Whitney Tilson’s Email to investors discussing the Tesla debate; 40% discount offer for his shorting conference; crypo & cannabis bubbles; Munger interview; Marcelo Lima on Amazon.
1) I think it’s incredibly healthy for our markets for well-articulated bull-bear debates like this one on Tesla. Here is Andrew Left’s report this morning: Citron reverses opinion on Tesla. Excerpt:
Q3 hedge fund letters, conference, scoops etc
As much as you can’t believe you're reading this, we can’t believe we're writing this!
The most challenging part of being a short seller is to constantly check your thesis to make sure nothing has changed. You must let all predispositions and prejudices disappear and stay focused on only the facts.
It is in that spirit and with a great deal of analysis and due diligence that we can say for the first time, Citron is long Tesla as the Model 3 is a proven hit and many of the TSLA warning signs have proven not to be significant.
It has been almost 5 years since Citron published the following line:
“By the time this product is even approaching market, there will be multiple other 200-mile range plug-ins that have been out for years.”
Rumors of the Tesla killers have been as constant and unfounded as Bob Lutz's call for Tesla's bankruptcy.
While the media has been focused on Elon Musk’s eccentric, outlandish and at times offensive behavior, it has failed to notice the legitimate disruption of the auto industry that is currently being DOMINATED by Tesla.
What has changed??
Here is Anton Wahlman’s response just out: Why Citron Is Wrong on Tesla. Excerpt:
Andrew Left's 'fundamental' reasoning behind suddenly going from hating TSLA to liking the stock is simply uninformed.
… Tesla has proven one thing: It is possible to sell a dollar for 80 cents. Bravo! But is that sustainable?
… In short, Citron's research piece did not show an understanding of Tesla's current, international, and emerging 2019 competitive landscape -- let alone what is coming in 2020, 2021 and 2022.
As an investor, you should take a ride down to your local Jaguar dealer and take a look at the i-Pace all-electric SUV and ask yourself: Very soon, every automaker will have more than a handful of these all-electric crossovers. Why would anyone buy a Tesla at that point?
I predict that as little as 90 or 180 days from now, Citron's research piece will look very naive in hindsight, at least as far as automotive industry fundamentals are concerned. In the meantime, the stock is up 10% Tuesday.
I've invited both Left and Walhman to speak at the Kase Learning Shorting Conference, which will take place in NYC on December 3. Left is trying to make the scheduling work (he's based in California) and Wahlman just confirmed – he's planning to give a presentation on Tesla entitled The eight-dimensional analysis of the most complex investment situation.
For more information on the conference and to register, either in person or livestream, please click here. Don't delay, as the base price jumps from $2,495 to $2,995 at the end of the month – and if you act before then, you can save 10%, by using discount code VW10. I hope to see you then!
2) A very insightful article on the crypto and cannabis bubbles: Crypto and Cannabis Are the Perfect Post-Crisis Bubbles. Excerpt:
So here you have these two bubbles, with a lot in common, coming back to back. But why now? If there were an easy explanation for why bubbles emerge, anyone could get rich. But there are some general rules. You need a fantastic story, which both crypto and cannabis have. One’s disrupting finance and big tech; the other’s a gigantic new market rapidly becoming legal around the world. You also need the supply of investable assets to be small, so there’s a huge mismatch between the great story and what investors can actually buy.
…Both crypto and cannabis have the same meta-story about getting back at corrupt elites. Stick it to big businessmen, with their war on hemp. Stick it to ineffective mainstream medicine. Stick it to central bankers degrading the value of your dollars. Stick it to bankers and their bailouts at taxpayer expense. Stick it to the censors. Stick it to Richard Nixon. Stick it to Jeff Sessions. Stick it to the racist prison-industrial complex.
And the cherry on top with both, the believers will tell you, is that thanks to the current regulatory black hole, there’s a beautiful opportunity to get in now and make Wall Street the last bag holder. Psychologically, at least, crypto and cannabis are the perfect trades for the post-crisis era.
While these are obvious stock bubbles, I think both of these areas are real, so when the bubbles finish bursting (with the current silly stocks down at least 90% -- some will be down 99% – from their peaks), there will no doubt be incredible opportunities for savvy bottom-fishers.
For example, consider Priceline.com (now Booking Holdings, BKNG): this darling of the internet bubble saw its stock rise to over $1,000 before it collapsed by more than 99% to under $10. But the company cut its burn rate and survived, with the stock trickling upward for a couple of years. Then it bought Booking.com in July 2005 for $135 million – one of the great acquisitions of all time – and the stock is up nearly 100x since then.
3) For you Charlie Munger junkies (like me), check out this new 24-minute interview (audio only, but posted on YouTube) in which he discusses China (Li Lu appears briefly as well).
4) Here’s another good audio (podcast): Eric Schleien & Marcelo Lima talk about Amazon (39 minutes).
