Berkshire Hathaway has $189 billion in cash. Elon Musk has an idea where Warren Buffett should spend it.

By Steve Goldstein

The latest results from Berkshire Hathaway shows that the conglomerate had nearly $200 billion - $189 billion, to be precise -in cash at the end of the first quarter.

That's after Warren Buffett and co. trimmed its stakes in giants including Apple and Chevron. "We only swing at pitches we like," Buffett said this weekend.

Elon Musk has an idea on how some of that Berkshire Hathaway (BRK.B) cash can be deployed - Tesla (TSLA), which of course is the company he runs. "He should take a position in Tesla. It's an obvious move," said Musk in a message on the social media service X, which he owns.

Musk didn't explain why it would be obvious. Buffett, and his late partner, Charlie Munger, have praised the world's third-wealthiest billionaire previously. "What Tesla has done in the car business is a minor miracle," said Munger.

Tesla's financials are not the sort, however, to typically attract Buffett.

According to FactSet, Tesla trades at 66 times next year's earnings, at 9 times book and 57 times cash flow, which compared to Tesla's own history is significantly cheaper than its highs but elevated compared to other companies in the field. The second-biggest automaker by market cap, Toyota (TM), trades at 10 times next year's earnings, a little more than 1 times book and 11 times cash flow.

Musk has previously recalled meeting Munger - in one message, saying the meeting was in late 2008, in another, saying it was in 2009.

"I was at a lunch with Munger in 2009 where he told the whole table all the ways Tesla would fail," said Musk. "Made me quite sad, but I told him I agreed with all those reasons & that we would probably die, but it was worth trying anyway."

Tesla shares have dropped 27% this year even after rallying 29% from its late April lows.

Tesla stock rose 1% in premarket trade.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-06-24 0822ET

Copyright (c) 2024 Dow Jones & Company, Inc.