By
Svetlana Soroka
April 18th, 2024
Berkshire Hathaway made its first move to acquire BYD shares after the global financial crisis of 2008, stacking up $230 million worth of the stock at the time at an average price of HK$8 ($1.02).
American multinational conglomerate holding company, Berkshire Hathaway Inc (NYSE: BRK.A) has reduced its stake by offloading some of the shares of Chinese automaker, BYD Ord Shs H (HKG: 1211). As reported by Reuters, the Warren Buffett-owned Berkshire Hathaway sold off exactly 1.33 million shares of BYD, a number that amounts to $34.43 million.
Berkshire Hathaway ranks as one of the biggest and oldest shareholders of the electric automaker and for about 14 years, the company held as much as 225 million shares of BYD. Berkshire Hathaway has been offloading these humongous shares since August this year, and the firm has not given any specific reasons why it is cutting its exposure to the electric automaker.
For what it is worth, BYD operates in an industry that has continued to gain increasing relevance over the past decade. Though the competition has continued to stiffen, BYD has innovated and has been gaining good market traction. This implies that the reasons for offloading its shares at Berkshire Hathaway are not necessarily rooted in the company’s lack of performance or future potential.
Per the Reuters report, the latest sale has pushed the holdings of Hathaway in the company to 14.95% on Dec. 8, down from 15.07%, according to a filing lodged with the Hong Kong Stock Exchange on Tuesday.
Berkshire Hathaway and the Long Term Support for BYD
Berkshire Hathaway made its first move to acquire BYD shares after the global financial crisis of 2008, stacking up $230 million worth of the stock at the time at an average price of HK$8 ($1.02). Compared with the current price of the automaker’s stock which is pegged at HKD210.40, Berkshire Hathaway is in more profits than it can imagine.
The massive rebound in the company’s shares following its low period was catalyzed by the company’s introduction of its “Blade Battery” technology as well as the boom in the Electric Vehicle market in China and Asia at large. With these catalysts, the company’s shares soared by 437% in the 2020 fiscal year.
As part of its moves to stay competitive, BYD has continued to develop its Blade Battery, boasting that it is more efficient than regular Lithium iron cells. BYD said its batteries are thinner and longer than the available options in the market and as such occupies less space which is a very good advantage in electric car manufacturing.
As of last month, BYD outrank American competitor, Tesla Inc (NASDAQ: TSLA) as the best-selling auto brand in China, an update that has relatively helped keep its shares to stay resilient.
While it remains unclear whether Berkshire Hathaway will completely sell off its stake in the company, BYD has notably sustained investors’ confidence in its operations, a reality that is evident in its current share performance. Despite the sell-off news, BYD shares in Hong Kong closed Tuesday’s trading session down by 0.38%.