Warren Buffett’s Berkshire Hathaway has been investing in Chinese automaker BYD since 2008. The company has now sold 1.33 million shares in BYD, reducing its stake in the automaker. The investment has increased in value over the years, and now sells shares for 47 million dollars.
Image credits: Yahoo Finance
Berkshire paid $232 million for BYD’s $225 million acquisition in 2008. The success of BYD’s investment is just one example of why many investors follow Buffett’s moves closely because he has a remarkably successful track record over the decades. Beidi said in its earnings report this week that sales of its vehicles rose in the first half of this year, helping it grow its market share, even as car sales in the domestic Chinese market continued to decline. It said revenue surged nearly 66% in the first half of this year, driven by rapid growth in electric vehicle sales, and net income more than tripled to $520 million (3.6 billion yuan).
Buffett, the billionaire chairman and CEO of Berkshire, who turns 92 today, said his 98-year-old business partner Charlie Munger was the inspiration for the investment.
Investments
Berkshire said it owned about 7.7% of BYD before the latest share sales, and that figure will not change much after the sale. Berkshire Hong Kong-issued BYD shares fell slightly from 20.49% to 19.92%. In the past, Buffett and Berkshire Vice Chairman Charlie Munger have admired BYD’s chairman and founder Wang Chanfu and said they are investing more in BYD’s technology. Munger says Wang has accomplished a number of feats that seemed impossible at the time, including taking a third of the lithium battery market from Japanese manufacturers in 2010.
Berkshire owns dozens of businesses, including BNSF Railroad and Geco auto insurance, and stocks such as Apple Inc and Bank of America Corp. He did not announce plans to sell individual stocks, knowing that other investors could follow Buffett’s example and sell their own. Berkshire spent more than $57 billion this year on oil companies such as Occidental Petroleum Corp. and Chevron Corp.
Sales of electric vehicles in China have increased in recent months, benefiting from government measures to stimulate demand. On Monday, the increase in sales from January to June helped offset disruptions from the supply chain and the domestic Covid-19 outbreak, Bydi said. BID has overtaken Elon Musk’s Tesla Inc as the world’s largest seller of electric vehicles. In a research note on Tuesday, Daiwa Capital Markets analyst Kelvin Lau raised his 12-month price target for BYD, but said the Berkshire sale could put the stock “under pressure” in the near term.
Comments
