On the second trading day after the announcement that Tesla will be included in the major S&P 500 index, the stock has continued to soar. After a gain of 8 percent on Tuesday, it again increased by 10 percent on Wednesday and approached its all-time closing record of just over $ 500 at $ 486. One investor took the upcoming index inclusion as an opportunity to deal precisely with the question of where large blocks of Tesla shares are. He came across a strange loophole – and an online newspaper found evidence that the famous investor Warren Buffett had invested heavily in an unnamed company.
Looking for a new Tesla investor
According to his calculations, 50 million shares of Tesla would be “missing”, wrote the Twitter user @FrankPeelen on Wednesday, who is intensively concerned with the paper. Of course, they haven’t really disappeared, but according to stock market reports at the end of the third quarter of 2020, they were no longer to be found in the portfolios of large investors who have to report on their positions. At prices around $ 400 – around this level, Tesla shares stood for the majority of the quarter – that makes around $ 20 billion.
That is too much to explain it with purchases from private investors, writes @FrankPeelen. After sales by some funds in the third quarter, he had therefore firmly expected to find a Tesla block with another institutional investor, but nothing can be found in the reports. The private analyst cites the most likely explanation that the new major investor does exist – but that he keeps his stake in Tesla a secret.
Thread on Berkshire Hathaway and Tesla.
Yesterday, I pointed out in this quoted thread that, based on data I gathered from 13F filings, a large number of TSLA shares seem to have gone missing during Q3, to the tune of 100M shares. https://t.co/FXnCX22geQ
– Frank Peelen (@FrankPeelen) November 18, 2020
Shortly afterwards, the analysis became even more interesting. Because also on Wednesday the online newspaper NewsABC.net (BI) reported that the investment company Berkshire Hathaway, led by the investor legend Warren Buffet, had recently established a new position and had been approved by the stock exchange supervisory authority, initially not providing broad information. “Confidential information has been left out of the 13F public report for the third quarter,” said Berkshire.
11 unexplained billions at Berkshire
For analysts interviewed by BI, it was clear that Buffet’s company was investing in another company on a substantial scale, but names were not mentioned. @FrankPeelen, however, took up the information and calculated that Berkshire had last undocumented the use of about 16.5 billion dollars. That is about three times as much as in previous quarters.
Some of the missing Tesla shares could be held by trading companies that bought themselves against the expected index inclusion, writes @FrankPeelen, and part of the gap at Berkshire can be explained by investments in Japan. But there is still a discrepancy of about $ 11 billion. And for such a sum, there are only a few investment goals in question, because anyone who buys a stake of more than 5 percent in a company must definitely inform in the USA. So the total market value of Buffet’s new investment must be at least $ 220 billion. There are only 25 of them on US stock exchanges – and one of these heavyweights is Tesla.
Enough Tesla advantage for buffet?
After this analysis, there was intense discussion on Twitter about the possibility that the buffet, known as a frugal investor, had invested heavily in Tesla. The fact that he has already invested in Tesla’s Chinese competitor BYD speaks against this. According to the blog Electrek, Berkshire also owns many US auto dealers who lobby against Tesla’s direct sales model and the largest electric company in the state of Nevada, which has campaigned for worse conditions for private photovoltaics there.
Nevertheless, it cannot be ruled out that Berkshire is now also trying to achieve above-average returns with Tesla. Admittedly, Buffet only invests in companies whose business he understands well, and the technology sector is not one of them. But he is now being advised by younger specialists, it said on Twitter, and despite the high rating, they could have found good investment arguments for Tesla: Buffet prefers companies that have a secure lead (“moat”) over their competition seem to be.