After holding the stake for the past 14 years, Warren Buffett’s Berkshire Hathaway is continuing to reduce its long position in BYD, which is China’s largest home-grown electric vehicle manufacturer and Tesla’s major competitor.
According to a document made with the Hong Kong stock exchange on Tuesday, the famed investor’s conglomerate sold another 3.2 million Hong Kong-listed shares of BYD (BYDDF) last week, bringing the total number of shares it owns in the company down to 15.99%. The sale was estimated to be worth approximately $80 million.
According to the publicly available records, this transaction marks the fifth significant share sale made by Berkshire (BERK) of BYD shares since August. This month saw a substantial pick up in the pace of sales, with three deals completed so far in the month of November. Berkshire has not provided any information regarding the motivation behind the sales. Berkshire had been holding 225 million shares of BYD for 14 years before the first deal involving the company was made public in August.
In 2008, the American multinational corporation made its initial investment of $230 million to purchase BYD shares at an average price of HK$8 ($1.02) per share. During that time, BYD shares had reached an all-time low as a direct result of the ongoing global financial crisis. However, the share price has made a significant recovery since that time. In the year 2020, BYD’s shares that were listed in Hong Kong skyrocketed 437 percent as the business created their “Blade Battery” and the electric vehicle market in China flourished.
According to the manufacturer, the battery in the shape of a blade is both thinner and longer than traditional lithium iron cells. As a consequence of this, it is able to make the most efficient use of the space available within the battery pack. According to BYD, it has a lower risk of igniting even in the event that it has sustained significant damage.
BYD has already overtaken Tesla to become the most popular electric vehicle (EV) brand in China. In China, it had 103,157 sales of pure electric vehicles over the previous month. According to figures provided by the China Passenger Car Association, Tesla delivered 71,704 automobiles from its manufacturing in China. In comparison, BYD’s Hong Kong-listed shares reached an all-time high of HK$331.4 ($42) around the end of the month of June. That was approximately forty-one times more than what Berkshire spent for it fourteen years ago.
Since the beginning of the summer, Berkshire has been on a tear when it comes to selling its BYD stock. According to the most recent statement with the market, the conglomerate has sold off more than 49 million BYD shares over the course of the last four months.
It is unclear how much profit Berkshire has made from the sale of the property. However, the company has reported that the average price of each share in the five transactions that have taken place since August was approximately HK$205 ($26).
According to subsequent reports, using that average, Berkshire could have made a net profit of $1.2 billion by selling the 49 million shares, assuming a purchase price of HK$8. This is based on the assumption that the acquisition price was HK$8. According to the most recent pricing of BYD’s stock, the conglomerate’s existing holdings in the company are currently worth $3.9 billion.