Whitney Tilson’s email to investors discussing the man who abandoned value; story of Elon Musk in his darkest moments; evaluating Tesla’s price changes on Model 3 / Model Y; Lucid Motors; quality issues threaten Tesla dominance in China.
Q4 2020 hedge fund letters, conferences and more
The Man Who Abandoned Value
1) 13 months ago, I was smart enough to realize my old friend Arne Alsin had done some good analysis on Tesla, which is why I sent his Q4 ’19 letter to both my Tesla and full investing email lists (archived here), when the stock was at $109.44 (split adjusted). Alas, wasn’t smart enough to listen to him and buy the stock! He was up 274% last year. Michelle Celarier has a nice profile of him in the latest issue of Institutional Investor: The Man Who Abandoned Value. I’m quoted in it here:
At the time, Tesla wasn’t the battleground stock it would later become. But the company’s heavy debt load and lack of cash had already lured some short-sellers, including Whitney Tilson. The former hedge fund manager and value investor, who shut down his Kase Capital fund in 2017, was burned by shorting Tesla in 2013 and 2014 and said it was the worst short of his career.
A year ago, Tilson, who’d communicated with Alsin as a fellow value investor some 20 years earlier, received a copy of Worm Capital’s fourth-quarter report for 2019 — when the Tesla bet was finally starting to pay off. That year, Worm’s long/short fund gained 13.04 percent and the long-only fund rose 29.15 percent.
Now the CEO of Empire Financial Research, Tilson says he was impressed to see Alsin “absolutely crushing it” in the tech space.
“I knew he wasn’t just some dipshit bull market genius,” says Tilson. He forwarded the report to his subscriber list of 5,000 people interested in Tesla, noting that it included the “best bullish analysis on Tesla” he’d ever read.
In it, Alsin details how Tesla’s powerful brand, and its advances in software and battery technology, would result in structurally higher margins in the future.
2) A fascinating 9-minute video on the early days of Tesla: Story of Elon Musk in his darkest moments | Jason Calacanis and Lex Fridman
3) Tesla recently cut prices, which (yet again) bears see as evidence of weakening demand, while bulls see it as another step toward Tesla fulfilling its mission. Here’s the bull case (a 12-min video) by Tesla Daily: Evaluating Tesla’s Price Changes on Model 3 / Model Y
Elon Musk’s Ex-Chief Engineer Creates Lucid Motors To Beat Tesla
4) An interesting profile of Lucid Motors and its CEO, a former top engineer at Tesla: Elon Musk’s Ex-Chief Engineer Creates A New Car—And Says It Beats Tesla. Excerpt:
Peter Rawlinson has many goals for the Lucid Air. One is that it be hailed as the world’s best electric car. “Nobody believes me, but we’re about to take it to another level,” he says in a pre-Christmas Zoom chat from the 300-year-old Warwickshire, England, farmhouse he calls home when not at Lucid Motors’ Silicon Valley headquarters.
5) A surprisingly lame 6-min video by the WSJ: Quality Issues Threaten Tesla Dominance in China
