Expand your active ETF horizons.: With Fidelity Active ETFs, you can have the flexibility needed to adapt and transform based on market conditions with potential tax efficiencies. Learn more here.
Warren Buffett just did a U-turn on one of his most successful investments to date.
BYD sank 3.79% today after CNBC first reported that Buffett’s Berkshire Hathaway has completely sold its position in the Chinese EV maker—but not before pocketing a roughly 3,890% gain over the last 17 years.
Back in 2008, Berkshire Hathaway bought 225 million shares of the fledgling carmaker for $230 million, giving Buffett a roughly 10% stake in the company—though Buffett credited Charlie Munger with bringing the investment to Berkshire Hathaway in the first place.
Since then, BYD has grown into one of China’s largest EV companies and has made a name for itself as a formidable competitor to Elon Musk’s Tesla.
Buffett started trimming Berkshire’s position in BYD in 2022, after its stock surged 41% that year, and by last June, Berkshire had sold over three quarters of its original stake in the company.
Buffett hasn’t explicitly explained his rationale for selling, but while he was shedding shares in 2023 he told CNBC that, although BYD is an “extraordinary company,” he was looking for better uses of his money.
The EV drag race is tough
Once again, Buffett’s timing was perfect: CNBC reports that, as of March 31 of this year, Berkshire had exited its position completely. In the last six months, shares have tumbled over 21%.
Turns out, BYD has some problems under the hood. While the carmaker has made headlines for outselling Tesla in Europe, it’s facing increasing domestic competition rolling out even cheaper EVs, not to mention ongoing regulatory probes.
In addition, BYD’s domestic sales (which make up 80% of its shipments) fell for the fourth consecutive month in August, according to Reuters. On top of that, BYD’s quarterly profit dipped for the first time in three and half years last month.
Time for BYD to put the pedal to the metal.—LB