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Buffett Comments Applied to TSLA

MSEV

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Aug 10, 2014
465
98
Nebraska
Robert L. Bloch (H&R Bloch) is coming out with a book called, "My Warren Buffett Bible."
In my local paper, given that I live in Omaha, where Berkshire Hathaway is and WB lives, there is a running Sunday morning article about bits and pieces surrounding WB. Four quotes of Buffett's were cited in the paper from Bloch's book. I, as an investor of TSLA, enjoyed the four quotes and provide them here for your thoughts and comments:

1: "Buy into a company because you want to own it, not because you want the stock to go up."

2: "The difference between successful people and very successful people is that very successful people say 'no' to almost everything."

3: "The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rther determining the competitive advantage of any given company and, above all, the durability of that advantage."

4: "The lower prices go, as long as you know the company you're investing in, the better it is for a buyer. Down days always make me feel good."

For me, number 1 is a large part of why I invested in TSLA.

Number 2: I believe I have heard this about Elon in reading Elon Musk's recent biography. It doesn't say that, specifically, but I imagine he says no to a lot of things. He said no to a lot of things before picking to go to Mars and to save earth in his way with transformative energy and a viable EV now.

Number 3: I believe TSLA has a huge advantage, that advantage continues to grow, and when people wake up to it, TSLA will prove to have been a very good investment.

Number 4: TSLA is on sale now. Live long and prosper.
 

MSEV

Member
Aug 10, 2014
465
98
Nebraska
Based on which Buffett or other noted value investor metric(s) is Tesla "on sale" at the moment?

Buffett and Munger invest in companies that couldn't be further apart from companies like Tesla.

My point is not that Buffett or Munger would invest in TSLA; I agree, they say no to stock like TSLA. In fact, in a somewhat contrary fashion, they bought a large group of dealerships rather recently.
Number 4 is about TSLA is going down, meaning it may be a time to buy. Perhaps I am wrong in my thinking, but TSLA is about $30 or more less than a week ago.
 

SteveG3

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Based on which Buffett or other noted value investor metric(s) is Tesla "on sale" at the moment?

Buffett and Munger invest in companies that couldn't be further apart from companies like Tesla.

Couldn't disagree more. It's valuation based on future earnings that Buffett uses to make his stock decisions. That's the precise kind of analysis I used to decide to get into Tesla in 2012. It's on that very same basis that Tesla is over 30% on sale now, which is when I consider it a clear buy.
 

SteveG3

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Buffett does not invest in technology, this approaches that criteria.

Buffett does not invest in businesses he does not understand. He's less likely to understand a "technology" stock than other businesses. Buffett's Berkshire Hathaway invested $230 million in Chinese electric car maker BYD in 2008.

I never invested in any of the internet, computer hardware or software stocks because I felt no confidence I could predict how these inter-related markets would develop in the future, and which companies would have outsized earnings growth. I feel the same way about stocks based on consumer trends like fashion, even though they do not involve much of any technology. By contrast, I feel more confidence in my ability to predict the growth of the EV market, and Tesla's outsized earnings growth given it's position in that market than any other business I've ever looked at.

For so long I've thought Tesla was a stock Buffet would love I actually tweeted him the day before Tesla's Q1 2013 earnings call, which then began the massive rise in Tesla's price. I never thought he'd read or respond to the tweet (he probably didn't) but here's exactly what I wrote (Tesla went on to raise a billion dollars in a secondary a week after the tweet):

Steve H@vistacruiser7 7 May 2013
@warren_buffet need owning BYD preclude you from looking at Tesla? a 5-10% secondary would be in your spending range.



3:26 PM - 7 May 2013 · Details






 
Last edited:

tftf

Member
Sep 19, 2013
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Hop Sing Laundry
Couldn't disagree more. It's valuation based on future earnings that Buffett uses to make his stock decisions.

Valuation based on future earnings? Still doesn't make Tesla or similar companies a Buffett/Munger stock, quite the opposite.

As others noted he owns stakes in traditional car dealerships:

Warren Buffett not worried about Tesla: CNBC - MarketWatch

You also picked a fake Twitter account, he uses @warrenbuffett and only sent out a handful of tweets since 2013:

Warren Buffett (@WarrenBuffett) on Twitter
 

SteveG3

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Valuation based on future earnings? Still doesn't make Tesla or similar companies a Buffett/Munger stock, quite the opposite.

As others noted he owns stakes in traditional car dealerships:

Warren Buffett not worried about Tesla: CNBC - MarketWatch

You also picked a fake Twitter account, he uses @warrenbuffett and only sent out a handful of tweets since 2013:

Warren Buffett (@WarrenBuffett) on Twitter

tftf, as to your assertion that valuation based on future earnings makes Tesla quite the opposite of a Buffett stock, here are the opening two sentences of the Investopedia article, "What is Warren Buffet's Investing Style"


"If you want to emulate a classic value style, Warren Buffett is a great role model. Early in his career, Buffett said, "I'm 85% Benjamin Graham." Graham is the godfather of value investing and introduced the idea of intrinsic value - the underlying fair value of a stock based on its future earnings power."

What Is Warren Buffett's Investing Style?


As to the tweet. Indeed, the account I tweeted that message to in May 2013 under the impression it was Buffett's has now been suspended. Extremely unlikely it was ever Buffett's. Alas, had I not fallen for the presumably fake account, Buffett might be a fellow Tesla investor today.


 

SteveG3

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Munger pushed buffett into BYD, Munger fell in love the the CEO. Buffett went along to get along.

Drax7, I've heard that too. Perhaps it was Buffett that said it, I don't know. They often kid about how they arrive at decisions. All that said, I think there's far more to Buffett's interest in EVs than going along to get along. Probably a stock Munger found, became extremely bullish about, told Buffett, which eventually led Buffett to look deeply, and came to his own conclusions. I say this because of the quote below. While I could believe Buffett would agree to a $250 million investment simply on Munger's say-so, I find it hard to imagine Buffett would make such a bold statement as this without his own analysis of facts and reason convincing him it is justified. The last thing Warren Buffett is is a guy who goes around making bold proclamations without having done any homework.

"Buffett to proclaim: "In 20 years, all cars on the road will be electric"."

http://sufiy.blogspot.com/2009/11/warren-buffett-in-20-years-all-cars-on.html



 

tftf

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Sep 19, 2013
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Hop Sing Laundry
tftf, as to your assertion that valuation based on future earnings makes Tesla quite the opposite of a Buffett stock, here are the opening two sentences of the Investopedia article, "What is Warren Buffet's Investing Style"

"If you want to emulate a classic value style, Warren Buffett is a great role model. Early in his career, Buffett said, "I'm 85% Benjamin Graham." Graham is the godfather of value investing and introduced the idea of intrinsic value - the underlying fair value of a stock based on its future earnings power."

What Is Warren Buffett's Investing Style?


As to the tweet. Indeed, the account I tweeted that message to in May 2013 under the impression it was Buffett's has now been suspended. Extremely unlikely it was ever Buffett's. Alas, had I not fallen for the presumably fake account, Buffett might be a fellow Tesla investor today.


I don't have time to discuss value investing in general and why TSLA is the exact opposite of that investing approach imho.

Future earnings/cash-flows have to predictable and as stable as possible for one - and a company most often has to demonstrate this potential already at present, neither is true with Tesla.

Please read some good books on value investing (Graham, Klarman, Pabrai...) if you haven't already. Investopedia just offers short introductory blurbs without depth imho.
 

SteveG3

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tftf, you don't owe any of us the acknowledgement that what you have said in our discussion is factually false.

I do however hope that you realize you can acknowledge it to yourself (I'm quite confident a willingness to do so will be of benefit to you, on this and matters far more significant than Tesla),

so no public acknowledgement from you is needed. you don't owe it to us, and we don't need it from you as anyone can plainly see for themselves what's false in your statements in:

-our discussion in this thread

-our discussion in this other thread,

No Model III until 2019? - Page 4

-and finally, the calls on Tesla as an investment you and I have made on Seeking Alpha... mine long since 2012, you, bearish in thousands of posts since Tesla hit $70 in 2013.

as to the investopedia quote... of course it's not the source of my learning about Buffett's investing philosophy. it was simply the first concise description of Buffett's philosophy that turned up in a google search last night as I wrote that post.
 

tftf

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Sep 19, 2013
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Hop Sing Laundry
-our discussion in this other thread,

No Model III until 2019? - Page 4

-and finally, the calls on Tesla as an investment you and I have made on Seeking Alpha... mine long since 2012, you, bearish in thousands of posts since Tesla hit $70 in 2013.

I don't see anything posted by me on that linked page 4, can you elaborate?

PS: My short position is at $225 blended, not $70.
 

SteveG3

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I don't see anything posted by me on that linked page 4, can you elaborate?

PS: My short position is at $225 blended, not $70.

tftf,

I posted a link to the page where I saw your first extremely implausible assertions in that thread in post #133. You added a number of additional posts expanding on these implausible assertions, and the two of us later exchanged a few posts downthread. You had tried to present LG Chem and Samsung battery contracts with other automakers as support for your assertion that the Model 3 would face a "sea" of mass market long range EV competition by 2018-2020 (from "at least 5-10" other automakers). I had illustrated that the number of long range EVs which the volume of battery production those contracts could support were not even close to a scale that would impact Model 3 sales. The last of my posts on this was in January 2013, post #189. You never posted again on that thread, and thus never answered a direct question I had proposed to you. That's the best place for the discussion of this topic if you'd like to respond to my post there now.

I didn't say you had a short position on Tesla at an average price of $70, I said you have written thousands of bearish posts on Tesla since the stock was at $70. As to whether you're "blended" price on your short is $225, that's your business as to whether or not you are making another false statement here on TMC.

ps please don't take any of this personally. I can assure you that if I saw someone making false statements to you on TMC that could mislead you, I would also make an effort to expose the falsehoods you had been presented, to help you avoid being misled by another member.

- - - Updated - - -

SA is populated by the lowest form of life, considerably below invertebrates.
Would not be surprised if they are complicit in some malfeasance .

SA is an environment where false statements in the "articles" and comments are allowed (and thus mushroom), while comments that point out such false statements are removed as an "accusation of bad faith." True story, last month someone posted an "article" on SA, claiming in a graph that the average sale price of the Model S had fallen to some figure in the $60,000s. I pointed out that beyond being obviously false to anyone following the company, it was mathematically impossible for the average price to be below the starting price of the base Model S without any options ($70K). My post was later removed as an "accusation of bad faith." As to the author, he changed the numbers in his graph with absolutely zero acknowledgement of the original error or the fact that the graph had been changed (or the article updated at all).

There are several posters on Seeking Alpha who have each written literally thousands of posts on Tesla, every last one negative, very often taking advantage of SA turning a blind eye to false statements.
 

tftf

Member
Sep 19, 2013
811
204
Hop Sing Laundry
You had tried to present LG Chem and Samsung battery contracts with other automakers as support for your assertion that the Model 3 would face a "sea" of mass market long range EV competition by 2018-2020 (from "at least 5-10" other automakers). I had illustrated that the number of long range EVs which the volume of battery production those contracts could support were not even close to a scale that would impact Model 3 sales.

I stand by that prediction more than ever given recent developments.

I would only add that LG Chem will likely get much of the advanced Li-Ion business with large car makers in 2017-2020 unless Samsung can quickly catch up and sign more big customers (in addition to BMW) or unless there is an unexpected battery break-through from a new entrant/supplier (unlikely until 2020 given the long battery testing and car development lead times).

We will see how well the new LG Chem batteries perfom in detail once the GM Bolt ships (very likely their first customer to market). That will put Samsung and the other large competitors into overdrive.

Coming back to value style investing this could result in very unpredictable cash-flows, margins and market share (especially since batteries traditionally are a very low margin-business in EV/stationary use).
 

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