Warren Buffett's Berkshire Hathaway has cashed in about $230 million of BYD stock. Charlie Munger and Li Lu's sales foreshadowed the move.

  • Warren Buffett’s Berkshire Hathaway recently sold nearly 3% of its BYD stock for about $230 million.
  • Charlie Munger and Li Lu, who spurred Berkshire’s bet on the Chinese EV maker, sold shares before.
  • Munger and Li’s disposals over the past year or so make Berkshire’s sales less of a shock.

Warren Buffett’s Berkshire Hathaway has sold nearly 3% of its BYD stake for around $230 million in recent weeks, netting a roughly 36-fold return on its investment.

Buffett’s close followers won’t be too surprised by the move, given the two men responsible for Berkshire betting on the Chinese electric-vehicle company have pared their own wagers over the past year or so.

Li Lu, the head of Himalaya Capital Management, introduced Charlie Munger to BYD. In turn, the Berkshire vice-chairman trumpeted the automaker to Buffett, and persuaded him to invest by touting BYD’s founder and CEO, Wang Chuanfu, as “Thomas Edison, Henry Ford, and Bill Gates all in the same person.”

Buffett agreed to spend $232 million for 225 million shares of BYD, giving Berkshire a roughly 10% stake in 2008. It has now trimmed that position to under 220 million shares, Hong Kong Stock Exchange filings revealed this week, and the conglomerate can sell another 11 million shares before it has to file another disclosure.

The disposals follow Himalaya’s sale of about 26% of its BYD shares last summer, which slashed its ownership of the company’s Hong Kong-listed shares to below 5%.

The sales took it below the reporting threshold for further transactions, meaning it may have exited the position entirely since then. It was BYD’s second-largest shareholder after Berkshire, as recently as June last year.

Meanwhile, Munger oversees Daily Journal’s investment portfolio, and served as the newspaper publisher’s chairman before stepping down in March. It appears he sold $50 million of BYD stock in December, realizing a 15-fold return on a $3.3 million investment.

“The Daily Journal sale had to be BYD,” Chris Bloomstran, a close follower of Buffett and Munger and the head of Semper Augustus Investments, told Insider at the time. “It’s the only holding with that kind of gain.”

It appears that both Li and Munger decided to cash out some of their massive gains on BYD stock in the second half of last year. Buffett, who invested in the automaker on their advice, may simply be following suit with his recent disposals.

Read more: Insider interviewed the CEOs of 5 Berkshire Hathaway businesses: See’s CandiesDairy QueenBorsheimsCort, and Brooks Running. They offered a rare glimpse inside Warren Buffett’s company, and shared how they’re dealing with the pandemic and inflation.

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