Buffett reduced its stake in BYD
Buffett’s Berkshire Hathaway has reduced its stake in BYD to less than 5%. Warren Buffett’s Berkshire Hathaway has reduced its stake in BYD to less than 5%, continuing to adjust its long-term investment in China’s leading electric-vehicle manufacturer.
An investment firm based in Omaha, Nebraska recently decreased its stake in BYD to 4.94% from 5.06%. They sold 1.4 million H shares at an average price of 246.96 Hong Kong dollars (US$31.64) per share, as reported in an exchange filing on Monday. When falling below the 5% threshold, Berkshire will no longer have to disclose its sales of BYD stock on the Hong Kong stock exchange.
Shares of BYD experienced a 3.9% decline in both Hong Kong and Shenzhen on Tuesday. The company’s Hong Kong-listed shares have experienced a modest 10% increase this year, while its China-listed shares have seen a significant gain of nearly 30%.
Experts noted that the stake sale was expected, as Berkshire has been consistently reducing its stake in BYD since August 2022. This decision was made shortly after BYD’s shares reached a new all-time high and when Berkshire’s ownership exceeded 20%. During its peak in 2008, Berkshire had an almost 40% stake.
“It’s a lucrative investment, but ultimately Berkshire will divest all of its holdings in BYD,” stated Angus Chan, an automotive industry analyst at Bocom International.
According to Nomura analyst Joel Ying, the unwinding could be attributed to the geopolitical tensions between the United States and China.
According to Ying, Berkshire has expressed their intention to explore further opportunities in the U.S. markets. According to him, the decision to reduce the BYD stake may be attributed to the fierce competition in China’s EV market.
Berkshire did not respond to a request for comment right away.
Buffett mentioned in May that his late business partner, Charlie Munger, was the one who first suggested investing in BYD. However, moving forward, Berkshire will primarily focus its investments in the U.S.
In early 2023, Berkshire decided to sell off all its holdings in Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker. This decision was influenced by concerns surrounding the escalating tensions between China and Taiwan.
