Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) has reduced its stake in the Chinese electric vehicle (EV) maker BYD Co. Limited (HK:1211) to below 5%. According to the company’s filings, Berkshire sold 1.4 million H shares of BYD at an average price of HK$246.96 ($31.64) per share, reducing the stake to 4.94% from 5.06%.
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At this level, the American investment group is no longer required to disclose its holdings in BYD. The Hong Kong Stock Exchange mandates that companies disclose their holdings in Hong Kong-listed firms. However, disclosure is no longer required once ownership falls below 5%.
BYD shares have lost nearly 3% as of writing.
Berkshire’s BYD Investment
Berkshire, led by renowned investor Warren Buffett, started investing in BYD in 2008 by acquiring a 10% stake for $230 million. The investment group started offloading its shares in BYD in August 2022, followed by multiple divestments.
Previously, Berkshire cut its stake in BYD’s H-shares to 5.99% as of June 19, down from 7.02% on June 11. Earlier in May, Buffett revealed that his late business partner, Charlie Munger, had initially advocated for investing in BYD. Moving forward, Berkshire will concentrate its main investments in the U.S.
In terms of operational performance, BYD set a new record with 341,658 NEV (new energy vehicles) sales in June 2024, marking a 35% increase from last year and a 3% rise from the previous month.
Analysts’ Reactions
Overall, analysts are not surprised by the recent move, considering the series of sales over the last few years.
Analyst Angus Chan from BOCOM International stated he expected the investment firm to eventually book profits and sell off its shares. Meanwhile, analysts from Nomura pointed to geopolitical tensions between the U.S. and China as a likely factor behind the stake cut.
Is BYD a Good Stock to Buy Now?
According to TipRanks, 1211 stock has received a Strong Buy rating, backed by 11 Buy recommendations. The BYD Co. share price target is HK$328.40, which implies an upside of 33.5% from the current trading level.
