**Warren Buffett and Berkshire Hathaway: Exiting BYD and Thoughts on Corporate Reporting**
The renowned investor Warren Buffett and his conglomerate, Berkshire Hathaway, have made headlines once again by completely exiting their investment in BYD, the Chinese electric vehicle (EV) maker. This move marks the end of one of Berkshire’s most successful international investments, bringing to a close a position that had delivered exceptional returns over nearly two decades. The decision also comes amid changing global dynamics, heightened geopolitical concerns, and continued debate over how public companies should communicate their financial results.
### Berkshire Hathaway’s BYD Investment: A Story of Vision and Success
Berkshire Hathaway’s relationship with BYD began in 2008, when the company, at the urging of Vice Chairman Charlie Munger, purchased 225 million shares for $230 million. At the time, BYD was a relatively unknown Chinese automaker, attempting to carve out a space in the burgeoning electric vehicle market. Munger, known for his keen investment insights, described BYD’s CEO, Wang Chuanfu, as a “damn miracle,” and believed that the company had the potential to become a major player in the global auto industry.
This early bet proved prescient. Over the years, BYD’s stock price soared as the company grew into a leader in electric vehicles, battery technology, and renewable energy. During Berkshire’s period of ownership, the value of its BYD holding increased by an astonishing 3,890%. By the second quarter of 2022, the original $230 million investment was worth around $9 billion, following a 41% surge in the stock’s value that year. The success of the BYD investment stood out as one of the most lucrative international stock picks in Berkshire’s portfolio.
### Gradual Exit: From Public Disclosures to a Complete Sale
In August 2022, Berkshire Hathaway began to reduce its stake in BYD. The initial sales were significant but gradual, with the company selling off large portions of its holdings in the months that followed. By June 2023, Berkshire had sold about 76% of its original BYD position, reducing its stake to just under 5% of the company’s outstanding shares. This threshold is important because, under Hong Kong stock exchange rules, investors holding less than 5% of a company’s shares are no longer required to disclose their transactions. From that point, the exact pace and timing of Berkshire’s further sales were not publicly reported.
However, a sharp-eyed reader of Berkshire Hathaway Watch noticed that in the first quarter 2024 financial filing of Berkshire Hathaway Energy—the Berkshire subsidiary that held the BYD shares—the value of the BYD investment was listed as zero as of March 31. A spokesperson for Berkshire Hathaway later confirmed that the entire BYD position had been sold. This means that after falling below the 5% disclosure threshold, Berkshire continued to offload its BYD shares until its stake was completely eliminated.
### Why Did Buffett Sell BYD?
Warren Buffett has not given a detailed explanation for why Berkshire began selling its BYD shares after holding them for 17 years. However, he has consistently praised BYD and its leadership. In an interview with CNBC in 2023, Buffett called BYD an “extraordinary company” led by an “extraordinary person” (referring to Wang Chuanfu). Nevertheless, he added, “I think that we'll find things to do with the money that I'll feel better about.”
This statement suggests that, despite the company’s continued success, Buffett and his team saw better opportunities for redeploying the capital or had concerns about the investment’s risk profile. Around the same time, Berkshire Hathaway also sold almost all of its stake in Taiwan Semiconductor Manufacturing Company (TSMC), another highly profitable but geopolitically sensitive holding. Buffett explained that the decision to exit TSMC was driven by a reevaluation of the geopolitical risks associated with China’s claims over Taiwan, remarking, “It’s a dangerous world.”
While Buffett has not explicitly linked the BYD sale to geopolitical concerns, the timing and pattern are notable. The global business environment has become increasingly complex, especially for Western investors in China, amid rising tensions between the U.S. and China and greater scrutiny of foreign holdings in sensitive industries.
### Buffett’s Broader Investment Philosophy: Long-Term Focus Over Short-Term Gains
The BYD exit also offers a glimpse into Warren Buffett’s broader investment philosophy, which has