ERICOPOLY

It has returned 15% annual returns over the past 8 years before dividends, and we're not talking about FFH. Seriously crazy for the 3rd biggest market cap on the planet!

There are a lot of companies with blockchain investments. Here are four: Amazon, Microsoft, Google, IBM https://aws.amazon.com/blockchain/ https://azure.microsoft.com/en-us/solutions/blockchain/ https://www.bloomberg.com/news/articles/2018-03-21/google-is-said-to-work-on-its-own-blockchain-related-technology https://techcrunch.com/2017/03/19/ibm-unveils-blockchain-as-a-service-based-on-open-source-hyperledger-fabric-technology/

Like this? “The blockchain revolution has a greater potential than anything we’ve seen in history,” Byrne told Fox Business on Nov. 26 (video below). “It’s bigger than the Internet revolution, how it’s going to restructure society.” Does the guy in the bitcoin tie and matching socks look crazy? https://www.ccn.com/blockchain-revolution-is-bigger-than-anything-weve-seen-in-history-overstock-ceo/

I think his eccentricity is a marker for something in his psychological makeup.

Would Patrick have left his job to chase gold in 1849? He left a boring Berkshire subsidiary to found an exciting .com retailer when .com was hot. Now he is straying from online retail to exciting blockchain when that is hot. Am I being unfair? The stock crash has led me to think about him more critically, it's human nature. He deflected and used the naked shorts for a long time? Now that case is closed and soon afterwards he is throwing in the towel? For all the talk of how much Overstock is a compounding machine (it's in the thread if you read it), you'd have 4x your money in Berkshire stock over the past 15 years. Not the case in this stock unless you traded on the surges. Rumor may be getting around Wall Street that nobody wants it at his price? Or they do, but that rumor is circulating anyhow?

Comparing revenues isn't enough. How fast are those respectively growing? What kind of ROIC are they getting on the growth investments, what kind of margins could they get at a stable rate? +1! We thought Overstock was worth around $35-$40 or 0.5 times revenue conservatively. It's now fully-priced by the markets...forget about conservatively...and what you've been seeing is more of a mania around any blockchain potential. That being said, stupid money does very stupid things, and I would not be surprised to see this thing hit $130-150 per share in 2018. It has propelled from a value-stock into something almost purely speculative now. Remember Overstock was an $80/share stock 16 years ago, and that was based on internet mania...we saw what happened over the ensuing years. We've sold about 2/3rds of our position (bought at an average cost of about $14.50) starting at $35 all the way up to just under $86 today. Don't want to take any more short-term gains, but the speculation is just on a tear! Cheers! At your average cost again today.

Same math with buyback or dividend, aside from taxes (assuming your dividend purchases more shares). If it weren't for this f'ing divorce I would buy WFC. I'm not allowed to buy anything without her consent.

So true.

Thanks for posting and writing this Eric. The more I think about it, long term call Leaps are probably one of the best way to achieve this. Long with puts could be similar. Options pricing does not take fundamental values into account and therefore on a long term basis this can be the inefficiency. To get really great odds though I think 2 things have to be present. 1. Extreme undervaluation 2. Low cost of the option premium. The upside is magnified returns vs unlevered long only. Downside is getting wiped out if the stock is down. So to be 100% invested in calls has wipeout risk. Yes, 100% invested in calls has wipeout risk. The 2006 FFH trade was to buy the calls in May/June and to deleverage after the hurricane season passed. Hurricane seasons don't last past November and the 2008 calls didn't expire for yet another 14 months after that. The theory was that their extrinsic value was artificially low due to the crowded short trade with short sellers using the options market maker exemption because there were not enough physical shares to borrow. Additionally, the time value component of the extrinsic value decays relatively slowly so this was the safest window of the holding period.

A Jaguar that looks too much like a Subaru WRX: https://www.jaguarusa.com/all-models/i-pace/index.html

I was going to say that. The equity values of highly-levered companies acted like unhedged margin portfolios in 2008-2009.

Here: http://www.cornerofberkshireandfairfax.ca/forum/strategies/bac-leverage/msg245797/#msg245797 and It was talked about a bit here: http://www.cornerofberkshireandfairfax.ca/forum/strategies/warrants-for-leveraged-garp-investing/50/ It's all strung out because it generated a lot of questions and doubts.

Why are the shorts covering? You make it sound so obvious.

The Boring Company to sell bricks for 10 cents each: https://www.teslarati.com/elon-musk-boring-company-bricks-price/ Musk noted that the bricks would be “interlocking with a precise surface finish,” which would allow the blocks to be stacked on top of each other without compromising durability. Musk even noted that the Boring Bricks would be designed in such a way that “two people could build the outer walls of a small house in a day or so.”

The dual-motor was more popular once it was introduced. They've sold more LR RWD because it was a long time before the dual-motor was an option.

They lowered the price $1,000 of the less popular real-wheel drive midrange. (their production bottleneck is battery cells) They raised the price $1,000 of the dual-motor long range, their highest-volume configuration which consumes the most battery cells (their production bottleneck is battery cells)

I haven't seen anyone here with a long position, nor trying to justify one.

Okay, suppose the cost then on the $46,000 car is about $35,000 to produce with the mid-range battery and warranty reserves factored in -- manufactured at reliability level of big-name firms. Those are decent margins so why aren't they doing it already?

They tore apart a rear-wheel drive LR model but only the dual-motor LR model can be ordered today (so I can't find the price for the model that Monroe tore apart). However, they are offering the mid-range battery rear-wheel drive model today for $45,000. Had Monroe tore apart a mid-range battery model it would have been significantly lower cost than $34,700 I presume. There is no other luxury car being produced in these volumes on a single production line, is there? Economies of scale?

JB Straubel sometimes corrects Musk on the spot. I don't believe this company is intentionally trying to deceive anyone and I think Straubel would be gone if there was no "there... there". I think Musk is a bit histrionic and perhaps bipolar could explain his behavior -- I don't know. He made that crazy tweet about the Saudi's when he was reportedly not getting any sleep. Straubel looks to be a real engineer and not a huckster. People point a lot to Musk's erratic behavior but why not point instead to Straubel's steady behavior? Is there a bias involved in that choice?

Grant, didn't they include the price of a long range battery? The $35,000 model will have a short range battery and costs are perhaps soon coming down 30%.

I will take a stab at it from 10,000 foot view. 1) . A German firm says that it should cost $28,000 to build a Model 3 2). I have not done my own teardown of the car, am not an automotive engineer, and cannot refute them. I have no reason to dispute their analysis. 3). Average selling price is far higher than $28,000 but Tesla at the end of Q2 talked about having a lot of costs of production left to cut. https://qz.com/1294282/the-tesla-model-3-cost-28000-to-build-german-engineers-say-and-it-still-may-not-be-profitable/

Panasonic has already taken credit for holding up the production rate of the Model 3: "The bottleneck for Model 3 production has been our batteries. They just want us to make as many as possible.” https://electrek.co/2018/09/26/panasonic-ahead-schedule-tesla-gigafactory-1-battery-cell-production-lines/ Tesla Gigafactory 1, which started in 2013, has already grown into the biggest battery factory in the world with an annual production capacity of over 20 GWh. Panasonic said that it planned on adding three production lines to increase the capacity to 35 GWh by the end of the year to support the production ramp.

I'm not capable of fundamental analysis really, so you are asking the wrong person your questions. I cannot tell you how much the stock is worth either. I don't think any of the short sellers can tell you what the stock is worth -- they are relying on their own biases ("it can't be possible") to reach valuations. I recall Buffett saying that he prefers boring companies with a long financial history that make boring staple products with a wide moat -- I believe he says this because forecasting the future is enormously difficult and you need every bit of help you can get. But here we have legions of value investors ignoring the great sage's advice and presuming to know that the worth of Tesla is lower than here, even though Tesla does not have a long financial history, etc... I have taken this attitude towards shorting the stock since it was price at $20 or $30. One other piece of advice from Buffett that the shorts aren't following is to not follow a company quarter by quarter. Valuation works in both directions doesn't it?

Clearly because the product is SO good and people love them! The more love the bigger the margins get. Of course I'm trolling some, but sometimes when I read a bullish thesis this is what it seems like. I've seen very few longs with a model as to how they get from x to y and what justifies each. This is just a magical company and you're either on the hype bus or you're some terrible human who hates the earth and somehow is opposed to saving humanity. No one can explain margins, or why numbers are what they are. But they are saving the world and anyone questioning it isn't, so there's no discussion, and no attempt to. I think part of the problem is this is a luxury brand, but also a luxury brand with a mission. Tesla owners (and I'm infering this from reading forums, posts etc) look down on those with gas cars. We don't 'get it' and of course most people don't have $150k to dump into a vehicle either, especially when $150k buys you a house in most of the US. So there is a superiority complex, a luxury complex, and with that why would you need to explain things to peons? This is really a 1% purchase. The interesting psychology is with the Model 3 aspiring 1%'ers can join the club for $50-70k. No intention to offend anyone who owns one. Congrats, as Buffett has said you've hit the genetic lottery and are wealthy. I'm glad you can enjoy the fruits of your wealth with a nice purchase. But I think it's unfair to extrapolate your reality to presume that's what it's like for all Americans. I think part of the reason bulls (and most are owners) have trouble discussing this is because personal identity is wrapped up in this purchase. If you buy a very expensive membership to a very exclusive club how open are your eyes to problems with that club? On the other hand, perhaps you are not listening because you are dismissing their opinions because they are 1%'ers.