Warren Buffett's Berkshire Hathaway Further Reduces Position In This Tesla Rival, An Investment Charlie Munger First Recommended

Berkshire Hathaway, Inc. BRK BRK, the investment holding firm, run by revered investor Warren Buffett on Monday disclosed trimming stake in China-based electric-vehicle maker BYD Co Ltd. BYDDY BYDDF.

What Happened: Berkshire sold 1.3 million Hong Kong-listed shares of BYD, with the sale fetching the firm proceeds of HK$ 310.5 million ($39.8 million), a Hong Kong stock exchange filing showed. The disposal was done on June 11.

Berkshire has been offloading shares of BYD in small quantities over the years, and the most recent divestment has left it with a stake of 6.90%, down from 7.98% in late October 2023, when it sold 820,500 shares.

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Why It’s Important: Berkshire first invested in BYD in 2008 at the behest of Buffett’s trusted lieutenant Charlie Munger. The duo paid $232 million back then to pocket 225 million BYD shares, representing 25% of the company’s Hong Kong-listed shares, or 9.9% of the overall company, a Business Insider report said.

Thanks to a string of profit taking in the stock, the stake now stands reduced below the 10% level.

BYD, which initially started out as an ICE vehicle manufacturer, transitioned to a fully electric company in 2022. The company now sells both battery EVs and hybrids and is among the top sellers of new-energy vehicles in China. It has also expanded its offerings to developing markets overseas to capitalize on the demand for low-cost EVs in these countries. BYD also has a thriving EV battery manufacturing business.

In a Feb. 2023 annual meeting of Daily Journal, Munger lauded BYD as the frontrunner in the EV arena. "I have never helped do anything at Berkshire that was as good as BYD,” he reportedly said.

Previously, he had referred to BYD founder Wang Chuanfu as a “combination of Thomas Edison and Jack Welch.”

The successive trimming may not flag a lack of confidence on the part of Buffett and the team. Berkshire recently slashed its position in Apple, its top holding, and Buffett clarified at the annual shareholder meeting that the selling was to meet tax expenses and the desire to hold cash amid an uncertain economic environment.

The Hong Kong-listed BYD shares ended Monday’s session up 1.74% at HK$ 233.40. The U.S.-listed ADRs of BYD trading over the counter under the ticker symbol BYDDY, ended Friday’s session down 0.78% at $58.20, according to Benzinga Pro data.

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