Power Players

Charlie Munger on Elon Musk: 'Never underestimate the man who overestimates himself'

Charles Munger, vice chairman of Berkshire Hathaway Inc., left, and Warren Buffett, chairman of Berkshire Hathaway Inc., attend a BYD Co. press event in China, on Monday, Sept. 27, 2010.
Nelson Ching | Getty Images

Owning Tesla stock has been a bit of a roller coaster ride as of late: During the first week of February, for example, the stock had "one of its wildest weeks ever," CNBC reported, with the share price "swinging hundreds of dollars in both directions." On Thursday, when Tesla announced it will sell 2.65 million new shares of stock, the share price jumped nearly 5%. After it announced the new stock will sell at $767 a share on Friday, the stock fell 2% in premarket trading.

At the annual shareholders meeting for newspaper company Daily Journal on Wednesday, a shareholder asked Berkshire Hathaway vice chairman Munger what he thought about Musk, based on Tesla's recent ups and downs.

"My thoughts are two," Munger, who serves as the Journal's chairman replied. "I would never buy [Tesla], and I would never sell it short," he said, referring to a technique investors use to bet that a stock will decline.

And "I have a third comment," the billionaire investor continued: "Never underestimate the man who overestimates himself. I think Elon Musk is peculiar and he may overestimate himself, but he may not be wrong all the time."

At the Daily Journal's 2019 shareholder meeting, Munger shared similar thoughts, but also said that he personally would not hire Musk.

"I want the guy who understands his limitations instead of the guy who doesn't," Munger said at the time. "On the other hand, I've learned something terribly important in life…. These weird guys who overestimate themselves occasionally knock it right out of the park.

"I don't want my personal life to be [around] a bunch of guys who are living in a state of delusion, who happen occasionally to win big. I want the prudent person," Munger explained.

Musk and Tesla did not immediately respond to CNBC Make It's request for comment.

Warren Buffett, Berkshire Hathaway chairman and Munger's longtime business partner, has also given his opinion on Musk.

"He's trying to do something to improve a product, and I salute him for that," Buffett said on CNBC's "Squawk Box" in May 2018. It's "not easy" to do that, Buffett said. "The American public will decide whether [Tesla's electric cars are] a success."

Currently, Tesla's market cap is over $140 billion, first hitting the $100 billion mark in January.

According to Musk's compensation package, if Tesla stock hits $3,665, the company's profit target hits $14 billion a year and other financial targets are met, Musk will get more than $55 billion. With the added value to Tesla and Musk's personal payday, that would make his total net worth over $175 billion, CNBC reported. Jeff Bezos, the richest person in the world, currently has a net worth of $131 billion, according to Bloomberg's Billionaires Index.

Right now, Musk is the 24th richest person in the world, according to the index, with a net worth of $41.1 billion. Buffett is worth $89 billion, the index shows, and Munger is worth $2 billion, according to Forbes.

With Friday's Tesla announcement, Musk pledged to buy $10 million in shares Tesla's secondary stock offering. Board member Larry Ellison will buy $1 million in shares, the electric car company said.

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