Traders rushed to sell BYD Co (比亞迪) after Warren Buffett’s Berkshire Hathaway Inc trimmed its stake in the Chinese electric vehicle (EV) maker, fearing that the legendary investor might be gearing up for an eventual exit after a decade as the company’s most notable backer.
BYD shares yesterday plunged as much as 13 percent in Hong Kong, the most in seven weeks and the worst performance on the benchmark Hang Seng Index. The selling followed Berkshire’s filing to the exchange late on Tuesday notifying that the firm reduced its holding of BYD’s Hong Kong-listed shares to 19.92 percent from 20.04 percent on Wednesday last week.
Speculation has been swirling for weeks about Buffett’s intentions, ever since a 20.49 percent stake — identical to the size of Berkshire’s last reported BYD position as of December last year — entered the Hong Kong’s central clearing and settlement system last month, a move that is often seen as a precursor to share sales. BYD stock has fallen more than 25 percent from a July high.
Photo: Bloomberg
“Investors could interpret this as the beginning of Berkshire closing its position in BYD,” said Bridget McCarthy, a market research analyst at hedge fund Snow Bull Capital Inc. “I would expect arguably one of the world’s greatest investors to take some profits after over a decade, especially on his highest-returning investment, percentage-wise.”
Buffett has sold about 6.3 million shares since June 30 through Wednesday last week, calculations based on BYD’s interim report and the investor’s latest filing showed. Berkshire, which first bought 225 million shares in September 2008, has been by far the largest shareholder in the EV giant.
The investment has also proved hugely lucrative as BYD shares have soared more than 2,000 percent since his initial purchase.
Investors view BYD, China’s biggest EV maker, as a bellwether for the sector. The company reported a jump in profit for the first half of the year as record output and sales shielded it from COVID-19 disruptions and supply-chain pain.
The automaker’s fundamentals suggest BYD might be able to endure further selling from Buffett, especially as investors pour into China’s green energy sector on bets the industry will benefit from Beijing’s policy push.
The auto industry has also been a key recipient of a range of tax and consumption incentives as authorities seek to dominate the shift away from combustion engines and accelerate the economy’s recovery.
BYD’s business model has improved significantly from the time Buffett first invested, said Andy Wong (黃耀宗), a fund manager at LW Asset Management Advisors Ltd (利達資產管理) in Hong Kong.
“Despite the short term share price struggle, there is value to invest in the company with its solid business model in the medium to long term,” he said, adding that some investors might have been waiting for a correction to buy.
A BYD official, in comments to China’s 21st Century Business Herald, said there is “no need to overinterpret” the stake sale, and added that the company’s operations remain normal.
As of Tuesday, BYD was the world’s second-most richly valued automaker, with its price to estimated earnings ratio below Li Auto Inc (理想汽車), a Chinese EV start-up listed in the US, and higher than Tesla Inc.
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS