Asgard Credit Fund CIO on Buying Tesla Default Swaps

The video discusses the strategy of shorting Tesla's credit while avoiding shorting its stock or convertible bonds due to high risk. The speaker explains the mechanics of the trade, focusing on the credit market's pricing and the potential mispricing compared to the stock market. The catalyst for the trade is a positive view on the auto sector's credit market, with a balanced approach to avoid excessive risk. The video also analyzes Tesla's recent market rally, attributing it to factors like a potential short squeeze, profits, and new developments in China. The future of Tesla is seen as binary, depending on the dominance of battery-driven vehicles.

What is the primary reason for shorting Tesla's credit rather than its stock?

• The stock is too volatile.

• The credit interest is less expensive.

• The credit interest has become quite expensive.

• The stock has decreased significantly.

Which financial instrument is being shorted in the discussed Tesla trade?

• Tesla's stock

• Convertible bonds

• Credit default swaps (CDS)

• Tesla's equity

Why is shorting convertible bonds considered too risky?

• They have a high interest rate.

• They offer limited upside potential.

• They are not affected by market volatility.

• They are not part of the capital structure.

What is a potential catalyst for profit in the discussed strategy?

• An increase in convertible bond prices

• A positive view on the credit market pricing

• A rise in Tesla's market cap

• A decrease in Tesla's stock price

What is a key factor in Tesla's future success according to the discussion?

• The adoption of battery-driven vehicles

• The development of new factories

• The expansion of credit markets

• The increase in stock market volatility