The gulf between what Elon Musk has told the fanboys to believe and what a rational, informed person would think possible is so incredibly huge

Whitney Tilson’s email to investors discussing Aristides Fund’s Chris Brown on Tesla Inc (NASDAQ:TSLA).

In Chris Brown’s April letter for the Aristides Fund he gives TSLA a well-deserved thrashing. Here’s the first paragraph:

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q1 hedge fund letters, conference, scoops etc

Seth Klarman: Investors Always Need A Strategy To Guide Them

Volatility"Many investors lack a strategy that equips them to deal with a rise in volatility and declining markets," Seth Klarman told his audience in a speech at MIT in 2012. Q3 2020 hedge fund letters, conferences and more Klarman was talking about the benefits of having a strategy, such as value investing, to provide a Read More

Tesla is always fun for me to chat about, because the gulf between what Elon Musk has told the fanboys to believe and what a rational, informed person would think possible is so incredibly huge. Just this week, in an invitation-only conference call to certain prospective investors, Musk told the audience that Tesla would soon be a $500 billion company after its “fleet of robotaxis” was deployed. Tesla “Autopilot” still tries to run drivers into the back of parked semi trucks, yet Teslas are about to become driverless? GMAFB. Tesla has logged zero miles of autonomous driving. There is no chance that Tesla is going to have a fleet of autonomous cars in two years, three years, or even five years. The company had about 3 or 4 months of cash left before it would have needed to declare bankruptcy, car sales are trending something like 35% below Musk’s guidance for the second quarter, and history has taught Musk that he can lie with complete impunity. With basically his entire net worth tied up in Tesla shares, Musk is literally fighting to defend his entire fortune here, and he doesn’t give up easily.

Chris is one of the smartest investors I know. He started his fund with $500,000 about a decade ago and has put up incredible numbers: the #1 Sortino Ratio (whatever that is) among equity long-bias funds from the market bottom in March 2009 through 2017, according to BarclayHedge. Consequently, Aristides has grown to $129 million today, despite being in Toledo, Ohio of all places! Aristides isn’t looking to grow much larger, as his strategy mostly focuses on a lot of small caps and special sits.

That said, he sometimes shorts big, obvious frauds. Last year, he spoke at both of our shorting conferences on May 3 and December 3, pitching, respectively, Energous (WATT), which has crashed 72%, and Tilray (TLRY), which has fallen 53%.

Mark my words: Aristides will be proven right on Tesla as well…