Twitter stock soared on Elon Musk's investment, showing S&P 500 investors follow the billionaire's moves. But who's the better bet? Berkshire Hathaway's Warren Buffett or Tesla's Musk?
It's tough to pick a favorite just looking at this year so far. Shares of consumer discretionary Tesla are up 18% this year, in a dead heat with industrial conglomerate Berkshire Hathaway's 18.0% rise. And it's actually a fair comparison. Neither S&P 500 stock pays a dividend. And Berkshire holds Buffett's top investment ideas, while Tesla holds Musk's solar company (but not SpaceX).
Longer term, though, it's more clear where each investment visionary shines. And Musk, too, is showing his penchant like Buffett to own stakes of companies he thinks hold promise.
"We would expect this passive stake (by Musk of Twitter) as just the start of broader conversations with the Twitter board/management that could ultimately lead to an active stake and a potential more aggressive ownership role of Twitter," said Wedbush Securities' Dan Ives.
Musk's Latest Move In The S&P 500
Shares of Twitter jumped more than 27% to 49.93 Monday following Musk's shocker. In a regulatory filing, Musk said he now owns 73.5 million shares of the social media firm. That's a $2.89 billion stake worth 9.2% of the company, Ives says.
It's a big move for Musk. But it reveals another strong similarity with Buffett. Both are heavily, and almost identically, doubled down on their own wealth-generating companies.
To date, Musk's largest public position in an S&P 500 company is his 172.6 million shares of Tesla. That accounts for nearly 17% of the electric car company, more than any other investor's position. The No. 2 largest owner is Vanguard, which only owns 6% of the company, says S&P Global Market Intelligence. Musk's stake alone in Tesla is worth $187 billion. Tesla is the fifth most valuable S&P 500 company worth $1.1 billion, just ahead of Berkshire Hathaway.
Buffett, too, is doubled down on shares of his own company. He owns 16.2% of Berkshire Hathaway, an almost identical market position as Musk's in Tesla. Buffett, too, is the No. 1 holder of Berkshire stocks second only to, you guessed it, Vanguard, at 6.1%. Buffett's position in Berkshire is worth $125.9 billion.
But which is the better investment?
Sizing Up Musk Vs. Buffett In The S&P 500
When it comes to recent performance, you can't go wrong with Buffett or Musk. But Musk holds the edge.
Tesla's stock outperformed Berkshire in all the periods in the past one, five and 10 years. And not by a small amount. Shares of Tesla are up more than 70% in the past year, trouncing the 32.5% rise by Berkshire stock in that time. Tesla's outperformance gets stronger the farther back you go. Tesla is up 1,778% over five years, topping the 107% gain of Berkshire in that time. And it's up 16,195% in 10 years, topping the 325% rise of Berkshire.
But before you call Buffett's investment prowess overrated, it's helpful to compare how Berkshire did in its first years as a public company. Shares of Berkshire Hathaway shot up 1,206.4% in their first 10 years of trading following their April 16, 1985 restructured debut as tracked by S&P 500, says S&P Global Market Intelligence. That actually more than doubled the 464% gain by Tesla shares in their first 10 years of trading following the June 29, 2020 first day of trading.
And in many ways, Buffett's Berkshire stock is doing just as it's supposed to now.
"The stock has done exactly what I wanted and expected it to do – massively outperforming during times of turmoil, when growth stocks are getting whacked," said Whitney Tilson of Empire Financial Research.
Elon Musk's Tesla Vs. Warren Buffett's Berkshire Hathaway
Both are tied this year, but each leads in different periods
| Company | Ticker | Stock YTD % ch. | Gain 1-year | 5-year stock % ch. | Stock 10-year % ch. | First 10 years while trading* |
|---|---|---|---|---|---|---|
| Berkshire Hathaway | BRKA | 18.2% | 32.5% | 106.5% | 324.9% | 1,206.4% |
| Tesla | TSLA | 18.0% | 72.4% | 1,777.9% | 16,194.6% | 464.2% |
