Warren Buffett’s conglomerate
Berkshire Hathaway
sold more stock in Chinese electric-vehilcle leader
BYD.
The reason why is still a mystery, and doesn’t seem to line up with recent comments from Berkshire Vice Chairman Charlie Munger.
Recently,
Berkshire Hathaway
(ticker:
BRKb
) sold 2.5 million of the Hong Kong-listed shares of BYD (1211.Hong Kong) worth about $86 million, according to reports citing Hong Kong exchange filings.
Berkshire Hathaway didn’t immediately respond to a request for comment about the sale.
It isn’t Berkshire Hathaway’s first sale. It has been selling relatively small blocks of BYD stock from time to time over the past couple of years. One of the recent sales was a May sale of roughly 2 million shares worth about $60 million.
Berkshire Hathaway originally purchased its BYD stake in 2008. Shares are up roughly 33-fold since then, working out to an average annual gain of about 26%.
BYD shares really took off around 2020, about the same time Tesla (TSLA) shares started to rise significantly. EVs were the reason. Tesla is the largest seller of all-battery EVs on the planet, with BYD at number two. In China, however, BYD is tops. The two companies are the only EV makers that are consistently profitable.
Together, the pair have roughly 30% of the entire global market for battery-electric cars.
BYD’s rise has drawn praise from Berkshire Hathaway’s Munger, at the expense of Tesla. “BYD is so much ahead of Tesla in China…it’s almost ridiculous,” he told CNBC’s Becky Quick in February.
That hasn’t stopped the sales though. Perhaps Buffett doesn’t like the car-manufacturing business as much as his longtime partner. He was asked about opportunities arising from EVs at Berkshire Hathaway’s May annual shareholder meeting.
“I would say that Charlie and I felt that the auto industry is just too tough,” said Buffett, adding later that picking long-term winners and losers in the car business is hard. Berkshire Hathaway is in the car business, of course, as it owns 80 car dealerships.
Perhaps Berkshire Hathaway’s stock sales are just about profit-taking.
Whatever the reason, investors appear to be used to stock sales. BYD stock was down 0.6% in overseas trading while the
Hang Seng Index
dropped 0.5%. BYD’s U.S.-listed American depositary receipts, or ADRs, which trade under the symbol BYDDY, are up 0.5% in Monday trading, while the
S&P 500
and
Nasdaq Composite
are up 0.3% and 0.6%, respectively.
Write to Al Root at allen.root@dowjones.com
Read the full article here