Long-term investor: Will Warren Buffett leave Tesla’s BYD competitor? | News

• BYD with good business and stock exchange results
• Rumors of the departure of Warren Buffett
• Does BYD have a lithium problem?

Electric car maker BYD recently dethroned Tesla in terms of the number of electric cars sold: Chinese corona-related production outages impacted the US group and plunged the number of deliveries. Tesla sold only 254,695 vehicles in the second quarter, compared to 310,000 in the first quarter. Cumulative first half of the year, Tesla sold 564,000 vehicles – and was overtaken by BYD for the first time in this key figure. The Chinese competitor increased sales in the first half of the year by 315 percent to 641,350 vehicles.

BYD as a darling investor

BYD’s successful price is also reflected in the stock exchange: unlike Tesla’s competitor, BYD has been able to improve its share price since the beginning of the year. Overall, BYD’s stock balance is remarkably positive: in the past three years alone, the Hong Kong stock market has risen by more than 500 percent.

Well-known large investor in BYD, American entrepreneur Warren Buffett, should be particularly pleased with this. In 2008, on the advice of his vice president of Berkshire Hathaway, Charlie Munger, he bought BYD for $ 230 million and bought 225 million shares of BYD. Meanwhile, the value of his shares has risen to over $ 9 billion, so betting on a then unknown Chinese group has paid off for the star investor.

Is Warren Buffett pulling the trigger after 14 years as an investor?

Recently, however, speculation has surfaced that Buffett, after 14 years as a BYD shareholder, may now initiate a exit from the electric car manufacturer. The reason for the rumors of Buffett’s withdrawal was the fact that a short position appeared in the Hong Kong billing system, corresponding to approx. 20 percent. BYD shares. This is how much Buffett is involved in an electric car maker. If Buffett really were the seller of a huge stake, the 91-year-old would make billions of dollars on his investment. After the disclosure of the Hong Kong position, BYD’s share plunged sharply, but was able to recover in the days that followed.

Recently, only a few negative reports have been mixed with mostly positive reports about BYD. In May, BYD called on 10,000 vehicles to repair shops: concerns over the safety of electric car batteries necessitated a recall. Basically, however, BYD had good news to convey: this concerned, inter alia, cooperation with the American group NVIDIA in the field of automated driving, but also the news that the company has access to lithium deposits – one of the most important raw materials for building batteries for electric cars.

Do Buffet and Munger know more?

Still, the market remains concerned because if Buffett and Munger emerge from such a profitable investment, it could be more than the public realizes. Especially since another major investor BYD has already turned some of its investment into money in the recent past: Himalaya Capital reduced its stake in 2021 from 7.03 to 6 percent, according to Fortune. The founder of Himalaya Capital, Li Lu, was the investor who initially brought BYD to the interest of Charlie Munger.

Bloomberg columnist Anjani Trivedi suspects that despite recent reports of success, the supply of lithium could become a problem for the Chinese. While BYD has dealt with the cost pressures of the raw material shortage, access to raw material is not guaranteed. Because there will be no immediate and guaranteed lithium delivery. Meanwhile, the expert points out that key battery patents that limited production to China are expiring, so BYD-manufactured battery types are gaining ground outside of China, which should further boost demand.

Moreover, analysts believe that the mines in which BYD has a stake may not survive as long and as productively as expected. “Whether it’s a Buffett share or someone else’s share, investors are nervous about raw material supply and costs, no matter how vertically the company is integrated or how good the revenue projections are,” continued Trivedi.

However, it is still unclear whether or not it was actually a star investor’s stake that recently emerged as a selling item in Hong Kong’s billing system. Investors will not be able to obtain more information on this for several weeks as Buffett submits his Form 13F.

Editors of finanzen.net

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