BYD Stock An EV Gainer Through 2024 – Who Is Trimming Here?

BYD stock has had an upwards 2024, as so many of it's EV industry fall by the wayside.

With the bankruptcy filings of Fisker barely inked, and Tesla's stock price having a torrid year so far (-26%), we see the BYD stock price (OTCMKTS: BYDDY, HKG: 1211) quietly gaining 12.5% on a YTD basis. With a 3x under the belt over the last 4 years for BYD holders, there is a notable profit taker.

Berkshire Hathaway, the conglomerate led by Warren Buffett, has made a strategic reduction in its holdings of BYD shares,. Earlier this month, Berkshire sold approximately 1.35 million shares of the Chinese EV manufacturer, which lowered its stake from 7.02% to 6.9%.

The sale generated HKD 310.5 million (USD 40 million) and marked the first time in ten months that Berkshire has sold BYD shares at such a scale, also being the 14th instance of BYD stock reduction since August of the previous year. The timing of this transaction aligns with growing concerns over trade relations, particularly those involving EVs. Western trading partners have expressed worries stemming from the Chinese government's support for its EV sector and the consequent surge of low-priced Chinese EVs in their markets.

Recently, the European Union imposed a punitive tariff on Chinese EVs, which includes a new 17.4% anti-dumping duty, over and above the existing 10% import tax. BYD, among others, is significantly impacted by these additional levies. In a retaliatory move, China has initiated a preliminary anti-dumping probe concerning pork imports from the European Union, further escalating trade tensions between the two economic powerhouses.

Berkshire Hathaway's initial investment in BYD dates back to 2008, involving a sum of USD 230 million when the company's shares were at a low. This investment stands as one of the most profitable decisions for Berkshire, showcasing Buffett's value investment strategy. BYD, founded by Wang Chuanfu in Shenzhen, momentarily eclipsed Tesla as the world's largest electric vehicle seller by the end of last year, although Tesla overturned this in the following quarter.

With the EV sector continuing to shake up into fewer larger players, we will be watching for further clues as to what the future might hold in store.