Street Calls of the Week
Investing.com-- BYD fell in Hong Kong and Chinese trade on Monday following a report that Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) entirely sold down its stake in the electric vehicle giant, after years of logging hefty profits on the position.
BYD’s (HK:1211) Hong Kong shares, through which Berkshire held its stake, fell 3.4% to HK109.60. Losses in the EV maker also pressured the Hang Seng, which fell 0.8%.
BYD’s mainland shares fell 1.5%.
CNBC reported a confirmation from Berkshire Hathaway that the hedge fund had entirely exited its stake in BYD. This was after the company disclosed in a filing earlier this year that the value of its investment in BYD had dropped to zero.
Berkshire had begun steadily offloading its stake in BYD– which it had acquired over a decade ago– in mid-2022, and by last year, had sold its holdings to less than 5% of the EV maker’s outstanding shares.
This removed the hedge fund from disclosure requirements under the Hong Kong exchange, meaning that its last publicly disclosed position in BYD amounted to about 54 million shares.
Berkshire had initially purchased a stake in BYD about 17 years ago, at the urging of the late Charlie Munger.
The trade had turned into a spectacular call, with BYD’s shares surging nearly 4000% since Berkshire took its position. At the peak of its holdings, Berkshire owned 225 million shares in the EV maker.
Berkshire’s sale comes amid some trying times for BYD. While the EV maker did overtake rival Tesla Inc (NASDAQ:TSLA) in China and Europe, investors were seen questioning the company’s margins and cash levels amid a bitter price war in China.