Buffett Exits BYD: Stock Dips After Full Stake Sale

• BYD Co. (BYDDY) shares fell more than 3% following Berkshire Hathaway Inc.’s (BRK.A, BRK.B) complete divestment of its long-held stake, ending a 15-year investment that began with 225 million shares in 2008 and yielded over 4,500% returns by March 31.
• The sale, confirmed by Berkshire and reflected in a subsidiary filing valuing the investment at zero, aligns with ongoing reductions since mid-2022, amid BYD’s 30% share decline from its peak due to intense competition in China’s electric vehicle market.
• BYD, which transformed from a battery supplier to the nation’s leading electric and hybrid vehicle producer, received gratitude from its public relations manager for the 17 years of support from Warren Buffett and Charlie Munger, who initially recommended the investment.

BYD Co. (BYDDY) shares experienced a notable decline of 3.4%, positioning the company among the weakest performers on an index tracking Chinese stocks in Hong Kong. This drop followed reports that Berkshire Hathaway Inc. (BRK.A, BRK.B) had completely divested its holdings in the electric vehicle manufacturer, marking the end of a significant investment relationship. A spokesperson for Berkshire confirmed the exit, with a subsidiary filing indicating the investment value stood at zero as of March 31.

The divestment concludes a holding period exceeding 15 years for Berkshire, which initially acquired 225 million shares in September 2008. Over that span, BYD’s stock appreciated dramatically by more than 4,500% from the day prior to the purchase through March 31 of this year. This performance reflects BYD’s evolution from a modest battery supplier for mobile devices into China’s leading producer of electric and hybrid vehicles, a transformation that unfolded across the past two decades amid rapid advancements in renewable energy technologies and shifting global automotive demands.

Berkshire’s reduction of its stake began in mid-2022, eventually falling below 5% last year, which relieved the firm of disclosure requirements under Hong Kong Stock Exchange rules for subsequent transactions. The sale aligns with broader market dynamics, as BYD’s shares have fallen approximately 30% from their peak four months earlier, pressured by intensifying rivalry in China’s electric vehicle sector, where aggressive pricing strategies have eroded profit margins for many players.

BYD’s branding and public relations general manager, Li Yunfei, acknowledged the development on Weibo, noting that buying and selling stocks represent standard practices in investing. He expressed appreciation for the 17 years of support from Warren Buffett and Charlie Munger, who was instrumental in recommending the investment alongside Himalaya Capital’s Chairman Li Lu. Munger’s endorsement stemmed from his recognition of BYD’s potential in sustainable transportation, a sector that has since expanded globally with increasing adoption of battery-electric and plug-in hybrid models.

This move by Berkshire occurs against a backdrop of evolving investment landscapes in clean energy, where companies like BYD continue to innovate in battery technology and vehicle integration, despite facing domestic competition from established automakers and emerging startups. The firm’s growth has been bolstered by government incentives for electric mobility in China, contributing to its dominant market share in new energy vehicles. As investors reassess holdings in volatile sectors, such exits highlight the disciplined approach of value-oriented firms like Berkshire, which prioritize long-term fundamentals over short-term fluctuations.

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