Buffett Continues Sales of BYD, Cutting by More Than Half Since First Move in August

BEIJING, May 8 (TMTPOST)Legendary investor Warren Buffett offloaded stocks of BYD Co., Ltd. again, taking his stakes in China’s top electric vehicle (EV) maker to less than 10%.

Source: Visual China

Buffett’s Berkshire Hathaway sold 1.96 million Hong Kong-listed BYD shares at an average price of HK$235.64 (US$25.70) apiece on May 2, cashing in about HK$462 million (US$59 million), according to a filing with the Stock Exchange of Hong Kong (HKEX) on Monday. Following the sale, Berkshire’s holdings in the EV giant were down from 10.05% to 9.87%. This is the eleventh offloading made public in HKEX for Berkshire since last August. The investment company disclosed on August, 24 about sales of 1.33 million shares, its first stake reduction since acquiring 225 million BYD shares for HK$8.00 each in September, 2008. The holding was trimmed by more than half as it held 20.49% stakes in BYD prior to the first sale.

The ongoing sale doesn’t mean Buffett or leadership of his company turned bearish on BYD. BYD Executive Vice President Stella Li played down Berkshire’s sales in last December. According to Li, its “very natural” for Buffett to get some returns. The executive didn’t treat the offloading as any indication that the investor’s abandoning BYD. Instead, Buffett “loves” the company and its management since he will always be its biggest supporter, Li said.

Buffett called BYD “extraordinary” in an interview last month, right after his company disclosed to lower its holdings from 11.13% to 10.9%. “We’ll find things to do with the money that I’ll feel better about,” the 92-year-old Chairman, CEO and Chief Investment Officer of Berkshire said. He added that Berkshire wasn’t in a hurry to reduce further following that sale. While labeling another Chinese company TSMC as a “fabulous enterprise”, Buffett suggested geopolitical risk due to tensions between China and the United States made him re-evaluated and decided to reduce holdings in the chipmaker. “I didn’t re-evaluate the business, the management, or anything of the sort,” he noted.

Calling BYD his best investment in Berkshire, Charlie Munger, Buffett’s long term investment partner, said it is “almost ridiculous” how much it’s beating Tesla at the Daily Journal’s annual meeting in February. Berkshire initial investment is now “worth about $8 billion or maybe [$9 billion]. That’s a pretty good rate of return,” said the 99-year-old Vice Chairman of Berkshire. He admitted BYD now is not a cheap stock any more, but added “on the other hand, it’s a very remarkable company.”

At Berkshire’s annual meeting at the recent weekend, Munger just cited BYD when answering a question about what’s his view on artificial intelligence (AI) tech’s impact on the stocks, the market and society as a whole at the latest weekend. "Well, if you went into BYD's factories in China, you would see robotics going at an unbelievable rate. So, we're going to see a lot more robotics in the world. I am personally skeptical of some of the hype that is going into artificial intelligence," Munger shared.

Both Munger and Buffett urged U.S. to ease tensions with China at the meeting. Munged blasted increasing tensions between the two economies as “stupid, stupid, stupid”. “The one thing we should do is have a lot of free trade with China. Think of what Apple has done by engaging with China as a big supplier. Everything that increases the tension is stupid,” he stated. "It is imperative that China and the United States both understand what the game is and understand that you can't push too hard, but both places can be competitive and both can prosper," according to Buffett. “The vision that is out there that China will have a more wonderful country. The United States will have a more wonderful country.”