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I have a problem with Tesla: Billionaire Investor

GAMCO Investors Chairman & CEO Mario Gabelli joins 'Influencers with Andy Serwer' to discuss Tesla's soaring market cap and the future of ESG investing.

Video Transcript

ANDY SERWER: So I've asked about media. But you have all kinds of other interests as well in terms of investing. What are the things that are catching your eye these days?

MARIO GABELLI: Well, nothing different, OK? We have to worry about the planet. OK, there's no question that you know what you're having in California is just the tip of the iceberg, the weather changing, the patterns of weather. And carbon capture and sequestration, when I started following the utility industry 30 years ago, that was the holy grail.

Today, it's renewable energy-- solar, wind. But transmission, you got to go from the wind where it's blowing to where the demand is. Then you have to have battery storage for the time in which the wind and the sun is not shining.

And then you have to have cybersecurity, Andy, because there are a lot of people that can do funny things. And then on top of that-- listen, if a 17 or 18-year-old can hack everybody's content, like Bill Gates, imagine what somebody can do just tinkering. In addition to that, you need battery storage.

We are hosting our 44th Annual Auto Parts Conference and bringing it-- last year, we did it on used car companies. It was part of Carvana. It was part of what's going on at CarMax. It's part of what's going on in AutoNation. Vroom has just hitchhiked on that.

But the battery companies are coming in. Will we be able to come up with a battery that can absorb and generate and store? And that becomes a total ingredient. So we're looking at that ecosystem for a while. And we have to own that.

The second part is people, do we-- and also tied into the planet. Do we want to have protein from non-animals sources, plant protein? And what companies benefit from that?

You think immediately about this hamburger company, Beyond Meat, and then Impossible Burger. But there's a company in Canada that's a bargain that's put tons of cash flow into developing that business. That stock is cheap. It's called Maple Leaf. So there's a lot of ways to--

ANDY SERWER: Maple Leaf?

MARIO GABELLI: Yeah. It's located outside of Toronto, like in a suburb, much like Greenwich is a suburb of-- I don't want to say that-- and of some other big city, like Boston. So those are some of the areas that we're investing in. In addition to that, obviously, you have to think about what-- how bad is bad for these cyclical BOTL company, be it banks, oil travel, and leisure?

How good is good? And when will that occur? And then, Andy, when it gets good, how do you get a bigger multiple? What's going to be the ingredient that says OK, will this stock sell at three times cash flow higher than it would sell normally because they've got some input into a Tesla or the other versions of all of the electric vehicles that are coming down?

So that's how we think. We look at every stock, every company with a microscope. And then we look at them with a telescope.

ANDY SERWER: I want to get into the green stuff in a minute. But the BOTL companies, what was that again? Take us through that again.

MARIO GABELLI: No, no, that's B for banks. They have been significantly thrashed, particularly the smaller ones. And why? Because just in case people can't pay their mortgage, will the government come along under some administration and say don't bother?

You took a student loan instead of working. Or you took it because you thought you needed it. We've got a solution for that. Travel and leisure--

ANDY SERWER: Oil.

MARIO GABELLI: Well, oil is the O.

ANDY SERWER: That's the O, right?

MARIO GABELLI: Yeah, the oil has dropped to $42 a barrel. And we have to make a transition, obviously, away from carbon. But the necessary transitionary fuel is nat gas.

And so where is the nat gas play? What companies will do well? Yesterday or last night, it was announced that Exxon's coming out of the Dow Jones. And they're putting in Honeywell and then--

ANDY SERWER: Amgen.

MARIO GABELLI: --eliminated-- Amgen and Salesforce and dropping. So the weightings in this index fund-- I just got off track on that-- but that's an element. So that's the BOTL.

Will you go to a hotel to go see the Consumer Electronics Show? Will you go to Las Vegas with 120,000 people to go to that kind of a gathering? When will you do that?

Where will you go gamble? Well, you won't go to the Kentucky Derby, because they're doing it virtually. Will you do it next year? So the question is timing, but not if.

ANDY SERWER: Do you own Tesla? As you talk about these green stocks, and you mentioned Tesla.

MARIO GABELLI: Well, I have a problem with Tesla. I think he, Elon Musk, when you think of SpaceX, when you think about what he does, in quotes, "the boring," the capability of drilling tunnels, and think about the ingenuity that he's brought to this company. It's phenomenal.

However, when I take the number of shares and multiply it by 2,000, I get $400 billion. And you have about five years to grow into that valuation. If I multiply the number of cars today in the world, we're going to produce 80-- 90-- 82 million. By the year 2025, let's go to 100 million.

Are we going to have 10% or 10 million of those electrics? And then today, you have 1.2 billion cars on the road, Andy-- 1.2 billion in the world. Maybe we'll have one to four in the world. And yes, we have to substitute some kind of other fuel, whether it's somebody at MIT coming up with a hydrogen powered, will it be nothing better than water and gas-- water and air, and so on. So that's work and play.

Just think about 100 years ago when Henry Ford came down with the assembly line, the Model T, any color you want but black. And today, electric vehicles are the holy grail of the environment that we're all a part of, whether it's in Europe. And secondly, it's also part of what is a new style of investing, which is ESG.