Saudi Funds

Discussion in 'Tesla' started by bwilson4web, Jan 29, 2019.

  1. bwilson4web

    bwilson4web Well-Known Member Subscriber

    Source: https://www.ft.com/content/d501c670-2307-11e9-b329-c7e6ceb5ffdf

    . . .
    The derivative used to put on the hedge is known as an equity collar, a bespoke instrument that is costly to finance but has become popular with Middle Eastern and Asian investors.

    The people with direct knowledge of the trade did not give the Saudi fund’s rationale for putting the collar in place. Such hedges are normally used to protect large holdings from volatile price swings; locking in profits without selling shares would allow Saudi investors to exert influence at the company without having to be entirely subject to its share price fluctuations.

    So the Saudi have a significant share of TSLA bought when the stock was below $300. Now they've arranged for J.P. Morgan to setup a hedge fund (privately managed) to preserve the value of their investment. But "equity collar" is new to me.

    Apparently an "equity collar" involves setting both a buy and sell order scheme to limit losses at some limit on profits. Something new to learn about.

    Bob Wilson

     

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