Berkshire Sells Its Stake in Chinese EV Company BYD

Berkshire Hathaway has completely divested from its highly lucrative investment in the Chinese electric vehicle manufacturer, BYD.

Timeline of Berkshire's Exit from BYD Investment

The process began in August 2022 when Berkshire started reducing its 225 million shares, which had been acquired for $230 million.

The value of these shares had increased by 41% during the second quarter of that year, reaching approximately $9 billion.

By June the following year, the holding was reduced to just below 5% of BYD’s outstanding shares.

Crossing under the 5% threshold meant Berkshire no longer needed to openly report further sales, according to Hong Kong exchange rules.

Disclosure of Complete Sell-Off

Nevertheless, updated documents from Berkshire Hathaway Energy divulged that as of March 31, the investment's value was marked as zero.

A company spokesperson confirmed that Berkshire's entire stake in BYD had indeed been liquidated.

The decreasing investment values in BHE's reports indicated ongoing sales after the share count fell beneath 5%.

Initial Investment Motivated by Munger

Seventeen years prior, Berkshire made the decision to invest in BYD based on Charlie Munger’s recommendation.

During the 2009 annual meeting, Munger expressed his confidence in the company and its CEO, Wang Chuanfu.

The investment proved prophetic, as BYD's stock value grew by nearly 3890% during Berkshire's ownership.

Berkshire’s Strategic Decision

Though Warren Buffett has not provided a detailed explanation for the divestment, he commended BYD in 2023 as an ‘exceptional’ company led by an ‘extraordinary’ CEO.

Buffett hinted at reallocating the capital into other ventures he felt comfortable with.

Around the same period, concerns about geopolitical risks influenced Berkshire to reduce its holdings in other regions.