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Berkshire Hathaway has reduced its stake in Chinese electric car maker BYD from just over 10% to less than 10%.
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Elon Musk and Warren Buffett have said that they do not want to compete with each other.
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We don't want to see so many failures. Munger said.
Berkshire Hathaway has reduced its stake in the Chinese electric vehicle manufacturer BYD for the eleventh time in less that a year.
The sale of shares came just a few days after Warren Buffett, Charlie Munger and others said that they didn't want Elon Musk to compete.
Berkshire now owns less than 10% of BYD. BYD is the second largest electric vehicle manufacturer in the world, after Tesla. Berkshire currently owns a stake in BYD worth over $3 billion.
According to the filing, the BYD purchase took place on May 2, only a few days before Buffett and Munger announced at Berkshire’s annual shareholders meeting that they didn't want Elon Musk to compete with them.
Buffett stated on Saturday that "We don’t want to compete in many things with Elon." Munger added quickly to Buffett's statement, "We don't wish for that much failure."
These comments were made in response to the question of whether or not they believe Elon Musk is overestimating himself. Musk is talented, and a "brilliant brain" has led to his success.
"He wouldn't have achieved the success he has had in his life if he didn't try for unreasonable extreme goals." Munger said that he likes to take on impossible tasks and do them.
Berkshire purchased its BYD share in 2008 for only $232 million. According to Hong Kong's regulatory filings, Berkshire will own about 21% BYD by the end of 2021. BYD was valued at more than $7 billion at its peak.
Berkshire has been selling BYD despite the comments made by the legendary duo about Musk. This is likely due to Berkshire wanting to take profits and use the money elsewhere, rather than to avoid competing with Musk in EVs.
Buffett told CNBC in an interview last month that "we will find ways to use the [BYD] funds I feel better about… We are not in any hurry to sell the money, but it is my job to allocate the capital."
Berkshire has a huge stake in BYD and could be simply taking profits in order to redeploy cash elsewhere, such as in Occidental Petroleum.
Buffett recently also highlighted the increased geopolitical tensities between China and Taiwan. This is what led to him selling his stake in Taiwan Semiconductor only a few short months after buying it. These geopolitical risk could also extend to Chinese automakers like BYD.
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By: mfox@businessinsider.com (Matthew Fox)
Title: Berkshire Hathaway cuts stake in EV maker BYD as Warren Buffett and Charlie Munger say they don’t want to compete against Elon Musk
Sourced From: markets.businessinsider.com/news/stocks/warren-buffett-elon-musk-berkshire-hathaway-sells-byd-stock-electric-2023-5
Published Date: Wed, 10 May 2023 12:01:02 +0000
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