No. of Recommendations: 16
This is from CNBC's Buffett Watch email last night:
Berkshire totally exits its profitable stake in Chinese EV maker
Berkshire Hathaway has completed exited its extremely profitable equity investment in the Chinese electric vehicle maker BYD.
In August of 2022, Berkshire started to reduce the 225 million share position it purchased in 2008 for $230 million.
That followed a 41% jump in the value of the position during that year's second quarter to $9 billion.
By June last year, Berkshire had sold almost 76% of its stake, bringing it just under 5% of BYD's outstanding shares.
By crossing below that level, Berkshire no longer had to disclose subsequent sales under the Hong Kong exchange's rules, so as far as we knew the company owned 54 million shares.
A Buffett Watch reader, however pointed out to me that the Q1 financial filing by Berkshire Hathaway Energy, the subsidiary that held the shares, listed the value of the investment as zero as of March 31.
A Berkshire spokesperson confirmed to me today that the entire BYD position has indeed been sold.
Based on the investment values listed in BHE's reports, the sales continued after the stake fell below 5% last year.
Berkshire made its initial purchase 17 years ago at the urging of Charlie Munger.
At the 2009 annual meeting, he told shareholders that even though it looked like "Warren and I have gone crazy," he saw the company and its CEO, Wang Chuanfu, as a "damn miracle."
It was an incredible call. BYD shares increased by roughly 3890% during the years Berkshire owned them.
Buffett has not explained in detail why Berkshire started selling, but in 2023 he told CNBC's Becky Quick that BYD is an "extraordinary company" being run by an "extraordinary person," but "I think that we'll find things to do with the money that I'll feel better about."
Around the same time, Berkshire sold almost all of the company's Taiwan Semiconductor stake, roughly $4 billion of stock, just months after the shares were purchased as he "reevaluated" the geopolitical risk posed by Beijing's claim that Taiwan is part of China. "It's a dangerous world," he said.
