Saturday, July 13, 2024

Berkshire Hathaway trims stake in China’s BYD, a “rewarding exception” for Buffett

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Warren Buffett’s Berkshire Hathaway has reduced its stake in China’s BYD, which lost its position as the world’s largest seller of electric vehicles to Tesla last year.

Berkshire sold 1.3 million Hong Kong-listed BYD shares for HK$310.5 million ($39.8 million), reducing its stake in BYD’s issued H-shares to 6.90% from 7.02%, according to a filing with the Hong Kong stock exchange.

See also: BYD and CATL Set Sights on EV Batteries with 6C Charge Rate

Credit: BYD

Buffett’s company first invested in Shenzhen-based BYD in 2008, purchasing about 225 million shares for $230 million, giving it a 10% stake at the time. The investment began to be trimmed in 2022 as BYD’s share price surged over 20-fold, peaking in June 2022 before falling approximately 30%.

The decision to invest in BYD was largely influenced by Charlie Munger, Berkshire’s late vice chairman. Munger, speaking at the 2023 annual meeting of the Daily Journal, expressed his admiration for BYD, stating, “I had never helped do anything at Berkshire that was as good as BYD.”

See also: BYD Considering Second Passenger Car Factory in Europe Amid EU Tariff Threats

Credit: BYD

While Berkshire primarily invests in the United States, Buffett highlighted BYD as a notable exception. “Charlie twice has pounded the table with me and just said, you know, ‘Buy, buy, buy,'” Buffett told shareholders at the recent annual meeting in Omaha, Nebraska. “BYD was one of them, and Costco was the other…. He was right, big time, in both companies.”

The move to reduce its stake in BYD reflects Berkshire Hathaway’s strategy to manage its investment portfolio actively.

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