Tesla Inc (TSLA)

[rolvram]

Christopher Dungeon
@ChrisDungeon
·
Nov 17
Replying to
@ChrisDungeon
Note: My 25% (subjective) probability is not a formal mathematical calculation.

Instead, it is my own personal belief and judgment that an accumulation of at least some small scale (less than $1B) is currently happening behind the scenes.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
1. Charlie Munger recently had nice things to say about $TSLA & Elon Musk after having just been negative on Tesla in February of this year.

Why the sudden change?

Because you don't talk bad about a company you own.

Becky Quick in a recent CNBC interview never followed up with
Christopher Dungeon
@ChrisDungeon
·
Nov 17
Munger to ask if he or Berkshire was accumulating $TSLA. That would normally be an immediate follow-up question but likely never asked because that talking point was off the table prior to the interview taking place.

While Buffett & Munger love a good deal, they are willing
Christopher Dungeon
@ChrisDungeon
·
Nov 17
to pay a fair price for a good/great business. That's their motto now.

They would love to scoop up $TSLA at even cheaper prices today (most people think TSLA is still overvalued at these levels. It's not. Those people are just lazy in their evaluation models, or have none), but
Christopher Dungeon
@ChrisDungeon
·
Nov 17
I believe they are more interested in protecting the bottom since it's on their balance sheet now, possibly at prices >$200.

Munger's positive statements on $TSLA & Elon could have an anchoring effect.

Elon also had nice things to say about Munger in response to his interview
Quote Tweet
Elon Musk
@elonmusk
·
Nov 15
Replying to @Umbisam
Mr. Munger’s words are much appreciated
Christopher Dungeon
@ChrisDungeon
·
Nov 17
2. Buffett & Munger love when a companies stock is disconnected from the underlying business fundamentals.

This creates opportunity.

They've taken advantage of countless similar situations.

3. They don't care about macro when investing in individual businesses.

Google it.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
4. It behooves Elon, Buffett & Munger to get along.

Why?

Because Elon owns a lot of $TSLA stock and Berkshire has the capital to buy large chunks directly from Elon.

5. Berkshire's stock purchases are a self-fulfilling boost. If a 13F is filed mid-Feb 2023, then it'll
Christopher Dungeon
@ChrisDungeon
·
Nov 17
automatically send shares up making any additional $TSLA purchases for Berkshire that much more expensive on the open market.

Remember, Berkshire started small with their $AAPL investment, then they went in heavy totaling $5B.

Will Buffett & Munger do the same here or will they
Christopher Dungeon
@ChrisDungeon
·
Nov 17
want to make the bulk of their purchases in secret prior to that mid-Feb 13F. It would be in their best interest to do just that.

6. Elon hasn't talked much positive about $TSLA lately. He's been pretty quiet.

Weird, right, but why?

If you knew heavy hitters in your
Christopher Dungeon
@ChrisDungeon
·
Nov 17
corner were buying, then why would you make it more expensive for them to acquire.

Secondly, if they're buying, then Elon can feel some comfort in knowing $TSLA is being backstopped by the best long-term investors out there.

7. Berkshire recently sold off BYD shares
Christopher Dungeon
@ChrisDungeon
·
Nov 17
Does it make sense that Buffet & Munger would take some BYD off the table and roll that into $TSLA, an American company with plenty of BEV exposure in China?

I think it makes perfect sense.

8. Geico

Berkshire is likely seeing a hit to their accounts thanks to $TSLA insurance.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
This is something that Buffett & Munger can see as it's happening. Why sit there while $TSLA takes small (and eventually large) bites out of your business.

Insurance Float is Berkshire's moat. They want to protect that at all costs and will likely partner with TSLA in the future
Christopher Dungeon
@ChrisDungeon
·
Nov 17
9. Munger lives in California

So what?

So he would see that Tesla vehicles and charging stations are all over the state.

$TSLA is literally the No. 1 selling vehicle (not just EVs) in CA. Easy to take notice and see the disruption.

10. What about Bill Gates shorting $TSLA?
Christopher Dungeon
@ChrisDungeon
·
Nov 17
Buffett is friends with Gates but Buffett's not going to let that affect any investment decision he makes on Berkshire's behalf. No one bats 1.000, and Gates clearly misunderstands $TSLA. Bill's Ego is getting the best of him here.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
11. Berkshire's upcoming 13F filed mid-Feb 2023 is roughly 90 days away.

That's a long time to accumulate a large sized portion of $TSLA before anyone even catches on.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
12. $TSLA has pricing power. They were able to raise prices throughout 2021/2022 in the US with limited demand destruction. Buffett loves pricing power.

13. Buffett didn't think twice about $AAPL until he saw everyone had an iPhone. Similar moment happening in the US with Tesla.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
14. Berkshire suffers from the Law of Large Numbers. To move the needle they need to invest large sums of money in growing businesses. That's a lot harder than it sounds.

$TSLA's high growth rate and favorable operating margins are exactly what Berkshire needs to grow at scale.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
15. Buybacks

On $TSLA's Q3 earnings call Elon mentioned that the Tesla Board will meet to vote on any upcoming share buyback.

Buffett loves buybacks.

Why?

Because this is excess capital (after all expenses & capex requirements) that go into making his share of the pie bigger.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
16. Elon specifically mentioned that $TSLA buybacks were a possibility in 2023, not Q4

If he knew Buffett & Munger we're accumulating $TSLA in Q4 then it would make no sense for Tesla to compete with Berkshire in buying TSLA in Q4. The announcement alone would raise share prices
Christopher Dungeon
@ChrisDungeon
·
23h
17. Buying $TSLA now is the ultimate contrarian move. Nobody wants to touch it. PMs don't care about the underlying fundamentals. They care more about Twitter and Elon selling more shares. Elon's sales have absolutely zero to do with Tesla's value. Zero.

Buffett thinks long term
Christopher Dungeon
@ChrisDungeon
·
23h
18. $TSLA CEO succession plan

At a minimum, Buffett & Munger would want a definitive plan in place. They've done it for Berkshire and asked all of their subsidiary CEOs to do the same.

19. Bitcoin sell-off

Munger detests Bitcoin. Wouldn't be surprised to see a zero balance.
Christopher Dungeon
@ChrisDungeon
·
22h
20. $TSLA Semi

Berkshire owns McLane (trucking) Company and is set to acquire Pilot Flying J in 2023. Pilot Flying J is a chain of truck stops in the US & Canada.

If Semi takes off, TSLA is a good hedge in setting up partnerships with Megacharging & efficient Semis for McLane.
Christopher Dungeon
@ChrisDungeon
·
Nov 17
Replying to
@ChrisDungeon
What probability would you assign?

Don't think in certainties, think in probabilities.

Those responding that'll it'll never happen are just as unrealistic as those saying it's ?? certain.

Not everything is binary. Use your brain and put some thought into it.
Christopher Dungeon
@ChrisDungeon
·
19h
For those asking about BYD, Berkshire recently sold several times with two instances occurring this month (right near Elon selling $TSLA):

1: https://reuters.com/markets/deals/berkshire-trims-stake-chinas-byd-h-shares-worth-hk560-million-filing-2022-11-04/

2: https://reuters.com/markets/deals/berkshire-hathaway-sells-145-mln-shares-chinas-byd-filing-shows-2022-11-11/

3: https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-byd-china-ev-stock-sales-auto-2022-9
reuters.com
Berkshire trims stake in China's BYD H-shares worth HK$560 million - filing
Berkshire Hathaway Inc, the investment firm owned by Warren Buffett, has sold 3.297 million Hong Kong-listed shares of electric vehicle maker BYD for HK$560.05 million ($71.35 million), according to...