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Does Warren Buffett own the next Tesla?
March 2, 2014 BYD Company Limited Ticker: 1211:HK
Disclosure!
2 For Investment Professional Use Only
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.
Introduction!
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§ 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
Is BYD going to $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 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
§ We believe BYD will trade above $100
within 18 months and $200 within 5 years
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BYD Company Limited
?
Who the #$&% is BYD?!
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§ 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
Wang Chuanfu is China’s Elon Musk!
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“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)
BYD Long Term Integration Strategy!
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3 key energy technologies: § Electric Transporta.on
§ Energy Storage Systems (ESS)
§ Renewable Energy Genera.on
Transportation : Plug In Hybrid!
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§ Top selling model Qin § 0-‐62 MPH in 5.9 seconds
§ 177 miles per gallon
§ Top speed 115 MPH
§ Global Market
Transportation : BYD K9 Bus!
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§ 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…
Transportation : Pure Electric Vehicle!
10
§ 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
Energy Storage Systems (ESS)!
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§ 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
Energy Storage Systems : !Market Opportunity!
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§ 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
Plenty of market poten.al… for the right product at the right price
§ 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 $50 billion/year via energy storage
Energy Storage Market Poten.al Grid-‐Scale Energy Storage ($B)
$150 $120 $90 $60 $30 $0
2014 2015 2016 2017
$30
$114
Investment Catalyst!
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§ 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
About Longboard!
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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
Contact Us!
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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
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