Doubling down on GM and hedging the market

With the recent declines in GM stock price, I decided to double down, and extended my long position in calls a bit and also sold a bunch of puts with 35-40 strike prices and expirations between September and January'19. Because I intend to buy more of GM anyway should these price levels be hit at these days, I can as well collect some premium for this.

Because I bought non-trivial portion of my stock holdings on margin and I no longer anticipate significant incoming cash, I decided to hedge my market exposure to some extend by shorting SPY ETF. This is only covers a portion of my overexposure to the market, so this does not indicate that I'm less bullish than before about my stocks, but I see most of others in S&P 500 as likely fairly or overvalued, given the relatively high PE ratio (but without doing thorough analysis of all of them).

Another reason for this hedging is that right now my TSLA short position is only ~2/3 of what it was just after Elon's infamous tweet, as I covered at average price $320, for ~$50 per share gain for the stock I sold short around the tweet time. I always saw my TSLA short as a partial hedge against market going south, and given that I have less of that short now, I felt it's the right time to start hedging against SPY, as S&P 500 is (again) at all time highs. I do hope it will go higher so I can short more, and also reduce a bit the other long positions I have by taking profits.

My overall portfolio evolved a little bit between EO Q2 and now, with BHC (formerly VRX), GM, FB and GOOG being top positions and BRK a bit smaller then them. I also reduced VER a bit, held share count of APPL steady and halved KHC. ~1% of EPOL and ~3% TSLA short complete the portfolio, as I sold last pieces of GILD.

Occam's Razor

One can surely not say that Tesla story is not entertaining. Three days after infamous tweet, Musk nor Tesla still didn't provide any details and BOD actually seem to be distancing itself from Musk.

The simplest explanation, based on prior experience is simply that Elon wanted to hurt shorts and went too far. Maybe Tesla will issue 8k clarifying that funding is in the works today after hours? And then after few weeks will say that being public is the best for Tesla anyway because they care about retail investors.

I simply can't get long thesis and I doubt someone will put tens of billions on the table with Tesla financials and signs of weakening demand for M3. But everything is possible and if the deal goes through at 420 I will take my losses with dignity. But I have no doubt that shareholder lawsuits will live long after that and probably harm Tesla and their new owners anyway.

Tesla

Yesterday's news on taking Tesla private was unexpected, certainly by me, perhaps by everyone.
It's still very hard for me to tell if this could be real. I'm short Tesla for approx. ~5% of my portfolio worth, and for now, I cancelled all my buy orders above $300, as I assume this will not get through and stock will collapse soon afterwards. If this does go through, so be it, I'll accept the loss, but it would still be baffling who would invest such amounts in a losing company in very tough industry/industries. But stranger things happened, so this can't be ruled out. After all, Tencent invested in Tesla before, and I can imagine them or other Chinese player to be behind this (if this is real).

I'm quite happy with a long position of approx. 6% in BYD, much safer play on EV future in my opinion.