Musk’s legal headaches

A Tesla shareholder filed a lawsuit last week accusing CEO Elon Musk of insider trading when he sold over $7.5bn of shares of the electric car maker in late 2022, saying the billionaire entrepreneur sold the shares before potentially disappointing production and delivery numbers were made public. Shareholder Michael Perry, in the lawsuit, said that Tesla’s share price plummeted after the company’s fourth-quarter numbers were made public and claimed that Musk “improperly benefited” by about $3bn in insider profits. The lawsuit is the latest legal headache for Musk. It comes as Musk faces opposition from some Tesla shareholders who are set to vote on June 13 on whether to ratify his $56bn pay package while he is in the middle of a regulatory probe to determine whether he broke federal securities laws in 2022 when he bought stock in social media platform Twitter, which he later renamed X.

(Adapted from “Tesla Shareholder Sues Musk For Alleged $7.5 Billion Insider Trading,” by Abhirup Roy, published on June 1, 2024, by Reuters)

Tattooing avocados

Tesco, Britain’s biggest supermarket group, is using lasers to etch product information on some of its avocados to avoid using barcoded stickers, in a trial it says will reduce plastic waste. The high-powered lasers remove a minute section of the top layer of avocado skin, leaving a tattoo that shows information for customers and cashiers, such as the size or variety of the fruit. All UK supermarkets are seeking to reduce plastic usage to meet their environmental commitments. A full roll-out would save nearly a million plastic stickers a year on its loose, extra large avocados. Tesco is also trialling replacing the plastic tray packaging for two of its most popular avocado lines and moving to a cardboard container that is easier to recycle. If rolled out, that would save over 20m pieces of plastic tray packaging a year from the twin-pack avocado alone.

(Adapted from “Tesco Lasering Avocados With Product Information In Test To Ditch Stickers,” by James Davey, published on May 31, 2024, by Reuters)

What are block trades?

Selling small amounts of publicly listed shares is easy: They generally sell for the prevailing market price. Big share sales are more complicated, since the very act of selling can drive the price down. To avoid that scenario, banks and brokerages often work with sellers to arrange private “block trades.” A string of recent scandals has underscored the murkier aspects of block trading, and put pressure on regulators to crack down on the misuse of private information ahead of deals. In an era of anonymized, electronic trading, block trades are one of the few areas of finance where investment banks’ relationships still drive the flow of deals, with the terms hashed out by humans on phones and keyboards. Sellers can include company founders and their families, asset managers and other big shareholders such as pension funds, insurance companies and private equity firms.

(Adapted from “What Are Block Trades? Why Are They in the Spotlight?” by Bei Hu and Filipe Pacheco, published on May 29, 2024, by Bloomberg)

Poker and investment

Rounds of Texas Hold’em, a popular variant, start with each player being dealt two cards and then deciding whether to bet on them. Amateurs are more likely to proceed than not, while pros fold immediately up to 85pc of the time. It is simply that most hands are too likely to lose to be worth betting on, and the pros are better at judging when this is the case. Investors usually dislike gambling comparisons. Yet at a recent conference held by Norges Bank Investment Management, which oversees Norway’s oil fund of $1.6tr, a packed hall sought to learn from a former poker pro, Annie Duke. Ms Duke argued that many factors stack the deck against people considering quitting, pushing them to act irrationally. That applies to poker players wondering whether or not to fold — and also to investors considering whether to exit a position.

(Adapted from “When To Sell Your Stocks,” by The Economist, published on May 30, 2024)

Published in Dawn, The Business and Finance Weekly, June 3rd, 2024