Berkshire Hathaway: Warren Buffett further unravels BYD’s China investments

Hong Kong
CNN Business

Warren Buffett’s Berkshire Hathaway continues to unwind its large position in BYD, China’s largest domestic electric vehicle maker and Tesla’s main rival, after 14 years of holding it.

The legendary conglomerate sold another 3.2 million shares of Hong Kong-listed BYD ( BYDDF ) last week, reducing its stake to 15.99%, a filing on the Hong Kong Stock Exchange showed on Tuesday. The value of the sale was approximately $80 million.

It is the fifth major stock sale by Berkshire (BERK) of BYD stock disclosed since August, according to public filings. The pace of sales has picked up significantly this month, with three transactions so far in November.

Berkshire has not disclosed the reason for the sales. The company did not immediately respond to a request for comment from CNN Business.

Before the first deal was revealed in August, Berkshire had owned 225 million BYD shares for 14 years.

The American conglomerate bought shares of BYD for the first time on average of HK$8 ($1.02) a piece in 2008, with an investment of $230 million. Back then, BYD’s shares had fallen to an all-time low during the global financial crisis.

But the stock has rebounded sharply since then. In 2020, BYD’s Hong Kong-listed shares rose 437% as the company developed its ‘Blade Battery’ and China’s electric vehicle market boomed.

The company says the blade-shaped battery is thinner and larger than conventional lithium iron cells. As a result, it can maximize the use of available space within the battery. It is also less likely to catch fire even when severely damaged, according to BYD.

BYD has already overtaken Tesla to become the best-selling EV brand in China. Last month, it sold 103,157 all-electric vehicles in China. By comparison, Tesla delivered 71,704 vehicles from its factory in China, according to data from the China Passenger Automobile Association.

In late June, BYD’s Hong Kong-listed shares hit a record high of HK$331.4 ($42). That was about 41 times the price Berkshire paid 14 years ago.

Since the summer, Berkshire has been on a BYD stock selling spree. Based on the latest exchange filing, the conglomerate has disposed of more than 49 million BYD shares in the past four months.

It’s unclear how much profit Berkshire made on the sale. But the average price per share in the five deals disclosed by the company since August was about HK$205 ($26).

Using that average, Berkshire may have made a net profit of $1.2 billion by offloading the 49 million shares, assuming a purchase price of HK$8, according to a CNN Business calculation. The group’s current stake in BYD is worth $3.9 billion, based on the latest share price.

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