In 2008, Berkshire Hathaway Inc. (NYSE: BRK-B) subsidiary MidAmerican Energy invested $232 million in Chinese automaker BYD Co. Ltd. (BYDDF) in exchange for a 10% stake in the maker of both internal combustion engine (ICE) and electric vehicles (EVs). As of early July, Berkshire holds an 8.2% stake in the company, valued at roughly $6.75 billion based on Berkshire’s holdings as of March 31.
The man who introduced Warren Buffett and Charlie Munger to the EV maker has reduced his own stake in BYD by just over 1%. Li Lu, an American citizen who was born in China, founded investment management company Himalaya Capital in 1997, sold some 10.8 million BYD H (Hong Kong-listed) shares last week, reducing his stake from just over 7% to 6%, according to a Thursday report in the South China Morning Post.
When BYD reported June sales earlier this month, the company said it sold nearly 50,000 vehicles last month, of which about 80% were EVs. Including ICE vehicles, sales were up 52.5% year over year and 10.2% month over month. The 40,116 EVs — or as China designates them, new energy vehicles (NEVs) — represented a year-over-year increase of 207.1% and a jump of 26.6% month over month. ICE vehicle sales were down 50.7% year over year and 28.5% lower month over month.
Will Buffett follow Li’s lead and reduce Berkshire’s stake in BYD? The Chinese automaker has been a standout performer for Buffett, increasing in value by some 1,300% since he purchased the stock in 2008. BYD traded down more than 30% for the year to date back in early May but has since recovered to show a year-to-date share price increase of 4%.
Given Berkshire Hathaway’s preference for buying and holding a well-performing stock, it doesn’t seem likely that Buffett will reduce his stake in BYD. Stay tuned.