Berkshire Hathaway reduces BYD stake below 5 percent, focusing on U.S. markets amidst rising tensions
Warren Buffett’s Berkshire Hathaway has reduced its stake in BYD to less than 5 percent, according to The Wall Street Journal.
This further unwinds its long-term investment in China’s largest electric vehicle maker
The Omaha-based investment firm recently lowered its stake in BYD to 4.94 percent from 5.06 percent, selling 1.4 million H shares at an average price of 246.96 Hong Kong dollars (US$31.64) each, as reported in an exchange filing on Monday.
This drop below the 5 percent threshold means Berkshire will no longer need to disclose its sales of BYD stock on the Hong Kong stock exchange.
BYD shares recently fell by 3.9 percent in both Hong Kong and Shenzhen on Tuesday. Despite this, the company’s Hong Kong-listed shares have risen about 10 percent this year, while its China-listed shares have gained nearly 30 percent.
Analysts were not surprised by the stake sale, noting that Berkshire has been consistently trimming its stake in BYD since August 2022, following a period when shares hit a record high and Berkshire’s shareholding exceeded 20 percent. At its peak in 2008, Berkshire held nearly a 40 percent stake in BYD.
“It’s a profitable investment, but eventually Berkshire will sell all of its shares of BYD,” said Angus Chan, an auto sector analyst at Bocom International.
Nomura analyst Joel Ying cited US-China geopolitical tensions as a likely reason for the unwinding, adding that Berkshire has indicated a preference for engaging more with opportunities in US markets.
Ying also pointed to intense competition in China’s EV market as another major factor for the decision to trim the BYD stake.
Berkshire did not immediately respond to a request for comment. In May, Buffett stated that his late business partner, Charlie Munger, had initially pushed for the investment in BYD, but that Berkshire would focus its primary investments in the US going forward.
Earlier in 2023, Berkshire sold all its holdings in Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker, partly due to concerns about rising tensions between China and Taiwan
