D.E. Shaw & Co. sold more than half its stake in Nio Inc., last quarter, surrendering its position as the Chinese EV maker’s largest institutional shareholder while leaving its holdings of the company’s convertible bonds untouched.
The New York-based investment firm held 18,204,968 Nio American depositary shares on June 30, down 20,124,300, or 52.5%, from March 31, according to a filing with the US Securities and Exchange Commission last Friday.
The stake was valued at $92.1 million, from $231.1 million three months earlier.
D.E. Shaw ranked fourth among Nio‘s institutional holders at the end of June, from first at the end of March, when its position was 2.6 times the size of the next largest on the register.
Morgan Stanley, the closest holder at that point, reported 14,721,369 shares on March 31 against D.E. Shaw’s 38,329,268.
The Bonds Did Not Move
Nio appears five times in the filing.
Alongside the equity line, D.E. Shaw reported $84,700,000 of Nio‘s 3.875% notes due October 2029 and $38,250,000 of its 4.625% notes due October 2030 — the same principal amounts it disclosed for March 31.
Neither figure changed.
The bonds’ market value did shift, with the 2029s marked at 101.25 cents on the dollar at the end of June, from 102.57 cents at the end of March, and the 2030s at 100.45 cents, from 100.24 cents.
The two remaining lines are options, and both were cut sharply.
Puts referencing 1,592,600 shares fell to 502,400, a reduction of 68.5%, while calls referencing 2,062,200 shares fell to 18,900, a reduction of 99.1%.
The call line had been the larger of the two at the end of March and is now the smaller by a wide margin.
Nio shares closed at $6.03 on March 31 and $5.06 on June 30, a decline of 16.1%.
Two Quarters of Selling
The second-quarter reduction extends one that began in the first.
D.E. Shaw held 48,172,443 Nio depositary shares at the end of December, cut 20.4% by March 31, then cut a further 52.5% over the following three months.
The equity position has fallen 62.2% in six months.
Bond principal ran the other way across the same period, with the 2029 notes rising to $84,700,000 from $74,700,000 and the 2030 notes to $38,250,000 from $27,250,000, taking the combined figure to $122,950,000 from $101,950,000.
The firm has since held that amount unchanged.
Nio issued both bonds in September 2023, each with a $500 million base tranche and a $75 million greenshoe.
Holders can put the 2029s back to the company in October 2027 and the 2030s in October 2028, dates that fall well before either maturity.
Nio’s Register
Morgan Stanley reported 27,411,634 shares after an 86.2% increase on August 13, ranking second at the time behind D.E. Shaw’s March figure.
D.E. Shaw’s filing the following day moved Morgan Stanley to first.
UBS Group AG follows at 19,271,326 shares after a 56.1% increase, then Bank of America Corp. at 18,998,920.
Behind D.E. Shaw sit Renaissance Technologies at 16,161,048, Goldman Sachs Group Inc. at 15,446,712, Aspex Management at 13,141,609 and BNP Paribas Financial Markets at 12,397,069.
BlackRock Inc. reported 9,461,793 shares after an 11.8% reduction, Two Sigma Investments 9,031,336 after a 32.3% cut and Citadel Advisors 8,759,358 after a 33.8% cut.
Susquehanna International Group and Millennium Management moved the other way, reporting 8,292,496 and 6,785,809 shares after increases of 268.9% and 495.7%.
Deutsche Bank AG cut its holding 17.9% while adding to XPeng and Li Auto, and IMC-Chicago more than doubled its position to 2.57 million shares.
D.E. Shaw is not the only holder of Nio’s convertible bonds to have separated its debt from its equity this quarter.
The Chicago firm holds no Nio common stock and no calls.
Other Automakers
D.E. Shaw more than doubled its Rivian holding to 20,832,777 Class A shares from 8,629,435, an increase of 141.4%, lifting the value 178.3% to $361.4 million.
The firm held $5,000,000 of Rivian‘s 3.625% notes on both dates, marked up to 107.12 cents on the dollar from 95.92 cents, while raising calls 4.9% and cutting puts to 50,000 shares from 150,000.
The Tesla equity position was almost unchanged at 4,349,492 shares, down 0.2%, as the value rose 12.9% to $1.83 billion.
Both Tesla option lines shrank, with puts down 33.8% and calls down 41.3%.
General Motors Co. rose 21.8% to 15,000,837 shares while Ford Motor Co. fell 38.6% to 5,561,886.
The firm holds almost nothing outright in the other Chinese manufacturers, reporting a new Li Auto position of 58,469 depositary shares, no XPeng shares and no Lucid common stock, only Lucid calls referencing 627,900 shares.
Deliveries
Nio delivered 107,658 vehicles in the second quarter across its Nio, Onvo and Firefly brands, a 49.4% increase from a year earlier.
The company has yet to schedule its second-quarter results and delivered 35,934 vehicles in July, 11.5% fewer than in June, taking the seven-month total to 227,057.
The Nio brand accounted for 20,008 of the July figure, while the flagship ES9 fell 26.5% from June in its first monthly decline.
The brand’s average selling price eased 1.9% to 434,600 yuan over the same month.
The Pentagon added Nio to its list of Chinese military companies in June, a designation the company has rejected while weighing legal action.
Investment managers overseeing more than $100 million had until August 14 to disclose the positions they held on June 30, and D.E. Shaw filed on the deadline.
