Massive “Valuation Reappraisal” Lower For Tesla Is Coming: Mark Spiegel

Mark estimates FSD liabilities could even reach the "tens of billions" and that Tesla will soon be valued like just another automaker. He also lays out his fund's long positions in his recent letter.

Friend of Fringe Finance Mark B. Spiegel of Stanphyl Capital released his most recent investor letter on February 28, 2023, with his updated take on the market’s valuation and Tesla.

Mark is a recurring guest on my podcast (and will be coming back on again soon hopefully) and definitely one of Wall Street’s iconoclasts. I read every letter he publishes and only recently thought it would be a great idea to share them with my readers.

Like many of my friends/guests, he’s the type of voice that gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely.

Photo: Real Vision

Mark was kind enough to allow me to share his thoughts from his February 2023 investor letter (edited slightly for length and grammar by QTR). This letter also contains positions his fund has on, both long and short.

Mark On Markets

For February 2023 the fund was down approximately 2.8% net of all fees and expenses. By way of  comparison, the S&P 500 was down 2.4% and the Russell 2000 was down 1.7%. Year-to-date the fund is  down approximately 14.8% net. By way of comparison, the S&P 500 is up 3.7% and the Russell 2000 is up 7.9%. Since inception on June 1, 2011 the fund is up approximately 155.3% net while the S&P 500 is up  272.0% and the Russell 2000 is up 162.2%. Since inception the fund has compounded at approximately 

8.3% net annually vs 11.8% for the S&P 500 and 8.6% for the Russell 2000. (The S&P and Russell  performances are based on their “Total Returns” indices which include reinvested dividends. Investors  will receive exact performance figures from the outside administrator within a week or two. Please note  that individual partners’ returns will vary in accordance with their high-water marks.) 

We’ve been in much deeper “performance holes” than this one and have always climbed out of them,  and I have no doubt we’ll do the same again. I take big swings in this fund (which is why I limit the size  of everyone’s investment but my own), and with “big swings” often come big swings in the fund’s P&L. 

The major contributor to this year’s so-far lousy performance has been a fierce, “temporary liquidity”*- fueled bear market rally in highly speculative stocks such as Tesla, which is a large short position of ours  that’s up 67% in 2023 despite massive, margin & profit-destroying price cuts. Tesla closed the month in  the $205s and I believe it’s headed to below $20; as usual, it’s discussed in depth later in this letter.