Berkshire Hathaway's cash hoard rekindles Tesla investment chatter

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Berkshire Hathaway’s cash hoard rekindles Tesla investment chatter

Warren Buffett appears on a TV screen at the Berkshire Hathaway sharesholders meeting, while a bystander walks past.

Warren Buffett-led Berkshire Hathaway, Inc.’s (BRK.A BRK.B) second-quarter 10-Q report filed with the SEC showed that the investment holding company’s cash position swelled to $277 billion. The cash buildup sent social media into a tizzy, with some Tesla, Inc. fans fervently hoping that the investment guru would divert some of it into the electric-vehicle maker’s stock.

What happened

“Buffett is a value investor. $TSLA is a growth stock,” said The Future Fund LLC Managing Partner Gary Black in a post on X. Black, who is a Tesla bull, was referring to Buffett’s investment rationale of picking up quality stocks trading at bargains, which is the premise behind value investing.

Growth stocks, on the other hand, are expected to generate above-market returns and these stocks trade at elevated price-earnings multiples. Their high valuations are justified only by the returns they can generate in the future, Benzinga reports.

Despite Tesla stock’s secular decline seen since late 2022, it still trades at an elevated forward P/E multiple of 84.75, according to the Yahoo Finance database.

Never the twain shall meet

“The two worlds seldom collide,” said Black in the post, referring to Buffett’s ideology and Tesla’s stock characteristic. Clarifying further, the fund manager said Buffett first bought Apple, Inc. stock when it traded at less than 12 times earnings and BYD Co. Ltd BYDDY stock when it was trading at less than 10 times earnings. Tesla “isn’t his type [of] stock,” said Black.

Incidentally, Tesla CEO Elon Musk has, in the past, resented that Buffett and his trusted late lieutenant Charlie Munger had overlooked Tesla as an investment option. Musk has mentioned an unsuccessful meeting with Munger in 2009 regarding a potential Tesla investment.

Every time Berkshire’s massive cash position is being discussed on social media, the world’s richest man has indirectly nudged Buffett to take a stake in Tesla. Buffett, while giving Tesla a snub, has admired Musk. “Elon is a brilliant, brilliant guy and I would say that he might score over a 100%,” Buffett said at one Berkshire shareholder meeting. “He dreams about things and his dream[s] have got a foundation.”