Warren Buffett's Berkshire Hathaway has sold another 1.96 million shares of Chinese electric car maker BYD, reducing its stake in the company to less than 10%. The latest sale is worth about $58.9 million.
Berkshire Hathaway has been selling off its stake in BYD since August 2022. The company initially invested $225 million in BYD in 2008, and its stake was worth more than $9.5 billion last July. However, Berkshire Hathaway has not explained why it is selling its stake in BYD.
BYD is one of the world's largest electric car manufacturers. The company sold nearly 1.9 million cars last year, including pure electrics, plug-ins, and hybrids. BYD's stock price has soared in recent years, and it is currently trading at $240 Hong Kong dollars per share.
Berkshire Hathaway is a holding company that owns a variety of businesses, including BNSF railroad, Geico insurance, and Dairy Queen. The company's portfolio of U.S. stocks is worth more than $300 billion.
It is unclear why Berkshire Hathaway is selling its stake in BYD. However, the company's stock price has been volatile in recent months, and it is possible that Buffett is simply taking profits. It is also possible that Buffett is concerned about the company's future growth prospects.
Here are some possible reasons why Berkshire Hathaway might be selling off its stake in BYD:
- BYD's stock price has been volatile in recent months. The company's stock price has fallen by more than 20% in the past year.
- BYD is facing increased competition from other electric car makers, such as Tesla. Tesla is the world's leading electric car maker, and it is rapidly expanding its production capacity.
- BYD is facing supply chain disruptions due to the COVID-19 pandemic. The pandemic has caused shortages of semiconductors and other components, which has disrupted production at BYD and other automakers.
- BYD is facing rising costs. The cost of raw materials, such as lithium and cobalt, has been rising in recent years.
Additional thoughts on the matter:
- It is interesting to note that Berkshire Hathaway has not sold all of its stake in BYD. The company still owns more than 100 million shares, which is worth more than $3 billion. This suggests that Buffett is not completely bearish on BYD's future prospects.
- It is also worth noting that Berkshire Hathaway has a history of selling off its stakes in companies that have become too large or too expensive. For example, the company sold off its stake in Coca-Cola in 2018, and it sold off its stake in Wells Fargo in 2020. This suggests that Buffett is not afraid to sell off his investments, even in companies that he has previously praised.
Berkshire Hathaway's decision to sell off its stake in BYD is a significant development in the electric car industry. The company's decision is a vote of no confidence in BYD's future prospects, and it could lead to other investors following suit. This could hurt BYD's stock price and make it more difficult for the company to raise capital.
Only time will tell what the long-term impact of Berkshire Hathaway's decision will be. However, the company's move is a sign that the electric car industry is becoming more competitive, and that investors are becoming more discerning about which companies they invest in.