didn't hold any tesla that's only seventeen percent of those funds so we don't necessarily know how the dollar distribution looks if one of those funds makes up the majority of that five hundred billion assets under management and they hold tesla the dollar percentage will look very different. But for now it's just assume it's the same at seventeen percent and then let's extrapolate that percentage to the six point six trillion and benchmarked funds. Broadly obviously quite a few steps. There were the math. Can break down. This is just a theoretical exercise but if we apply that then we could assume that of the six point six trillion and benchmarked funds about one point one trillion of that may already have a position and tesla leaving about five point five trillion. That does not so drop that. Six point six trillion down to five point five trillion. Assuming others already have tessa positions. If all those funds want to be equal weight on tesla they would need to buy sixty nine billion dollars. Tesla nice which one hundred and forty two million scherzer's. Obviously they could buy more. That could buy less. Could by not at all but doing anything other than being equal weight on tesla is an active choice to deviate their performance versus their benchmark based on how tesla's said another way if they don't know about tesla the safest thing for them to do is just to be equal weight so that it's not influencing their relative performance if we hop back to that goldman note per the bloomberg article on the topic. They say quote assuming those funds chose to hold the carmaker at benchmark. Wait they would need to buy eight billion dollars of the stock or about two per cent of tussles market value the analysts set and quote so many of you may have seen the headline articles about that today. That's just goldman saying that of these funds. These five hundred billion in assets under management those funds. We need to buy a billion to be equal weight. So there's walk in clients through the exact math and we've been walking through here for awhile. But on their universe as they say which is just a subset that seven and a half percent subset of the six point six trillion that the snp says is benchmarked against the s. and p. five hundred. We've now seen a couple of separate confirmations that overall the we've been walking through here is correct. I we had the snp announcement which indicated that okay. Yes it's going to be about a one percent weight that equates to about fifty billion in terms of shares that need to be bought so check that box and then here we have goldman sachs now the benchmark funds and how they would need to buy eight billion and that lines up well with the math that we've been talking about on the bench marked funds so i think good to see that i still don't really know how all this is gonna be able to work again if all that is equal weight. That's you know. Thirty eight percent of tesla's float you can't just take thirty eight percent of afloat off the market over the course of two weeks

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