Berkshire Hathaway, the company through which Warren Buffett manages its investments, has sold all its participations in Byd, the largest car manufacturer of China. The stock immediately collapsed by 3.6% on the Hong Kong stock exchange. Byd comes from a rather negative period, with an important slowdown in sales and profits in recent months.
Buffett had invested in Byd in 2008, sensing the company’s potential when he still produced mainly cell phones batteries. In 17 years the value of its participation increased by 4,500%. The sale that brought to zero the participation of Berkshire Hathaway in the company is however the result of a path that began in 2022.
Warren Buffett sold his actions in Byd
A document dating back to 31 March last displayed by the American network CNBC He would testify that Berkshire Hathaway has sold all his participations in Byd. A Warren Buffett’s holding spokesman would also have confirmed the news. The consequent collapse of the value of the shares of the Chinese car manufacturer led the title to lose 30% of its value from the historic maximum of four months ago.
Li Yunfei, general manager for byd’s branding and public relations, commented in a post on the Chinese social social network:
In equity investments, buying and selling are normal practice. We are grateful to Munger and Buffett for their recognition of Byd and for their 17 years of investments, support and company.
How much Warren Buffett gained by the sale of byd actions
Berkshire Hathaway invested in byd for the first time in 2008. The Chinese company for how we know it today, therefore a car manufacturer, was born in 2003, but the group existed, mainly as a manufacturer of electrical components and batteries, since 1995. 2008 was a decisive year for Byd, which was precisely in those months the first company in the world to produce a large-scale car on a large scale.
Buffett therefore identified the company as the objective of its investments, sensing the potential that the conversion from manufacturer of components to automotive manufacturer could have. He bought 225 million shares, 10% of the total, for a figure around 230 million dollars.
Actions that remained under the control of Berkshire Hathaway until at least 2022, when the first sales items on the part of Holding began to follow. In the following three years, Buffett continued to slowly give up its position in Byd, despite the company and the title continued to go well. The estimates on the returns of this investment, according to the Sole 24 Ore, are around a gain of 4,500%.
What is going on in Byd
The news of the definitive release of Berkshire Hathaway da byd comes at a time when Chinese society is struggling. After months of record results, a slowdown in growth before turnover began in July, then profits and finally sales.
It is the consequence of the Chinese state narrowing on incentives for car production. For years Beijing has financed dozens of companies because they have produced electric cars at increasingly lower prices. This created a price war, which led the average cost of a car to drop by almost 20%.
However, the deflation convinced the Chinese government to close this season. The five largest Chinese car companies have been summoned to Beijing to communicate this decision in recent months. The CEO of Byd Stella also declared that they wanted to push at least 100 competitors out of the Chinese market in the near future.
