Saudi Arabia’s PIF used an equity collar to reduce its exposure to price movements of Tesla’s shares.
As per a report by the Financial Times, Saudi Arabia’s Public Investment Fund (PIF) has reduced its exposure to Tesla Inc.
Saudi Arabia’s sovereign fund, with help from JPMorgan Chase, hedged most of its 4.9% stake in Tesla after the market closed on January 17, said the Financial Times.
Incidentally, on January 18, Tesla had stated, it would slash thousands of jobs to rein in costs as it plans to boost the production of its lower-priced versions of the Model 3 sedan; the news had sent it shares down by nearly 10%.
PIF still holds the shares, but has little exposure to the stock’s movements.
According to the Financial Times, PIF used an equity collar in its hedging program to slash its risks to Tesla’s shares.
Equity collars are instruments that are costly to finance and have become popular in the Middle Eastern and among Asian investors.
Both, Tesla and PIF declined to comment.