Has Warren Buffett Invested In Tesla? Here's Why People Are Speculating

Speculation is rife that the legendary investor and Berkshire Hathaway Inc (NYSE: BRK-A) (NYSE: BRK-B) Chairman Warren Buffett may be secretly building a position in Tesla Inc’s TSLA booming stock.

Buffett's Secretive Investment: The Elon Musk-led company’s shares surged over 10% on Wednesday and have added 19% since the beginning of the week.

Berkshire Hathaway in its 13F filing on Monday withheld information on its position in a company, saying it has been "filed separately" with the U.S. Securities and Exchange Commission.

David Kass, a finance professor at the University of Maryland, told Business Insider that Buffett is “undoubtedly building a large position now and may reveal it in his next 13F.”

Kass, who has followed Buffett closely for more than 30 years, noted that the investor has “received confidentiality treatment several times in the past.”

The professor noted that most-recently Buffett, similarly, confidentially built a position in energy, manufacturing, and logistics company Phillips 66 PSX around 2015 — and before that International Business Machines IBM. 

Edward Jones analyst James Shanahan suspects that Berkshire “is building a large position in a public company and they would like to continue to do that before disclosing it,” as per Business Insider.

Shanahan also pointed to third-quarter earnings of Berkshire — which value the company’s equity portfolio at $245 billion, excluding Kraft Heinz Co KHC, but the company’s 13F filing only shows $220 billion in holdings.

Tesla's Missing Shares: Meanwhile, independent analyst Frank Peelen claimed that 50 million of Tesla shares “seem to have gone missing” during the third quarter, as first reported by Electrek.

Peelen also speculated on Twitter that $11 billion of disparity in Berkshire’s investment numbers after accounting for other recent investments could be a confidential play in Tesla.

15/16
So did $BRK acquire a large stake in $TSLA? There's no proof, but it seems very plausible. We should find out for sure what $BRK's mystery new acquisition is over the next few weeks or months.

— Frank Peelen (@FrankPeelen) November 18, 2020

The $11 billion investment would possibly result in Berkshire obtaining more than 5% ownership in most companies, which requires disclosure unless an exemption is gained from the SEC.

Peelen theorized that if the company’s market cap is greater than $220 billion, the disclosure would not apply but there are only 25 such companies listed on exchanges in the United States. Berkshire is itself one of these companies and already owns shares in nine other of them.

Buffett, who is an investor in General Motors Company GM and backs Chinese automaker BYD Company Limited BYDDF, had previously said “No” to investing in Tesla.

This month it was revealed that the veteran investor picked up shares of drugmakers AbbVie Inc ABBV, Bristol-Myers Squibb Co BMY, Pfizer Inc PFE, and Merck & Co, Inc MRK amid the ongoing COVID-19 pandemic.

Price Action: Berkshire Hathaway Class A shares closed 1.13% lower at $345,592 on Wednesday. The same day, the company’s Class B shares closed 1.33% lower at $230.07.

Photo courtesy: Fortune Live Media via Flickr