Elon Musk has a bone to pick with Warren Buffet’s stock picks — his famous Berkshire Hathaway doesn’t include Tesla among its S&P 500 selections.
Responding to a March 26 tweet posted highlighting how Berkshire Hathaway’s portfolio grew from 1994 to 2022, the Tesla and Twitter CEO tweeted one way the famous Oracle of Omaha could’ve done even better.
Or he could have just invested in Tesla at $200M market cap when he had the opportunity to do so
— Elon Musk (@elonmusk) March 27, 2023
In February, Musk claimed that in late 2008, Warren Buffett’s Berkshire Hathaway partner Charles Munger passed on the chance to invest in Tesla at its $200 million valuation.
In response to a different Tweet at the time asking what stocks Berkshire Hathaway should buy, Musk replied, “Starts with a T....”
By the numbers, it’s hard to argue with the assertion. Tesla is worth nearly $600 billion today, and a $200 million investment at the end of 2008 would be worth $599 billion today. That’s an unheard-of 299,208% increase.
By comparison, Berkshire Hathaway is up 339% over the same span. That difference has made Musk the second-richest person in the world with a net worth of $177 billion, per Bloomberg, while Buffett comes in at fifth with a paltry by comparison $105 billion.
Perhaps adding insult to Musk’s perceived injury, Buffett owns stakes in a pair of Tesla competitors. Berkshire Hathaway holds 12% of Chinese elelectric vehicle producer BYD and 4% of General Motors.
What’s more, Buffet owns a large stake in index funds that own the S&P 500, and Tesla is the eighth-largest weighted stock in the index.
What Musk left out is Tesla’s volatility, often caused by his own tweets. Tesla shares tumbled more than 45% from the S&P 500's 2022 January peak to the 2022 low, while Berkshire Hathaway only fell 12.1%, half of what the S&P 500 lost as a whole.
The proof is in the beta numbers, which represent risk relative to the market. Berkshire Hathaway’s beta is 0.96, making it slightly less risky than the overall market. Tesla meanwhile clocks in at 1.65, or 65% riskier than the market.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
Follow him on Twitter @andrew_kessel