Whitney Tilson’s e-mail to buyers discussing to not buy Uber (or another IPO); Stamps is blowing up once more; My presentation on Charlie Munger; The 5 calamities that may destroy your life; Why it is best to get a new automotive; Extra Tesla Inc (NASDAQ:TSLA) debate.
Ben_Kerckx / Pixabay
A reader wrote in response to my final e mail:
This is some of the worst analysis I have ever seen.
1. Please tell us one factor Elon received incorrect in the battery swap demo. One. Never stated it’s coming. Just what’s attainable. While persevering with to improve charging to v2 and v3 which, oh by the method, all the Teslas can take benefit of by way of OTA updates.
2. Nobody believes autonomous driving will take 20 years. Business autonomous deployments have already begun! (Lyft/Waymo, Ford/Argo, Voyage, Optimus Journey)
A pal’s response to 1:
The primary sin of the battery swap demo was that it was going to be deployed in change for the quantity of ZEV credit per Tesla automotive bought to be many more. Relying on the yr, I assume it was as many as five additional ZEV credit per automotive bought. Every credit has a worth of as much as $5,000. So, as much as $25,000 per automotive bought. That’s pure gross margin.
Tesla collected these credit for years. Nevertheless it by no means deployed the battery swap in any significant method. There was a station situated subsequent door to Harris Ranch, Coalinga — a converted automotive wash, if I recall appropriately. It by no means opened to the public. You have been alleged to make an appointment, ages prematurely (who knows exactly what minute they may show as much as an interstate street stop, months prematurely?). It was by no means clear whether or not any non-Tesla employee or “close friend of the firm” ever tried it out. I’m positive Tesla technically performed some promised quantity of them and logged them in a log guide, but the station by no means opened to the public in any meaningful sense of the phrase.
I overlook what number of additional a whole lot of hundreds of thousands of dollars Tesla collected in incremental ZEV credits from this rip-off. Tesla’s pals in Sacramento made positive the problem “disappeared” in phrases of doing any proper audit. The “Mid Term Exam” was primarily ignored and no one was prosecuted.
For Memorial Weekend 2015, Ed Niedermeyer went to the website, put up a tripod and recorded the non-activity for the weekend: https://dailykanban.com/2015/05/tesla-battery-swap-unused-over-busy-holiday-weekend/
It was lifeless as a doornail. Not a single battery swap, regardless of the busy North-South California travel weekend.
Nevertheless, immediately subsequent door, Tesla has one of its first Supercharger stations. Ed Niedermeyer went over to film the activity there too:
Look, what have we right here? Tesla is feeding its Supercharger with a diesel generator. That’s the dirtiest variety, in all probability on the order of a thousand Volkswagens. Yet, Tesla is getting up to $25,000 incremental Zero Emissions Car credits per automotive bought, for a pretend battery-swap facility, paid for by other automakers because they’re allegedly dirtier than Tesla. You’ll be able to’t get any more hypocritical than this.
This was, for my part, one of the largest scams and frauds on this entire story. Seeing as the politicians and their bureaucrats in Sacramento, CA, are so favorably disposed to Tesla, it actually should be a matter that the Federal U.S. Department of Justice ought to research.
And response to 2:
These “commercial deployments” have, as of at present, exactly as many people sitting in the driver’s seat as the very first vehicle as the first automotive ever made, the 1886 one from Karl Benz. They don’t seem to be driving in common visitors — city, suburban, highway — intermingled with automobiles, vans, buses, development gear, and so forth — in any type of weather, at full legal speeds, and not using a individual in the driver’s seat.
So in other phrases: The product doesn’t but exist. There was no public reaction to a very common driverless automotive — either by individuals driving in that automotive, or amongst individuals round that automotive.
Keep in mind Apple’s Newton? That little pen-based factor? It was going to take over computing –imminently. It was just a matter of one or two more semiconductor iterations and extra software program refinement. Executed deal!
1) In case you’re tempted to buy into Uber’s much-anticipated IPO tomorrow (or any of the different shares in the crop of current tech choices), I have a single phrase of recommendation for you: DON’T! I wrestle for words to heap enough scorn on these IPOs. In virtually all instances, insiders and professional buyers – with assistance from Wall Road’s smooth-talking salespeople – are foisting overpriced dreck on the public.
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Q1 hedge fund letters, convention, scoops and so forth
Don’t comply with in the footsteps of the poor suckers who bought into Lyft’s (LYFT) IPO on March 29. On that day, the inventory traded as high as $88.60… and it has been all downhill ever since. After issuing its first earnings report as a public firm on Tuesday, the inventory fell 11% to shut at $52.91. It is now down 40% from its peak.
Buffett and Munger have been asked about IPOs by CNBC’s Becky Fast in an interview earlier this week (click right here and skip to 1:12:56). This is an excerpt from their replies:
Buffett: I don’t assume Berkshire’s ever purchased a new situation. I imply, the concept of saying that the greatest place in the world I can put my cash is something the place all the promoting incentives are there, commissions are larger, the animal spirits…
That is going to be higher than a thousand different issues I can purchase the place there is no comparable selling enthusiasm and the want to get the deal carried out and the additional commissions… that is the single neatest thing to purchase on a given day?
Munger: I can’t assume of a time we’ve ever achieved it… we’ve never purchased one.
Buffett: It just does not make any sense. We like to buy issues the place no one’s making a dime promoting them to us.
Munger: There’s lots of lying in trendy finance.
2) It is so painful to observe Stamps.com (STMP) blowing up. The inventory fell more than 50% in a day when it reported fourth-quarter earnings in February, and it’s doing so once more in the present day after releasing first-quarter earnings after the shut yesterday.
I do not keep in mind the final time I recall an organization of any measurement – this one had a market cap of $5 billion less than a yr in the past – having two 50%-plus down days in such a short period. Take a look at the three-year stock chart…
It is painful to observe because I was brief the stock a number of years ago in the hedge funds I managed. My investment thesis is recapped in two write-ups in 2016 on ValueInvestorsClub.com – click here and right here to read them. (There was also an extended pitch on the website in 2017.)
The stock had already greater than tripled to more than $100, and I figured it couldn’t go any greater – nevertheless it tripled once more!
Shares have fallen almost 90% in the previous yr as my brief thesis is enjoying out – finally! The short-sellers who had good timing on this (as many did – the brief curiosity is almost 20%) have achieved properly. However it’s chilly comfort to those like me who received in too early.
There are three huge classes here:
- Brief-selling is a troublesome enterprise.
- Being right on the timing/catalysts is especially essential on the brief aspect.
- Anytime you’re contemplating buying a inventory with a excessive brief curiosity, you had better work out precisely what the brief thesis is and do additional work to ensure the shorts are flawed… or you’ll get destroyed!
3) Last weekend in Omaha, I gave a presentation on Munger to a roomful of CEOs. In it, I took an in-depth take a look at his whole life, and concluded with my favorite “Mungerisms” – his timeless phrases of knowledge. (We made a video of my speak, which can soon be made out there to Empire Investment Report subscribers. Click here if you would like to subscribe.)
My two favorite Mungerisms are:
Spend each day making an attempt to be a bit of wiser than you have been whenever you awoke. Discharge your duties faithfully and nicely. Step-by-step you get ahead, however not necessarily in quick spurts. But you build discipline by getting ready for quick spurts. Slug it out one inch at a time, daily. At the end of the day, when you reside long sufficient, most individuals get what they deserve.
All I need to know is where I’m going to die, so I’ll by no means go there.
When Munger made this remark at a Wesco annual assembly way back, the crowd laughed, but Munger stated:
No, I’m critical. Once you reach a certain position in life, you need to spend most of your time making an attempt to keep away from the things that may derail your life and send you again to Go (or worse).
What occurs to too many individuals, nevertheless, is that, even once they’ve obtained it made, they can not help however lean out to grab the brass ring – and fall, bringing themselves to destroy.
I’ve actually taken this to coronary heart – and it has made a huge difference in my life. I’m naturally an optimistic individual, however because of Munger, I’ve spent lots of time learning and interested by the calamities that would derail my life. I’ve boiled them down to those five:
- Demise or critical damage to your self or a liked one
- Being in a nasty marriage or struggling a completely impaired relationship with a liked one
- Loss of fame/freedom
- Loss of wealth
Relating to the second one, I’ve already gone by means of part of it, sharing the 12 questions to ask earlier than you marry someone (summarized in my April 5 e-mail).
At present, I’d wish to share some ideas on the first one: demise or critical damage to yourself or a liked one. Throughout my speak last weekend, I shared one example about automotive security – particularly, not giving the previous household automotive to the kid going off to school – which led a lady in the audience to send me this e-mail:
I really loved your presentation – partaking, thought-provoking, refreshingly trustworthy.
I was the one that all of a sudden, in the midst of you mentioning the foolishness of handing down our oldest and least protected automobiles to our most inexperienced teenage drivers, jumped up and stated I had to go buy a new automotive proper this very minute. As a result of I realized how clearly right you have been, and felt type of ashamed provided that I am type of a nut about safety myself.
Anyway, thought you’d have an interest to know that I obtained a text at midnight Friday night time: my 17-year-old son was in a automotive accident. He’s okay – thank God. However the 2010 Prius we had handed right down to him was totaled. So, we’re safest-car purchasing this week, as you possibly can think about.
For my thoughts on this, see my brief, nine-slide presentation here and this text that I revealed a yr in the past: Why you must get a brand new automotive. Excerpt:
Ever since my spouse fell asleep at the wheel last November and received in a daunting accident, I’ve turn out to be a total zealot about automotive security, telling anybody who will pay attention that if they’re driving a automotive without the most advanced security options, get a brand new automotive now (if they will afford it; if they can not, then get the most secure automotive they will afford every time they’re getting a brand new one)…
Automotive accidents in 2016 killed 37,461 individuals on U.S. roads, up 14% in two years after a half-century of steady declines. Specialists aren’t positive why auto fatalities are rising, but I’m convinced that it’s probably as a result of growing electronic distractions. It is so easy for drivers nowadays – myself included now and again, I’ll confess – to take their eyes off the street as a result of of an incoming name or text, taking a look at Google Maps, and so forth. Our smartphones are always ringing, chirping and vibrating, which is an irritating distraction most of the time – however whenever you’re driving, it may be deadly!
Safety options in new automobiles
The good news is that there’s been a quantum leap in the previous few years in security know-how that may each aid you keep away from many sorts of accidents and, in the event you’re in one, ensure you stroll away unscathed. The more I study the numerous technologies, the extra amazed I am – and the extra decided I turn into to influence as many people as I can to upgrade to safer automobiles!