根据Management CV为《财富》杂志整理的公开资料以及Factset Research收集的数据，截至2019年6月10日的18个月内，许多公司内部人士都有买入和卖出操作，从中净赚数百万美元，而且持股数量没怎么变。
内部人士并没有出售已经持有的股票。而且随着时间过去，他们还以更高的行权价获得了额外期权。“名义上看，股权跟以前一样，实际上却是从中赚钱。” Management CV的首席执行官雷尼·庞福尔特在谈到数据时表示。据庞福尔特介绍，如果内部人士遵循此种模式，“真实资金承受风险”更小，也意味着内部人士的利益似乎与外部股东的利益并不一致。
芝加哥大学布斯商学院的教授史蒂文·卡普兰编写的案例研究显示，Valor Equity Partners的创始人安东尼奥·格雷西亚就是其中一例，他是特斯拉的第一位机构投资者。Valor曾经向特斯拉投资1450万美元，2012年退出前获得了近1.4亿美元的收益。
Many Tesla outside investors and analysts have been jumping ship from the “quagmire” some see the company having become, as Fortune previously reported. But it’s not just them. Some Tesla insiders—directors and current and former officers—have been consistently exercising options and then selling most or all of those shares, pulling millions of dollars out in the process, according to documents reviewed by Fortune.
Data from public filings and Factset Research, compiled for Fortune by Management CV, which monitors activity of senior executives that run public companies, shows that a number of insiders have, over the 18 months through June 10, 2019, performed combinations of purchases and sales that have left them with millions of dollars in net proceeds and roughly the same amount of stock as they already had.
The data show that some directors and executives were exercising options to buy stock at far below current market prices and selling virtually identical numbers of shares at market prices on the same days, thereby extracting value. The purchases and sales appear to have happened under a so-called Rule 10b5-1 plan, in which executives set their buying and selling strategies and schedules in advance so they can’t be accused of insider trading.
While there is nothing illegal or unheard of about this process, it raises potential red flags for investors. First, it becomes more difficult for individual investors who may depend on annual proxy statements and other SEC filings to track insider selling, and lack the necessary research time and other data sources to see the trading patterns.
Second, the trading raises the question of whether insiders, who may have held some low-strike-price options for years without having to buy the shares, think the stock remains a good longer-term investment. Although Tesla stock has seen substantial recovery in the last week, rising from the June 3 close of $178.97 to $213.91 a share at the end of Thursday, the share price is still far below its level of nearly $350 in mid-January 2019.
Occasional examples of essentially flipping options can be found in other companies, including other auto manufacturers. What stood out to experts was the concentration of insiders engaging in this strategy at Tesla, something an examination of some filings did not show before this 18-month period.
The theory behind using options or stock as compensation is that executives will have similar interests to shareholders, and everyone will hope to make money from increased share value over time. In this case, some of the insiders exercised older options with strike prices in the $20 to $30 range and then immediately sold them, profiting in the difference between the strike and current prices.
The insiders weren’t selling shares they already explicitly held. In addition, over time, they’ve received additional options at much higher strike prices. “Nominally, my beneficial equity stake is the same as it was, but what I’ve done is extract that wealth,” said Management CV CEO Renny Ponvert, of the data. Insiders who follow this pattern may have less “real money at risk,” as Ponvert said, meaning their interests may not seem as aligned with those of outside shareholders.
Tesla and the insiders did not respond to a request to Tesla for comment.
Some examples are Antonio Gracias, founder of Valor Equity Partners, which was the first institutional investor in Tesla, according to a case study prepared by University of Chicago Booth School of Business professor Steven Kaplan. Valor invested $14.5 million into the company, generating almost $140 million for its funds before exiting the investment in 2012.
Gracias has been the lead independent director of Tesla since 2007. Over the last 18 months, he netted out $28.4 million in cash through selling shares and exercising options, at prices around $30 a share. However, the total number of shares that he bought and sold after the transactions during the year-and-a-half exactly balanced, so he had planned to sell as fast as he exercised them. As of the end of 2018, he still had options left for 288,600 shares and held 500,826 shares, according to the latest Tesla proxy statement.
Chief technical officer Jeffrey Straubel netted out $26.7 million over the 18-month period, exercising options at anywhere from $20.72 to $31.49 a share. He ended up with a net drop of 20,000 shares. An SEC Form 4, required to show stock transactions of insiders, showed him on May 28, 2019 buying 15,000 shares at $31.49 each and selling 15,000 at prices ranging from $188.48 to $194.58. At the end, he still held 306,398 shares, essentially flipping the exercised options. Straubel has used the same pattern of buying and selling 15,000 shares, always maintaining the total 306,398 shares, six times between Dec. 28, 2018 and May 28, 2019.
Brad Buss has been on the Tesla board since 2009 and is listed as an independent director. He was the CFO for SolarCity, the solar panel installation company co-founded by two cousins of Tesla CEO Elon Musk, until 2016, the year that Tesla bought the company. Musk had also been chairman of SolarCity. Buss pulled out $17.9 million from his shares, finishing with a net increase of 4,666 shares. He had 204,082 option shares outstanding and held 165,790 shares at the end of 2018.
Deepak Ahuja served twice as CFO of Tesla, first from 2008 to 2015 and then again from 2017 until he left the company early in 2019. Ahuja netted $4.2 million. At the end of 2018, he owned 95,465 shares.
Elon Musk’s brother, Kimbal Musk, made $2.9 million with a net disposal of 2,190 shares and at the end of 2018 had 209,444 shares and options for an additional 100,000.
Douglas Field, who left Apple to join Tesla and then returned to the consumer electronics giant in 2018, took out almost $3.1 million with a net drop of 1989 shares. At the end of 2017, he had 42,728 shares, according to the Tesla 2018 proxy statement.
There are many possible explanations for why a given insider might decide to sell shares, including paying taxes on exercised options, freeing cash to diversify holdings, or covering some bill like the cost of a child’s college education. In fact, in a few cases, an examination of SEC filings showed that some sales of shares were automatic to cover taxes. Some older options from 2012 had expiration dates in 2019, which could have prompted their exercise, although it wouldn’t necessarily explain the immediate sale of the resulting shares. Insiders often treat options as a way of holding potential shares while delaying any cash outlay.
“You can never fully understand or determine what is going on inside the profile of one individual director and his or her financial plans,” said Bill Francavilla, an investment advisor. “But if several [insiders] are selling and you see a trend, that might be something different.”
For example, if a number of insiders are flipping most or all the shares they acquire from exercising options, it could also be a sign they have less confidence in the future value of the shares. “I would be suspicious and expect to pay a lot more attention if I was a shareholder,” Francavilla said.
While others sell, Musk buys
One clear exception to any broader patterns is Elon Musk. Over the 18-month period, he spent $95.2 million on 470,139 shares and did not sell any. Of the shares he purchased, 175,000 were options he exercised at a strike price of $31.17. The rest, however, were purchased at anywhere from $243 to $351.40 a share.
There are four common reasons why someone in Musk’s position might be bulking up his holdings, particularly when buying shares on open markets: to signal to shareholders his belief in the company, to build a bigger shareholder voting position, to deal with demands from bank loans, or to short the stock.
Trying to build a bigger voting position seems highly unlikely. The number of shares he’s gained are insignificant in comparison to either the nearly 38.6 million he already holds, according to the 2019 proxy statement, or the total number of outstanding shares. Given Musk’s antagonism toward short sellers, taking such a position might also seem unlikely, although certainly conceivable and one impossible to discern from the outside.
That leaves two potential reasons. One is to promote faith in the company.
“We’ve seen a lot of executives of public companies buying,” said Timothy Speiss, co-leader of the personal wealth advisors group at EisnerAmper. “It’s often that they’re buying form their heart and they’re trying to show support for the company.”
However, in Musk’s case, Tesla’s 2019 proxy statement shows that he has “13,394,056 shares pledged as collateral to secure certain personal indebtedness,” which is almost 35% of the 38.6 million shares he beneficially owns.
That is down somewhat from the 13,774,897 pledged in 2018 but up considerably from 11,450,723 pledged in 2017.
Investor Danny Moses, who does hold short positions on Tesla stock, thinks that at least part of Musk’s purchases are because of a cash crunch. In early 2019, Musk took out $61 million in mortgages on five properties in California, according to the Los Angeles Times.
According to the Tesla proxy statement, the company’s board requires that “the maximum aggregate loan or investment amount collateralized by such pledged stock does not exceed twenty-five percent (25%) of the total value of the pledged stock.” With the lower share value, it could be that outstanding loans might have exceeded the value of the stock, which would mean Musk would need more shares to meet the requirement.
A Tesla spokesperson called the suggestion that the purchase was a pledge requirement “patently false” and added that Musk was only trying to convey confidence in the stock.
Whatever the reasons for all the trading, investors might want to look closely before catching a ride with Tesla.