$630B Valuations in 2021: Berkshire, Tesla, and Bitcoin

[nafregnum]

https://twitter.com/ChrisBloomstran/status/1407440728570183680

 

Interesting thought I found on dataroma.com commentary tab, from a guy I don't know, Chris Bloomstran.  The replies he got on twitter made me laugh a bit, and reminded me of the recent Michael Burry quote: 

 

"People always ask me what is going on in the markets," the investor tweeted. "It is simple. Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude. #FlyingPigs360."  -- https://markets.businessinsider.com/news/stocks/big-short-michael-burry-twitter-return-biggest-market-bubble-ever-2021-6-1030524823

 

 

---START OF TWEET---

Mr. Market values $BRK.A $TSLA and #Bitcoin at nearly identical $630B market values.

One is up 20% YTD, earns $45B on $250B of sales & $450B of equity.

One is down 12%, earns $1B (maybe) on $36B of sales & $24B of equity.

One is up 12% and will never produce sales or earnings.

Mr. Market is rational at times and manic or depressive at others. What’s his state of mind now?

Investors should have an idea of expected return from holding each of these for the next decade. Speculators require a greater fool. Does a $630B valuation embed a margin of safety?

Food for thought:

Berkshire COULD pay its cash as a dividend, turning a 10% ROE to a 14.5%.

It COULD give 10% (or more) shares to insiders.

It COULD use its cash to buy back shares. The stock would at least double.

How many CEOs would do these things?

How many already have?

---END OF TWEET---

 

I also noticed a news story about Berkshire having bought back a chunk of shares recently.  I remember when Allan Mecham made a killing by loading up on Berkshire when he knew its share price was at the point where Warren would be buying back -- buying BRK.B shares when Warren Buffett is buying shares back seems like such a no-brainer compared to buying Tesla or Bitcoin right now.  I do not see an "almost guaranteed floor" underneath either of those.

 

Warren Buffett Filing Indicates Berkshire Hathaway Bought Back $6 Billion of Stock in 2nd Quarter