Elon Musk's Investment Advice To Warren Buffett — Invest In Company That 'Starts With A T...'

Zinger Key Points
  • Berkshire's cash position stood at over $128 billion at the end of 2022, up from around $109 billion at the end of September quarter.
  • The company has not been paying cash dividends since 1967 but bought back $2.6 billion worth of its shares in Q4.

Berkshire Hathaway, Inc.’s BRKA BRKB fourth-quarter earnings report released on Saturday showed that the investment-holding company’s cash position at the end of the year increased from the September level.

What Happened: Tesla TSLA CEO Elon Musk offered an opinion for investing the cash reserves of the Warren Buffett-led company.  He was responding to a trader’s tweet soliciting opinions regarding the stocks Berkshire can buy with the $128 billion+ cash it holds.

“Starts with a T…,” the billionaire replied, apparently referring to his flagship electric vehicle venture Tesla.

Musk followed it up with a tweet in which he said Charlie Munger had the choice to invest in Tesla way back at a valuation of around $200 million when both had lunch together almost 15 years ago. Munger is Buffett’s trusted lieutenant and second-in-command at Berkshire in his capacity as Vice Chairman. 

This is not the first time Musk is recounting the incident that transpired between him and Munger. In reply to a tweet in February 2022, the Tesla CEO said he had lunch with Munger in 2009, when the latter discussed all the ways Tesla would fail. While agreeing with Munger on Tesla potentially failing, Musk apparently said it was worth trying anyway.

See also: Everything You Need To Know About Tesla Stock

Why It’s Important: Musk’s rendezvous with Munger, going by the timeline the former mentioned, apparently took place ahead of Tesla’s IPO on June 29, 2010. Since then, Tesla has grown in rank and is currently a mega-cap company with a market capitalization of roughly $623 billion. Tesla bull Cathie Wood expects the stock to hit $500 by 2026, up from the current $196.88, considering only the EV part of the Tesla story. If the autonomous ride-hailing opportunity is also accounted for, the stock could hit north of $1,500, she said.

Meanwhile, Buffett said in his annual letter to shareholders that Berkshire will hold a boatload of cash and U.S. Treasury bills, along with a wide array of businesses, in the future. He also suggested that the company will not indulge in any activity that could result in any uncomfortable cash needs at inconvenient times, including financial panics and unprecedented insurance losses.

Buffett’s philosophy has always been making value buys and holding those investments for the long term. While Berkshire per se does not pay out dividends, a significant portion of its investment holdings pays dividends. So, it remains to be seen if Tesla would make the cut for a Buffett investment.

Read next: Warren Buffett Says In 58 Years Of Managing Berkshire His Decisions 'No Better Than So-So': Here's His 'Secret Sauce'

Photo: Fortune Live Media and Haddad Media on flickr

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Posted In: NewsTrading IdeasCharlie MungerElon MuskWarren Buffett
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