Berkshire Hathaway: Warren Buffett further unties BYD China investment

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CNN Business

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

The legendary conglomerate of investors sold an additional 3.2 million shares of Hong Kong-listed BYD (BYDDF) last week, reducing its stake to 15.99%, according to a Hong Kong stock exchange filing shown on Tuesday. The sale was valued at around $80 million.

This is the fifth major stock sale by Berkshire (BERK) of BYD shares disclosed since August, according to public records. The pace of sales has increased significantly this month, with three deals so far in November.

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

Prior to the disclosure of the first deal in August, Berkshire had held 225 million shares of BYD for 14 years.

The American conglomerate first bought BYD shares at an average price of HK$8 ($1.02) each in 2008, with an investment of $230 million. At the time, shares of BYD had fallen to an all-time high during the global financial crisis.

But the title has rebounded strongly since then. In 2020, shares of Hong Kong-listed BYD soared 437% as the company developed its “Blade Battery” and China’s electric vehicle market exploded.

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

BYD has already overtaken Tesla to become China’s top-selling electric vehicle brand. Last month, it sold 103,157 pure electric vehicles in China. By comparison, Tesla delivered 71,704 vehicles from its Chinese factory, according to data from the China Passenger Car Association.

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

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

It’s unclear how much Berkshire profited from the sale. But the average price of each share in the company’s five disclosed transactions since August was around HK$205 ($26).

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

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