Buffett's Berkshire sells more shares in China's BYD

Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) has continued trimming its large stake in Chinese automaker BYD (1211.HK), according to a filing listed today with the Hong Kong Stock Exchange.

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As reported by Reuters, the filing states that Berkshire Hathaway unloaded 3.297 million Hong Kong-listed shares of BYD, netting $71.35 million in proceeds. Following the sale, Berkshire’s stake in BYD dropped to 17.92% from 18.22%, still keeping Berkshire a large shareholder.

However, today’s disclosure follows additional Berkshire sales of BYD shares that occurred in late August and early September, when Berkshire offloaded 3.05 million shares in total. Prior to these recent stock sales, Berkshire held 225 million shares of BYD.

The future of Berkshire’s long-time holding of BYD was in doubt earlier this summer when a 20.49% position in BYD, which was identical in size to Berkshire’s BYD holding, was seen in the Hong Kong Stock Exchange’s Central Clearing and Settlement System in July. The listing in the clearing and settlement system was seen as an indication that Berkshire may be selling some, or all, of its stake in BYD.

Berkshire bought into BYD back in September of 2008 during the throes of the financial crisis, with a 225 million share purchase worth around $230 million. Before it started selling parts of the stake late in the summer, Berkshire’s stake was worth around $7.7 billion.

© Provided by Yahoo Finance US BEIJING – SEPTEMBER 29: (CHINA OUT) Berkshire Hathaway Vice-Chairman Charles Thomas Munger (L) and Berkshire Hathaway CEO Warren E. Buffett attend a BYD Co Ltd new product launch conference at China World Hotel on September 29, 2010 in Beijing, China. BYD, an electric car and battery maker, recently received a boost when Buffet delievered favorable remarks about the company during an event hosted by BYD. (Photo by Visual China Group via Getty Images)

According to Fortune, Buffett was intrigued by Charlie Munger’s description of Wang Chuan-Fu, the founder of BYD, whom Munger had met through a mutual friend. “This guy,” Munger said, “is a combination of Thomas Edison and Jack Welch — something like Edison in solving technical problems, and something like Welch in getting done what he needs to do. I have never seen anything like it.”

Buffett has been known to hang on to stakes in companies he likes for many, many years. But he’s also been known to pull the plug on investments when he thinks it’s time, or at the very least, take some money off the table. It appears Berkshire was doing just that with BYD, beginning the initial share sales only a few days after BYD reported strong earnings for the first half of 2022, with net income tripling compared to a year ago.

BYD is also the top “new energy” vehicle seller in the all-important Chinese car market, selling 217,518 vehicles in October alone. New energy vehicles include both hybrid and EVs.

Hong Kong–listed shares of BYD are down 26% year to date, but are up 5% today on the back of optimism surrounding the relaxing of COVID-19 restrictions in China.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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