Berkshire Hathaway Exits BYD After 3800% Gain

In a significant move, the investment firm Berkshire Hathaway, led by renowned investor Warren Buffett, has completely exited its stake in BYD, a prominent Chinese electric vehicle manufacturer. This decision comes after a 17-year investment period that saw substantial gains for Berkshire Hathaway.

BYD's public relations director responded to the news, acknowledging that buying and selling stocks is a normal part of the investment process. The director expressed gratitude to Buffett and his long-time business partner Charlie Munger for their support and recognition of BYD over the past 17 years, and praised their commitment to long-term investment strategies.

Buffett's initial investment in BYD was made in 2008, when he purchased 225 million shares at a cost of 2.3 billion USD, following a recommendation from Munger. Berkshire Hathaway held onto these shares for 14 years, during which time the value of their investment in BYD increased by more than 38 times, reaching 9 billion USD by 2022.

Berkshire Hathaway began gradually reducing its stake in BYD in August 2022. By June 2024, the firm had sold most of its shares, reducing its holding to less than 5% of BYD's issued shares. This reduction in holding meant that Berkshire Hathaway was no longer required to disclose further sales of BYD shares under Hong Kong exchange regulations.

At that time, the company still held 54 million shares. If dividends and other factors are not considered, and based on the average selling price of 228.57 HKD per share, it is estimated that Buffett's total cash inflow from this round of share sales was approximately 39 billion HKD.

However, Berkshire Hathaway's divestment activities continued after this point. According to market sources, Berkshire Hathaway Energy Company, a subsidiary of Berkshire Hathaway that held BYD shares, reported in its first-quarter financial report for this year that its holding value in BYD had fallen to zero as of March 31.

A spokesperson for Berkshire Hathaway confirmed that the company had indeed sold all of its BYD shares. Buffett has not publicly explained the reasons behind his decision to reduce his stake in BYD. However, Munger has frequently praised BYD in public, describing the company and its CEO Wang Chuanfu as a "miracle" at the 2009 annual shareholder meeting.

In 2023, after Berkshire Hathaway had already begun reducing its stake in BYD, Buffett told the media that he believed BYD was an "extraordinary company" run by an "extraordinary person." However, he also stated that he believed they would find more satisfying investment opportunities to manage this capital.