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Does Warren Buffett own the next Tesla?
- 1. Does Warren Buffettown the next Tesla? March 2, 2014 BYD Company Limited Ticker: 1211:HK
- 2. Disclosure! Longboard Asset Management, LLC (“Longboard”) is an investment advisor to funds that are in the business of buying and selling securi>es and other financial instruments. Longboard currently has a long posi>on in BYD Company Limited (“BYD”) common stock. We do not own any op>ons on BYD common stock. Longboard will profit if BYD stock increases in value and will lose money if it decreases in value. Longboard may change its views about or investment posi>on in BYD at any >me for any reason or for no reason. Longboard may buy, sell, cover or otherwise change the form or substance of its BYD investment. Longboard disclaims any obliga>on to no>fy the market of any such changes. The informa>on and opinions expressed in this presenta>on (the “Presenta>on”) is based on publicly available informa>on about BYD. Longboard recognizes that others may disagree with Longboard’s analyses, conclusions and opinions. The Presenta>on includes forward-‐looking statements, es>mates, projec>ons and opinions. Such statements, es>mates, projec>ons and opinions may prove to be substan>ally inaccurate and are inherently subject to significant risks and uncertain>es beyond Longboard’s control. Although Longboard believes the Presenta>on is substan>ally accurate in all material respects and does not omit to state material facts necessary to make the statements therein not misleading, Longboard makes no representa>on or warranty, express or implied, as to the accuracy or completeness of the Presenta>on or any other wriPen or oral communica>on it makes with respect to BYD and Longboard expressly disclaims any liability rela>ng to the Presenta>on or such communica>ons (or any inaccuracies or omissions therein). Thus, shareholders and others should conduct their own independent inves>ga>on and analysis of the Presenta>on and of BYD and other companies men>oned. The Presenta>on is not investment advice or a recommenda>on or solicita>on to buy or sell any securi>es. Except where otherwise indicated, the Presenta>on speaks as of the date hereof, and Longboard undertakes no obliga>on to correct, update or revise the Presenta>on or to otherwise provide any addi>onal materials. Longboard also undertakes no commitment to take or refrain from taking any ac>on with respect to BYD or any other company. As used herein, except to the extent the context otherwise requires, Longboard includes its affiliates and its and their respec>ve partners, directors, officers and employees. For Investment Professional Use Only 2
- 3. Introduction! § In this presenta.on we outline our case for the success of BYD Company Limited and how the current zeitgeist surrounding Tesla will translate into a substan.ally higher stock price for BYD § BYD is an under told and undervalued story which is now coming to light § The large rela.ve valua.on gap between BYD and Tesla will be closed with a substan.al upside revalua.on for BYD shares as their story becomes more mainstream in the years ahead 3
- 4. Is BYD goingto $200?! § § § § The success of Tesla has kicked off a global zeitgeist Tesla and BYD are the Coke and Pepsi of the global transporta.on and energy revolu.on BYD Company Limited 200 175 ? 150 BYD is an under told and undervalued story which is now coming to light The large rela.ve valua.on gap between Tesla and BYD will be closed with a substan.al upside revalua.on for BYD as their story becomes mainstream in 2014 125 100 75 50 25 0 Jul-‐07 Oct-‐07 Jan-‐08 Apr-‐08 Jul-‐08 Oct-‐08 Jan-‐09 Apr-‐09 Jul-‐09 Oct-‐09 Jan-‐10 Apr-‐10 Jul-‐10 Oct-‐10 Jan-‐11 Apr-‐11 Jul-‐11 Oct-‐11 Jan-‐12 Apr-‐12 Jul-‐12 Oct-‐12 Jan-‐13 Apr-‐13 Jul-‐13 Oct-‐13 Jan-‐14 Apr-‐14 Jul-‐14 Oct-‐14 Jan-‐15 Apr-‐15 Jul-‐15 Oct-‐15 § We believe BYD will trade above $100 within 18 months and $200 within 5 years 4
- 5. Who the #$&%is BYD?! § § § § § 10% owned by Warren Buffet’s Berkshire Hathaway World’s largest rechargeable baUery manufacturer Fastest growing Chinese auto company #1 electric bus manufacturer in the world #1 hybrid and pure electric car manufacturer in China 5
- 6. Wang Chuanfu isChina’s Elon Musk! “He’s a combina.on of Henry Ford, Thomas Edison and Bill Gates” -‐ Charlie Munger Vice Chairman, Berkshire Hathaway Referencing BYD CEO Wang Chuanfu (pictured right) 6
- 7. BYD Long TermIntegration Strategy! 3 key energy technologies: § Electric Transporta.on § Energy Storage Systems (ESS) § Renewable Energy Genera.on 7
- 8. Transportation : PlugIn Hybrid! § Top selling model Qin § 0-‐62 MPH in 5.9 seconds § 177 miles per gallon § Top speed 115 MPH § Global Market 8
- 9. Transportation : BYDK9 Bus! § Pure Electric Bus § 30 hours of drive .me between charge in NYC MTA tests § Less than 30% of the opera.ng cost per mile rela.ve to diesel bus § U.S. version assembled in California § Global Market Design § Coming to a city near you… 9
- 10. Transportation : PureElectric Vehicle! § Denza (new brand) § 50/50 Partnership between Daimler and BYD § Designed specifically for the Chinese consumer § Mercedes B Class design § Mid 2014 launch § Tesla alterna.ve in China 10
- 11. Energy Storage Systems(ESS)! § Very well posi.oned in the emerging energy storage market § Unlike Tesla they are currently producing ESS at industrial scale § Exis.ng ESS represent the largest completed energy storage projects on the planet § Ver.cal integra.on and proven capacity to scale produc.on 11
- 12. Energy Storage Systems: ! Market Opportunity! § Energy storage is a 500+ Billion dollar market opportunity § Posi.oned as a global leader in the segment § BYD is very far ahead of firms like Tesla who want to enter the business Energy Storage Market Poten.al Grid-‐Scale Energy Storage ($B) $150 $120 $90 $60 $30 $0 $114 $30 2014 2015 2016 2017 § Lux Research -‐ $114 B by 2017 § Piper Jaffrey -‐ $600 B market over 10-‐12 years § Boston Consul>ng Group -‐ $400 B market by 2020 § EPRI/DOE -‐ annual savings of $50 billion/ year via energy storage Plenty of market poten.al… for the right product at the right price 12
- 13. Investment Catalyst! § Tesla’s success story has put electric transport on the global center stage § The recent announcement of the Tesla “Gigafactory” has added the “energy play” to the conversa.on as well an addi.onal mul. billion dollar premium to Tesla’s valua.on § BYD has recently been an undersold story aner its early 2008 success with Warren Buffet taking a 10% stake in the company § The current rela.ve valua.on gap between Tesla and BYD is now 3-‐1 in favor of Tesla § We believe the market is beginning to recognize the true value of BYD and will begin to price in a similar Tesla growth premium to BYD shares § The market is hungry for the “next Tesla” and BYD is well posi.oned to ride that wave on a number of fronts § We see the market filling the rela.ve value gap with an upside re-‐pricing of BYD shares to $100 within the next 18 months 13
- 14. About Longboard! An alterna>ve approach to naviga>ng the investment ocean Longboard is an asset management firm specializing in trend following strategies. The firm’s principals have been inves.ng in and researching trend following strategies since the late 1990s. We manage both private investment funds and mutual funds applying our trend following investment style. “Trends come like a series of ocean waves, bringing the high .de when things are good and, as condi.ons recede, the low .de appears. These trends come unexpectedly, unpredictably, and they have to be weathered with temperance, poise, and pa.ence-‐ good or bad.” Jesse Livermore, Reminiscences of a Stock Operator 14
- 15. Contact Us! To learn more about Longboard, connect with us at: info@longboard-‐am.com 602.910.6961 2355 East Camelback Road, Suite 750 Phoenix, Arizona 85016 www.longboardmutualfunds.com www.longboard-‐am.com For media inquiries, please contact: Courtney Jardine courtney@longboard-‐am.com 617.467.4139 15