Latest Sale Reduces Holding to 6.9% as Buffett’s Conglomerate Capitalizes on Explosive Growth
Berkshire Hathaway (BRK.A), the investment conglomerate led by Warren Buffett, has further reduced its stake in China’s largest electric vehicle (EV) manufacturer, BYD. This move follows the influence of the late Charlie Munger, who was instrumental in Berkshire’s early investment in the company.
According to a filing with the Hong Kong Stock Exchange, Berkshire Hathaway sold an additional 1.3 million Hong Kong-listed shares of BYD for $39.8 million. This transaction decreased Berkshire’s holding from 7% to 6.9%. Under Hong Kong’s disclosure rules, any further reduction that brings Berkshire’s stake below 6% will necessitate another filing.
Berkshire Hathaway initially invested in BYD in 2008, purchasing approximately 225 million shares for around $230 million. This strategic bet paid off handsomely as the EV market experienced phenomenal growth in China and internationally. By April 2022, BYD’s share price had surged nearly 600% from its 2008 levels, prompting Berkshire to sell half its stake through various transactions in 2022 and 2023.
BYD, founded by Wang Chuanfu, began its journey in the 1990s as a battery manufacturer for mobile phones. By 2003, the company had transitioned into the automotive sector and quickly became a leading car brand in China and a major producer of EV batteries. In the fourth quarter of 2023, BYD surpassed Tesla to become the world’s top EV maker, selling more battery-powered vehicles than its American competitor.
Buffett has frequently credited Munger, Berkshire’s former vice chairman, for the successful investment in BYD. Munger’s acquaintance with BYD was facilitated by Li Lu, founder of Himalaya Capital. Buffett acknowledged in 2010 that Munger deserved “100 percent of the credit for BYD,” highlighting Munger’s significant role in identifying the potential of the Shenzhen-based company.
This continued divestment indicates Berkshire’s strategy to capitalize on BYD’s impressive growth while adjusting its investment portfolio.
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