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Berkshire Hathaway Sells Entire BYD Stake After 3,890% Surge
On September 21 (local time), CNBC reported that Berkshire Hathaway has sold its entire stake in Chinese electric vehicle company BYD for the first time in 17 years. During this period, BYD's stock price surged by 3,890%.
Berkshire purchased 225 million shares of BYD for $230 million in 2008, following the recommendation of the late Vice Chairman Charlie Munger. Starting in August 2022, Berkshire began selling its BYD shares, disposing of about 76% by June of last year. After that, the number of shares held dropped below the disclosure threshold required by the Hong Kong Stock Exchange, so Berkshire did not publicly announce subsequent sales. CNBC and other outlets estimated that Berkshire still held about 54 million shares.
However, CNBC recently confirmed in Berkshire Hathaway Energy's first-quarter financial statements that, as of March 31, the value of its BYD investment was listed as zero, indicating a complete sale. Based on the investment value stated in the report, Berkshire continued to sell its stake even after its holdings dropped below 5% last year.
A Berkshire spokesperson confirmed that the entire BYD stake had been sold.
CNBC described this as "a truly remarkable decision," noting that BYD's stock price rose by 3,890% during the period that Berkshire held its shares.
Warren Buffett, Chairman of Berkshire Hathaway, did not elaborate on the reasons for the BYD divestment, but in a 2023 interview with CNBC, he stated, "BYD is a great company run by a great person, but we thought we could do better with that money."
Geopolitical risks also appear to have been a factor. Around the same time, Berkshire sold most of its $4 billion stake in TSMC, which it had acquired only a few months earlier.
Meanwhile, CNBC pointed out that Chairman Buffett shares a similar long-term perspective with U.S. President Donald Trump. President Trump recently stated on his social media platform that U.S. companies should report earnings semiannually rather than quarterly.
In a 2018 co-authored article in The Wall Street Journal with Jamie Dimon, CEO of JPMorgan Chase, Chairman Buffett wrote, "The financial markets are too focused on short-term results," identifying quarterly earnings guidance as a major cause of this trend.
They argued that quarterly earnings guidance often leads companies to sacrifice long-term strategy, growth, and sustainability in pursuit of short-term profits. They also noted that when external factors beyond a company's control affect performance, companies may cut back on expenditures that are beneficial in the long run simply to meet short-term forecasts.
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