Buffett further cuts investment in biggest electric car maker

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Warren Buffett’s Berkshire Hathaway continues to trim its long position in BYD, China’s biggest domestic electric vehicle maker and Tesla’s main rival, after holding it for 14 years.

The legendary conglomerate of investors sold an additional 3.2 million shares of BYD listed in Hong Kong last week, reducing its stake to 15.99%, a Hong Kong stock exchange filing showed on Tuesday.

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The sale was valued at approximately $80 million.

It is BYD’s fifth-biggest Berkshire stock sale since August, according to public records. The pace of sales has picked up significantly this month, with three transactions so far in November.

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Berkshire did not disclose the reason for the sales. The company did not immediately respond to a request for comment from CNN Business 🇧🇷

Before the first deal was unveiled in August, Berkshire owned 225 million BYD shares for 14 years.

The American conglomerate first bought BYD shares at an average of HK$8 (US$1.02) each in 2008, with an investment of US$230 million.

By that time, BYD stock had fallen to a record low during the global financial crisis.

But the stock has rebounded sharply since then. In 2020, Hong Kong-listed BYD shares soared 437% as the company developed its “Blade Battery” and China’s EV market exploded.

The company says the blade-shaped battery is thinner and longer than conventional lithium iron cells. As a result, you can maximize the use of available battery space. It’s also less likely to catch fire even when it’s severely damaged, according to BYD.

BYD has already overtaken Tesla to become China’s top-selling EV brand. Last month, it sold 103,157 pure electric vehicles in China. By comparison, Tesla has delivered 71,704 vehicles from its factory in China, according to data from the China Passenger Car Association.

At the end of June, Hong Kong-listed BYD shares hit a record high of HK$331.4 (US$42). That was about 41 times the price Berkshire paid 14 years ago.

Since the summer, Berkshire has been on a BYD selling spree. Based on the latest stock exchange listing, the conglomerate has divested more than 49 million BYD shares in the last four months.

It’s unclear how much Berkshire profited from the sale. But the average price of each share in the five deals reported by the company since August has been around HK$205 (US$26).

Using that average, Berkshire could have made a net profit of $1.2 billion by divesting the 49 million shares, assuming a purchase price of HK$8, according to a calculation by CNN Business 🇧🇷

The conglomerate’s current stake in BYD is $3.9 billion, based on the latest share price.

Source: CNN Brasil

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