Sixteen years ago, Warren Buffett’s Berkshire Hathaway unveiled a $230 million investment in Chinese electric vehicle startup BYD , sparking questions about the conglomerate’s unusual foray into early-stage technology. The bet turned out to be one of Berkshire’s most profitable, with the stake ballooning to $8 billion at BYD’s peak as the EV market exploded in China and beyond. Lately, Berkshire has been selling down the position, ringing the register after earning billions of dollars during its hyper-growth phase. Berkshire trimmed its BYD stake to 5.99% as of June 19 from 7% just a few days earlier , according to a Hong Kong Stock Exchange filing . Credit to Munger The “Oracle of Omaha” credited his late business partner Charlie Munger for convincing him — a famous hater of technology businesses — to invest in Shenzhen-based BYD. Munger, who died in November at the age of 99, spoke admirably of BYD founder and CEO Wang Chuanfu, who he said came from a humble background but rose to prominence through hard work and talent. “Here’s one of eight children of a peasant that becomes a famous engineering school professor, and before he’s reached 50, he’s won the equivalent of China’s Nobel Prize,” Munger said at Berkshire’s 2012 annual meeting. Buffett revealed that Munger once compared Chuanfu’s genius to Thomas Edison and Bill Gates. ‘Damn miracle’ When Berkshire’s stake in the Hong Kong-traded shares first became public, Munger went to great lengths to explain to shareholders that BYD wasn’t some early-stage venture capital company, despite the fact that its CEO was only in his 40s at the time of Berkshire’s investment. “This is not some unproven, highly speculative activity. What it is, is a damn miracle,” Munger said in 2009. He detailed BYD’s journey from making batteries for mobile phones back in the 1990s to eventually pivoting to the automobile industry in 2003. It has since become the top car brand in China, as well as a major producer of EV batteries. “From a standing start at zero and with very little capital, he rapidly was able to create the best-selling single model in China,” Munger said. “And that’s against competition that was Chinese joint ventures with all the major auto companies of the world, technological marvels with way more capital and so on.” In the fourth quarter of 2023, BYD finally dethroned Tesla as the world’s top EV maker , selling more battery-powered vehicles than the Elon Musk-led rival. The late Berkshire vice chairman was introduced to BYD by his friend Li Lu, founder of Seattle-based asset manager Himalaya Capital, who had bought shares in the EV company for Munger’s family portfolio years before Berkshire invested in it. Munger was a longtime China champion, impressed by decades of rapid economic growth. “It’s simply amazing how fast people in China are learning to do what took us a long time to learn. The world is getting very much more competitive,” Munger said in 2012.
Original news source Credit: www.cnbc.com
Berkshire Hathaway Inc., Business News, Byd Co Ltd, Charlie Munger, Investment strategy, stock markets, Warren Buffett
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