The American holding company Berkshire Hathaway, which Warren Buffett founded, recently reduced its stake in the Chinese electric vehicle and battery manufacturer BYD. Since purchasing the shares in 2008, this is the first time the company has trimmed its holding, according to Associated Press.
In a regulatory filing with the Hong Kong stock exchange on Tuesday, Berkshire Hathaway stated that it had sold 1.33 million of its BYD shares for around $47 million ($368.8 million Hong Kong dollars) just after weeks of speculation.
In 2008, Berkshire purchased 225 million BYD shares for $232 million. The worth of those shares had risen to around $7.7 billion by the end of the previous year. Buffett’s BYD investment and his many other successes over the decades are the reason why many investors pay close attention to his decisions.
Even when auto sales in BYD’s home market China declined, the company acquired a sale increase in the first half of this year and helped it gain market share. Additionally, due to its rapid EV sales, BYD’s revenue increased by about 66% in the first half of 2022, and its net income more than tripled to $520 million (3.6 billion yuan), as per the earnings report this week.
In its mid-year report, the company noted that “China’s macro economy came under the pressure of shrinking demand, supply shock and weakening expectations, which resulted in the weakened consumer confidence, declined prosperity of (the) real estate industry, and underperformed investment.”
Prior to the most recent stock sales, Berkshire stated that it owned 7.7% of BYD. However, Berkshire reported a modest decrease from 20.49% to 19.92% in its holdings of BYD shares issued in Hong Kong.
CEO Buffett and Vice Chairman Charlie Munger of Berkshire have previously commended Wang Chanfu, the chairman and founder of BYD. The two highest authorities of Berkshire claimed that they were investing in Wang even more than in BYD’s technology.
Wang, according to Munger, was able to take one-third of the lithium battery market away from Japanese producers by 2010, an accomplishment that at the time seemed inconceivable.
“I have never in my life felt more privileged to be associated with something than I feel about BYD,” Munger said during Berkshire’s annual shareholder meeting in 2009.
In 2010, Buffett even traveled to a BYD factory in China to show his support for the business.
Buffett’s conglomerate, which is based in Omaha, Nebraska, holds more than 90 businesses outright in addition to investments, including Geico insurance and BNSF railroad. It also owns several significant utilities and a diverse range of retail and manufacturing firms like Dairy Queen, Helzberg Diamonds, and Precision Castparts.
Interestingly, Buffett did not answer immediately when questioned on Tuesday about the sale of BYD stock. Nonetheless, the value of its remaining shares was over $7.3 billion, giving the business an unrealized gain on investment of over $7 billion as of Tuesday’s close.
