Warren Buffett Sells Entire BYD Stake, Capping 38-Bagger Investment; Stock Falls

TradingKey - On the evening of September 21, news emerged that Warren Buffett's Berkshire Hathaway had completely exited its investment in BYD.

“In stock investing, buying and selling are normal practices,” Li Yunfei, a general manager for branding and public relations at BYD, said in a Chinese social media Weibo post on Monday. “We’re grateful to Munger and Buffett for their recognition of BYD, and for their 17 years of investment, support, and companionship.”

According to publicly available data, BYD's stock price surged approximately 3,890% from Buffett's initial investment in 2008 until the complete exit, with market capitalization increasing more than 38 times.

Perfect Conclusion to a 17-Year Multiple Times Return

Looking back at this investment journey, it began on September 26, 2008, when Buffett, through MidAmerican Energy Holdings Company (a subsidiary of Berkshire Hathaway), purchased 225 million shares of BYD H-shares at HK$8 per share under Charlie Munger's strong advocacy. This represented approximately 10% of BYD's post-offering shares, with a total transaction value of about HK$1.8 billion.

For the next 14 years or so, Buffett maintained a substantial holding in BYD until 2022.

In August 2022, Hong Kong Stock Exchange (HKEX) website data showed that Berkshire sold 1.33 million BYD H-shares on August 24, 2022, at an average price of HK$277.1016, realizing HK$369 million, reducing its stake to 218.719 million shares, representing 19.92% of voting rights.

Following this, Buffett began a series of multiple reductions in his BYD holdings. By July 2024, the HKEX disclosed Berkshire's 16th reduction in BYD holdings. After this reduction, Berkshire's stake in BYD had decreased to 4.94%.

According to Hong Kong Stock Exchange rules, reductions below 5% ownership do not require public disclosure, which is why the market had not previously been able to confirm the final complete exit.

Buffett had discussed the BYD investment in a 2017 interview, praising Wang Chuanfu as "having many great ideas and being very skilled at turning them into reality," and revealed that the investment was Munger's insistence.

As a key promoter of this investment, Munger frequently praised BYD in public. At the 2009 annual meeting, he told shareholders that even though it looked like “Warren and I have gone crazy,” he saw the company and its CEO, Wang Chuanfu, as a “damn miracle.”

Slowing Sales Growth, BYD Faces Challenges

Over these 17 years, BYD itself has undergone a transformative development, evolving from an obscure Chinese mobile phone battery supplier into China's largest electric and hybrid vehicle manufacturer. However, BYD is currently facing severe competitive market pressures.

Data shows that BYD's global passenger vehicle sales in July and August were 341,030 units and 371,501 units respectively, with year-on-year growth rates of only 0.1% and 0.2%, marking the lowest growth rates since the China Electric Vehicle Data Tracking Center began monitoring in January 2021.

In contrast, the overall Chinese passenger vehicle market (pure electric vehicles + plug-in hybrid vehicles) continued to grow during the same period, with July sales increasing 12.4% year-on-year to 987,000 units and August sales rising 7.2% to 1,101,000 units.

Amid mounting competitive pressures, sources indicate that BYD has internally reduced its previously announced 2025 annual sales target from 5.5 million units to 4.6 million units. According to data from the China Electric Vehicle Data Tracking Center, BYD's global passenger vehicle sales from January to August totaled 2,830,415 units.

Affected by the news of Buffett's complete exit, BYD's Hong Kong-listed stock price fell, with today's decline exceeding 3%.