Jul 23, 2024 07:09 PM
FINANCE
Buffett’s Moves on BYD Are Now Secret After Stake Falls Below 5%
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BYD’s own ship loads vehicles for export at Yantai Port in East China’s Shandong province on July 5. Photo: VCG
(Bloomberg) — When Berkshire Hathaway Inc. offloads another chunk of BYD Co. Ltd. shares — a stock it has held for more than 15 years — it will be done in secret.
Warren Buffett’s investment firm disclosed in a filing to the Hong Kong exchange Monday that its stake has fallen to 4.94% from 5.06%, and down from over 20% two years ago. Dropping below the 5% threshold means that Berkshire is no longer obligated to disclose any further sales, or whether it exits its position altogether.
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- Berkshire Hathaway's stake in BYD has fallen from over 20% two years ago to below 5%, removing the obligation to disclose further sales.
- BYD shares in Hong Kong dropped by 4% following the news, despite the company's strong market position and record vehicle sales.
- Early investments in BYD have seen significant returns, with BYD's value reaching nearly $100 billion, making it the third most valuable carmaker globally.
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Who’s Who
- BYD Co. Ltd.
- BYD Co. Ltd. is a Chinese automaker and the biggest producer of electric- and hybrid-vehicles globally, with a market valuation near $100 billion. Initially a battery provider, its strong vertical integration keeps costs down. Despite Berkshire Hathaway reducing its stake, BYD continues to thrive, selling a record number of vehicles in Q2.
- Berkshire Hathaway Inc.
- Berkshire Hathaway Inc., led by Warren Buffett, disclosed reducing its stake in BYD Co. Ltd. from 5.06% to 4.94%, down from over 20% two years ago. This drop below 5% means Berkshire is no longer required to disclose further sales. Despite Berkshire's selldown, BYD continues to perform strongly, selling nearly 1 million vehicles in the second quarter.
- Tesla Inc.
- Tesla Inc. is mentioned as one of the top three most-valuable carmakers globally, alongside Toyota Motor Corp. and BYD, which has a market valuation just shy of $100 billion. Additionally, Shenzhen-based hedge fund Snow Bull Capital holds stakes in both BYD and Tesla.
- Toyota Motor Corp.
- The article mentions Toyota Motor Corp. as the third most-valuable carmaker globally, following Tesla Inc. and ahead of BYD, which has a market valuation just shy of $100 billion.
- Himalaya Capital
- Himalaya Capital, chaired by Li Lu, once held 75 million shares of BYD, accounting for around an 8.2% stake. Its interest diminished below 5% in 2021. Li Lu recommended the Chinese automaker BYD to the late Charlie Munger, Berkshire Hathaway's former vice-chairman.
- Snow Bull Capital
- Snow Bull Capital is a Shenzhen-based hedge fund that holds stakes in both BYD and Tesla. The fund believes BYD initially benefited from Warren Buffett's endorsement when it was lesser-known. However, the CEO of Snow Bull, Taylor Ogan, suggests that Berkshire Hathaway fully divesting its stake would be beneficial for BYD's stock in the long term.
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What Happened When
- 2008：
- Berkshire Hathaway purchased 225 million of BYD’s Hong Kong-listed shares for $232 million.
- 2021：
- Himalaya Capital's interest in BYD dipped below 5%.
- Between April and June 2024：
- BYD sold just shy of 1 million cars, a record number.
- By July 22, 2024：
- Berkshire Hathaway's stake in BYD fell to 4.94% from 5.06%, no longer requiring disclosure of further sales.
- July 23, 2024：
- News of Berkshire Hathaway's reduced stake sent Hong Kong-listed BYD shares down as much as 4%.
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