Buffett Further Cut Stakes in BYD to Under 5%

TMTPost -- Legendary investor Warren Buffett constinues to unwind its longtime position in BYD Co., Ltd.to a level that is below Hong Kong stock exchange’s disclosure threshold.

Credit：BYD

Buffett’s Berkshire Hathaway sold 1,395,500 Hong Kong-listed BYD shares at an average price of HK$246.96 apiece (US$31.64) on July 16, according to a filing with the Stock Exchange of Hong Kong (HKEX) earlier this week. Following the sale, Berkshire’s stake in China’s No.1 electric vehicle (EV) manufacturer was down from 5.06% to 4.94%, representing sales of HK$344.63 million worth of shares. Through the latest move, the Omaha, Nebraska-based investment giant dropped its stake below the 5% threshold, which means it will no longer be required to disclose its position of BYD on the HKEX.

The sale last week is Berkshire’s third offloading that made public this year to date. A sale on June 11 is the fim’s first move since last October. The recent sales showcased the firm is stepping up stake reduction. The two disclosed sales last month dropped Berkshire’s stake by almost one percentage point in around a week, while it took the company seven months to reduce its stake to 6.9% from 7.98%.

As of this week, Berkshire has conducted sixteenth disclosed offloading in Hong Kong since August 2022, bringing it a total of nearlyHK$40billion by sales of more than 160million shares. The investment company unveiledon August 24 2022 about sales of 1.33 million shares, the first stake reduction since acquiring 225 million BYD shares for HK$8.00 each in September, 2008. The holding has been trimmed by 70% since first sale that reduced Berkshire’s holding in BYD to 19.97%. Prior to that sale, Berkshire held a 20.49% stake in BYD.

Buffett may plan to clear out all of his holdings in BYD and the stake reduction will accelerate once his company hold less than 5% stake, Chinese state-owned newspaper Securities Times cited industry analysts this week. The Hong Kong exchange requires larger shareholders to disclose sales when their resulting stakes fall below whole percentage numbers. Berkshire may cease disclosing BYD sales after its ownership stake falls below 5%.

As a long-term investor of BYD, Berkshire’s continuous offloading easily raises questions about the Chinese EV maker’s outlookamid the tariff threat, highlighting concerns of intense trade frictions.

Buffett called BYD “extraordinary” in an interview in Aprillast year, right after his company disclosed to lower its holdings from 11.13% to 10.9%. “We’ll find things to do with the money that I’ll feel better about,” the 93-year-old Chairman, CEO and Chief Investment Officer of Berkshire said.

At this year’s annual shareholders meeting in May, Buffett expressed his preference to investments in the U.S. "Our primary investments will always be in the United States," said Buffett when asked about Berkshire's appetite for increasing investments overseas, and in China specifically.

Berkshire made it clear that they will engage with more opportunities in U.S.markets, Nomura analyst Joel Ying said. Intense competition in China’s EV market is likely another major reason for trimming the BYD stake, he said.